Digitization in Telecoms: Are Companies Rising to the Challenge?

The digital revolution has permeated most aspects of our lives and the intersection of technology and humanity has never been more profound. As such, digital technology is everywhere, from shopping and finance to health and wellness.

This phenomenon has also made a substantial impact on communications and digital technology has placed the whole universe in our pockets, allowing us to keep in touch with just a few taps on a screen. Air travel made the globe smaller, while digital tech is bringing the world to us, no matter where we are.

Some key facts

• By the end of 2018, there were over 2.5 billion smartphone users worldwide
• In 2019, 56% of the world population has access to the internet
• As of 2018, more than 2.6 billion people use social media platforms

The way we communicate has changed profoundly within a short space of time. In less than 30 years, we’ve moved from phone calls and letters through email, instant messages, VOIP, video chat, and virtual reality. Today, we can see and talk to someone halfway around the world in seconds.

This rapid pace of change presents challenges and opportunities for telecoms companies. Future success depends on effective strategy-building now, so we’re focusing on how telecoms can embrace digital transformation and use it to their advantage, today and in the future.

So, what are the key challenges for telecoms companies?

​The Rise of Social Media

Thanks to social media, there’s now a wide spectrum of communication platforms for consumers. This has shifted an element of power from the suppliers to customers.

Take landline usage, for example. In the United States, the percentage of consumers with a landline connection has fallen from 92% in 2004 to 43% in 2017. Almost half of customers have ditched the old technology in less than 15 years.

While landline use has been in a prolonged decline, access to social media has accelerated rapidly. This helps to explain the move away from traditional technology, which only served one purpose.

New technologies offer more than simply voice, with instant messaging, video calls, image sharing, status updates, and time-limited stories now on the menu. And with ample scope for further development, it’s not surprising that consumers are turning their attention to the future at the expense of the past.

In fact, while US consumers have steadily abandoned landlines, they’ve been quick to switch to mobile data. In 2004, there were just 0.41 mobile broadband subscriptions per 100 inhabitants in the United States. By 2017, this had jumped to 132.9. There are now more mobile data plans in the US than there are citizens!

This presents a challenge to the traditional core business of telecom companies. Consumers demand data and to survive, telecoms must shift their focus.

Meeting Data Demands

We know that consumers are hungry for data, but to provide it, telecom companies must have the infrastructure and capacity in place. This is likely to require substantial investment.

We’re now on the cusp of widespread 5G connectivity rollout. This iteration of the wireless network is faster and more reliable than 4G, with a much higher capacity. But it doesn’t come cheap. It’s estimated that 5G infrastructure will cost the industry $33 billion (USD) by 2026.

Telecoms must also change the products they offer. Consumers are moving away from bundles that fail to serve their needs, and are actively seeking products that incorporate mobile voice and data over fixed options.

Staying Profitable

To remain competitive and profitable in the digitally enhanced market, telecoms must strive to make efficiencies – particularly when it comes to costs. Ironically, digital tech may provide a solution.

Cloud-based hosting, AI customer service, and automated processes can help telecom companies to minimize their own running costs and therefore the cost of their offerings to remain financially competitive in the market.

These technologies are also equipped to improve productivity. By automating some of the processes traditionally performed by employee frees up resource that can be most effectively channeled into tasks that require a human touch.

Future-Proofing

A key challenge for any business is predicting what will happen in the future. Digital technology evolves at such a rate that it’s difficult to know which direction the market will take in 5, 10, or 20 years.

At present, we can be fairly confident that 5G, automation, the internet of things, and AI will play a role in the digital landscape. Comprehensive training of staff will prove pivotal, as will timely investment in technology and infrastructure.

What are the Technology Opportunities for Telecoms?

It’s not all doom and gloom for the telecoms industry. Digital transformation provides ample opportunity for companies to update their practices, diversify their businesses, and ultimately thrive in a new way.

Evolution, Not Revolution

Telecoms can’t fight the changing market, but they can embrace it. Consumers have already adjusted their behavior, and so what they need from telecom companies has also changed. Instead of providing direct services, telecoms are becoming conduits for customers to access digital platforms.

It’s prudent for businesses in the sector to reevaluate customers’ journeys and identify key touchpoints. By understanding what consumers need, telecoms can ensure that they’re in precisely the right position to deliver.

On a wider scale, the success of developing smart cities depends on the digital infrastructure in place to support them. Again, telecoms have a potentially vast market to serve.

Highlight: Telstra

Telstra has already been innovating in this space. A notable example is their collaboration with Smart Parking, to provide the digital support for smart parking sensors that analyze real-time usage and provide directions to the closest free space for users of a dedicated app.

They’re also looking at ways to improve the efficiency of refuse collection and usefulness of digital billboards.

All of these factors add up to a great opportunity for telecoms to act as the backbone for the digital revolution.

Big Data and Insights

The leading telecoms tend to be large companies with extensive customer bases. As such, they have access to huge amounts of data. This presents a massive opportunity for telecoms to tap into the market for data insights.

Analysts need good-quality, big datasets to understand consumer behavior, identify trends, and predict future developments. What analysts demand forms a natural confluence with the data that telecoms can supply. And so, a relationship is ready for the taking.

It appears that the sector is waking up to the idea; in a survey of telecoms companies, 30% have already made investments in big data infrastructure, while almost half indicated that this is something they’re considering.

Customer Service

A reputation for good customer service is something that generally eludes the telecoms industry. Instead of wasting time listening to ‘hold’ music on the phone, customers want a fast and effective experience. In a survey of telecoms customers, 46% identified real-time assistance as a priority when choosing a provider, with a mobile-friendly experience close behind at 43%.

AI bots have also arrived on the customer support scene, and service users are increasingly enjoying the experience. In particular, support for quick and simple queries is a hit with customers; in a recent survey, 69% of respondents identified this as a benefit to engaging with bots. Millennials are paving the way in embracing customer service AI, but baby boomers aren’t far behind.

Further development of AI presents a fantastic opportunity for telecoms companies to provide the instantaneous support that customers need while freeing up the time of their support specialists to intervene only when an actual human is required.

This can help to cut down telephone wait times, thus improving user experience. All being equal, this should usher in better customer satisfaction scores.

Adjacent Businesses

The digital revolution has provided ample scope for telecoms companies to enter adjacent markets.

Media, fintech, IT, and other utilities are ideal candidates, as these sectors allow companies to tap into their existing customer base.

Highlights: BT and AT&T

In the UK, the former monopoly-holder of telecoms services, BT, has evolved into a successful disruptor in the home entertainment market.

BT Sport channel is a popular addition to cable and satellite service bundles, not least because it offers an alternative to the market leader, Sky Sports, in the broadcast of some Premier League matches.

Similarly, AT&T has diversified from its origins as a landline telephone company to a media giant, through organic growth into broadband and TV bundles, as well as its recent acquisition of Time Warner.

In the future, we are likely to see further collaborations between established telecoms and digital innovators like Netflix.