The telecommunications sector is broad and covers all the businesses that provide the services required for messages, data, and signal transmission. With the need for connectivity becoming one of the priorities of the modern digital age, the telecommunications industry is growing rapidly. The forecasts predict that it will go up to 1.5 trillion US dollars worldwide by the end of 2023. This increase will represent a 2.8% augmentation of that in 2022.
The increasing demand for connectivity is not the only factor that has been influencing the trend. Such advancements as 5G networks fiber-optic cables, Internet of Things (IoT) devices, and satellite communications are additional factors to name a few.
5G networks are attributes of the mobile telecommunications market (there are also fixed-line communications). From 2022 to 2028, the 5G subscriptions are expected to go from 950.91 million to 4,624.11 million with North-East Asia having the largest number of 5G users. Why is it becoming so popular? The main advantage of 5G is its speed and compatibility with cloud solutions. The latter requires robust high-speed and data transmission capabilities, therefore telecommunication networks play a crucial role. As more 5 G-enabled devices enter the market, companies start looking for new use cases where it can be implemented.
The way we work has also changed greatly. Following the shift towards remote work, the demand for stable connections has increased. This trend significantly boosted the enterprise collaboration market (valued at $47.2 billion in 2021) that consists of:
- video conferencing and webinar platforms
- remote visual assistance
- project management solutions
- workflow automation solutions
- intranets and enterprise portals
- knowledge management systems
- virtual collaboration spaces and so on.
As you can see, telecommunication is an indispensable part of it. With so many factors connected together, there are definitely significant benefits that drive the development of the telecommunication market, but there are also challenges that follow suit. The first part of the two-part series dedicated to the telecommunications sector will cover them and market trends.
1. Challenges of the telecommunication market
According to the study by E&Y, the telco industry has to address several pressuring matters among which are:
- growing cybersecurity threats
- the need for a defined sustainability strategy
- areas with poor connectivity and as a result failure to ensure resilient infrastructures. 39% of companies report that the high cost of technology infrastructure prevents them from digital transformation
- struggles to shift to the new business models where external partnerships are the core of it
The telecommunications sector relies heavily on energy-intensive infrastructure, including data centers, cell towers, and network equipment. The energy demand associated with these operations contributes to greenhouse gas emissions and exacerbates climate change. According to BCG’s study in 2021, telco accounts for 3% to 4% of global CO2 emissions, which is about twice that of civil aviation.
Telco operators also have to speed up their upgrade strategy because the latest technological breakthroughs have opened doors to hyperscalers, companies that aim to dominate numerous verticals at the same time. To stand the competition, telco operators will have to find the right way to transform their architecture and make the right strategic technology choices that would help them adjust.
2. Three trends in the telecommunications sector
McKinsey advocates that the following three trends must orchestrate the aforementioned need for change: data-driven decision making based on user-level QoE (quality of experience); open, virtualized and cloud-based networks (softwarization and cloudification); and the move to increased active network sharing.
2.1. Customer-level QoE
Individual customer experience is the key to customer satisfaction. The better it is the higher the chances that the company will be recommended through word of mouth. Network experience is listed among the primary factors that determine the QoE. It is crucial to notice that sometimes customers’ understanding of a good network may differ from the company’s understanding. Therefore, it needs to use effective measurement of customer perceptions of the services they use (e.g. ask the right questions in the feedback forms.)
2.2. Softwarization and cloudification
The cloud boom in recent years cannot be ignored. With cloud solutions being less costly, easily accessible, manageable, and scalable, many companies opt for them. McKinsey reports that “moving telco network functions to the cloud, in conjunction with softwarization, gives operators a further opportunity to potentially improve financial performance.”
Moreover, the cloud solution’s integration capabilities allow users to benefit from their favorite functions in one place without having to switch from one app to another. The flexibility with each application can be integrated with each other has become one of the factors that determine their success in the market. Consequently, this interoperability gives rise to new ecosystems within the vast global digital landscape.
2.3. Network sharing
Fiber sharing in telecommunications refers to the practice of multiple telecommunication service providers or operators using the same physical fiber optic infrastructure to deliver their services. Instead of each operator laying separate fiber cables, they collaborate and share a common fiber network, which can lead to cost savings, increased efficiency, and faster deployment of services. This practice is expected to continue as it allows operators to achieve up to 35% in savings.
3. Conclusion
In this first part of our two-part series on the telecommunications sector, we’ve explored the dynamic landscape of the industry, with its rapid growth driven by the increasing demand for connectivity.
As the sector continues to evolve, it faces a set of pressing challenges, so in part 2 we will delve into how remote visual support can play a pivotal role in addressing these challenges and enhancing the aforementioned trends. For telecom operators, strategically integrating digital technologies across their entire operations isn’t just an option; it’s essential. This approach enables them not only to tackle market challenges but also to unlock the vast opportunities presented by the emerging digital age.
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