In 2020, the telecom industry took on the challenges presented by the COVID-19 pandemic and came through the test with a very positive scorecard. Many outside the industry thought that fixed and mobile networks would creak and fall over as traffic patterns shifted and soared through the new reliance on video-based collaboration for work and the increased demand for Netflix, Disney, Amazon, etc. Those skeptics were wrong:
- The fixed broadband networks took up the bulk of the new traffic demand from home with mobiles alongside laptops latching onto the home WiFi in order to keep business communications flowing and entertainment customized around our individual preferences.
- Mobile networks adjusted their radios to literally point away from business locations and directly into the homes where we were all plotting the WFH revolution that many had dreamed of for decades.
- In the early days of different lock-downs, good old-fashioned voice traffic rocketed as we wanted to check on our friends and family and a basic phone call seemed the easiest way to keep in touch, especially with the more elderly members of society who have never heard of WhatsApp, Facetime, Zoom or Skype.
The seemingly impossible, made possible
Telcos don’t have the reputation of being fleet of foot but in this case, they did experience swift and significant changes.
- Tens of thousands of workers formerly tied to their office desks were switched to home working in a matter of days.
- Customer service staff were transported from noisy contact centers into their sitting rooms, kitchens, and even bedrooms to handle an explosion in calls.
- With physical stores closed, customer interaction across all digital channels was accelerated.
- Thanks to the automation of many systems and processes, minimal operational staff were required in buildings.
- Engineers entering data centers for their telcos, willingly carried out tasks for their competitors, making use of the sheer fact they were physically in the building.
- In some emerging markets, people were recruited to literally stand on street corners and offer to ‘top-up’ accounts in order to keep people connected.
The industry did a great job both in keeping its networks and systems up and running against this dramatically different demand whilst also continuing the on-going transformation of many aspects of the business.
In short, this has been a real shot in the arm for an industry not known for its agility to change direction quickly and respond to different market circumstances.
However, the pandemic has not changed many of the underlying trends at play in the telecoms market around the world, including:
- Pressures from a competitive landscape continue to push prices down and keep industry revenues flat or even shrinking;
- The content market is increasingly dominated by global players with deeper pockets than the now fundamentally national telecoms operators;
- The advent of SD-WAN, which represents a potential reduction in spending per location and per customer as the services flex around the way the business is organized, benefiting from the broadband connections already in place and replacing the expensive legacy services;
- Hyperscalers encroaching on the telecom patch with their direct internet connections and Mobile Edge Computing (MEC) offerings;
- Datacenter giants, wholesale fiber and tower companies benefiting from the more open software environments and positioning themselves to offer host neutral and edge services that will compete with telcos directly;
- Systems Integrators, with their industry-specific knowledge, looking to leverage both the more open supplier ecosystem and private 5G spectrum, where available, to strengthen their own position in the market.
In many ways, this plays out the idea that telcos are mere utility bandwidth providers that I first heard at Logica back in 1992. The difference today is that telcos are competing with some very strong global players with vastly different scales to their own national footprints. At the same time, governments and regulators are pushing for the final piece of truly universal coverage to get broadband out to the rural communities. The net/net of this, for me, is the need to deliver high quality, ubiquitous connectivity that everyone and everything can enjoy. I jokingly labeled this “Plain Old Broadband” (POB) in an homage to the Plain Old Telephone System (POTS) that was the mainstay of the industry for decades. Telcos cannot play in all the adjacent markets of media, enterprise applications, data centers et al. They need to focus on their sweet spot of providing the connectivity that everyone needs in usual and, of course, the most unusual times.
Brand awareness and affinity
In the brand world, we talk about awareness and affinity. Telcos were formerly in the Awareness category with relatively lower NPS scores. The reliability of broadband to keep us all connected during the pandemic has certainly improved the Affinity we feel to our telecoms providers. This more positive position should not be read as a green light to push aggressively into the next generation of connectivity nor into adjacent worlds of media, finance, or business applications. The focus should be on building out that ubiquitous, reliable set of connectivity services on the one hand coupled with partnerships with those companies driving the personal and business environments.
The economic impact of COVID-19 is still unknown. We saw pre-paid mobile markets suffer as people pulled back from spending during lock-down. Doubtless, the businesses that are floundering across the world will aim to reduce their spending, including connectivity. We saw many of the world’s telcos undertaking activities to support healthcare staff, the most vulnerable in society, and continue much of their foundation work with charities and the unconnected. This may well need to be extended into 2021.