The EY report, Top 10 risks in telecommunications 2020, revealed that while telcos have risen to the challenge of withstanding a surge in network demand during the COVID-19 pandemic, pressure to maintain infrastructure resilience and expand reach emerges as the most pressing sector challenge.
COVID-19 and the ensuing lockdowns have elevated the societal role of telcos as connectivity providers.
Tom Loozen, EY Global Telecommunications leader, says networks have withstood a sharp increase in home working, entertainment and schooling during the pandemic and telcos have commanded favourable customer opinion as a result.
“However, revenues are set to decline across most product categories and telcos must not become complacent. The journey to recovery will require new thinking and competencies, shifting the customer promise from speed to reliability, so telcos can thrive in the ‘new normal,’” he cautioned.
The inability to scale digitization initiatives ranks second on the risk radar.
The COVID-19 pandemic is accelerating this drive, with 78% of telcos now either re-evaluating or adapting the speed of automation and digital transformation programs. Despite this reappraisal, historical barriers remain – including inadequate skills in analytics and AI.
Failure to mitigate escalating geopolitical and competitive disruption lists ninth in the ranking and is a theme that underpins the top 10 risks.
With network equipment supply chains increasingly being disrupted by global trade forces, there are concerns that 5G rollouts could be delayed although telcos in Southeast Asia have actually begun accelerating their launch of commercial 5G services. Thailand’s telcos was the first country to offer 5G services in May 2020, followed by Singapore’s telcos in August.
Articulate the 5G vision
The report noted that while different industries are at varying stages of their 5G investment journey, they all need support to realize the opportunities on offer.
80% of enterprises across verticals want 5G providers to articulate a more coherent 5G vision, underlining the need for clearer dialogue.
The EY report, Maximizing the 5G opportunity for enterprise ranked this risk of ineffective engagement with industry verticals and the public sector as seventh, putting the blame to low awareness of the benefits of 5G.
Sam Wong, managing partner, ASEAN Markets, Ernst & Young Solutions LLP, comments: “5G, along with industrial IoT, provides an opportunity for telcos to create unique use cases and solutions that are industry-specific.”
The IoT value chain is evolving and telcos should expand their role beyond being the connectivity provider. Establishing alliances and partnerships in the ecosystem will be important.
“Telcos can leverage existing relationships with enterprise and public sector clients and develop deep understanding of sector issues and requirements to effectively develop the right solutions. Growth in enterprise business is imperative for telcos to realize their 5G vision,” he added.
Challenges to capturing 5G opportunities
While 5G opens many new opportunities for telcos, the industry needs to overcome several challenges before unleashing 5G’s full potential.
A key issue telcos in Southeast Asia face is the lack of monetizable use cases beyond enhanced mobile broadband, which limits the return on investment.
Other challenges to tackle include business transformation, CAPEX and OPEX optimization, and regulatory issues.
Telcos will need to fundamentally evaluate their role in the context of the IoT value chain and ask how they can transform from ‘telecom service provider’ to ‘digital service providers’.”
Loozen says: “Telcos’ relationships with government are deepening, with operators playing a pivotal role in pandemic response and recovery, positioning telecoms’ status as a national strategic asset more so than ever. Making the most of this more intimate relationship will require ongoing focus.”
Other risks listed among the top 10 include: failure to redesign workforce purpose and inclusion (3rd); failure to improve capex efficiency and network returns (4th); poor management of investor and stakeholder expectations (6th); inability to adapt to a changing regulatory landscape (8th); and failure to take advantage of changing market structures (10th).