Telecommunications Industry – Business Drivers

To provide solutions to clients in the Telecom industry, it is critical to have a comprehensive understanding of their business, their objectives, and their challenges – those business challenges unique to their organization as well as those triggered by the industry and marketplace. The following article provides an overview of the key business drivers that are impacting telecom carriers and hardware providers.

Business drivers are internal and external influences that can impact any industry significantly both positively and sometimes negatively. To work successfully in any industry domain, it is essential to understand and experience the key business drivers and challenges impacting that industry. To successfully compete in a highly competitive and demanding global marketplace, Telecom companies must develop sales and marketing strategies that increase operational efficiency and drive profitability.

Economic Cycles:

Economic cycles affect all industries and they are major drivers of the telecommunications industry on an international scale. The impact of Economic Cycles can be both positive and negative for any industry. Due to its large scale of operation and increasing cross-border presence, the telecommunications industry is a bit more sensitive to these cycles. Through its history, the telecommunications sector has often demonstrated its robustness in downturns and periods of market uncertainty. The recent past has been no exception. The sector is riding out the economic storms relatively well. Against this generally improving outlook, there are conflicting perspectives on how the sector will evolve. Investors are also concerned about the massive capital that will be needed to support this growth, and the need to secure new revenue streams.

Consumer Demand and Changing Mindset:

Another key business driver in the industry is increasing consumer demand and changing consumer preferences. With global technology brands now top of mind for consumers, and technology cycles quickening, operators need to understand and respond to fast-changing customer expectations and behaviors. This will require operators to communicate clearly the underlying value of the network and the sources of added value that differentiate their offerings in new service areas.

The use of multiple devices per user is increasingly the norm. And the time taken for new technologies to reach penetration is shortening rapidly down from ~15 years for mobile phones to ~4 years for smartphones and tablets. The market for traditional telephone service, or landlines, is declining while the number of cellular subscribers continues to grow. As a host of players from the technology and telecoms sectors seek to deliver new services, the need to differentiate is paramount. With this imperative in mind, operators should clearly define and communicate their core added value.

Technological Innovation & Business Intelligence:

To drive profitable customer propositions and improve their time-to-market for new innovative products and services, operators and telecom players need more accurate, timely, and comprehensive business intelligence and customer analytics. They also need integrated operational support and billing systems. These elements pave the way for efficient growth by enabling operators to produce better business intelligence for decision-making, helping them understand customer changes before their competitors, and allowing them to reuse network data in collaborative partnerships. Better information can also help operators reduce operational costs and ensure regulatory compliance.

Companies are investing heavily in innovation and the development of technology and infrastructure, creating growth in business activity while new value-added products and services drive consumer spending. Differentiation is the key in the future where the consumer has more choices due to increased competition among various operators.

Regulatory Approach:

Another key business driver is the regulatory approach after deregulation and competition. As new market structures emerge, the regulatory approach to these evolving sector ecosystems remains unclear. Many companies expanded and began offering services in several branches of telecommunications post-deregulation. The opening of the industry has led to rapid growth and the formation of new companies, leading to a surplus of available services. Consolidation in markets worldwide will continue to impact pricing and investment.

Going forward, new spectrum releases will shape 4G market structures and the rules vary from market to market in areas such as spectrum caps and trading. In new and emerging areas such as mobile money, regulatory jurisdictions and policies continue to lag behind the technology.

Privacy, Security, and Resilience:

Customers and business partners expect telecom players to be their security guarantors across a range of services. This is a great challenge for the telecom operators as they have to try to fulfill this role while coping with an array of threats that are expanding rapidly in number and severity.

The challenges are compounded by rising concerns among customers. As mobile phones evolve into personal data hubs, end users are facing privacy and security dangers that are escalating and multiplying, as threats converge from a range of environments, including SMS, MMS, Cloud, Web 2.0, and Mobile Apps. As a result, customers are now as concerned about data integrity as they were about to call quality a few years back.