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Telcos should become digital service providers, says EY

Due to the surge in network demand during the ongoing pandemic, the pressure to maintain infrastructure resilience has topped the world telecom risk radar. At the initial stage of the lockdowns, global Internet traffic has spiked to 70%; thus, telcos are now being elevated to a societal role as connectivity providers.

This is according to Ernst & Young (EY) report, Top 10 Risks in Telecommunications 2020, which combines EY industry insights and consumer survey data to shortlist the most urgent threats facing today’s telcos.

Tom Loozen, EY Global Telecommunications Leader, says: “Overall, 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’.”

Failure to mitigate escalating geopolitical and competitive disruptions was listed ninth in the ranking, but it underpinned all of the top 10 risks.

With network equipment supply chains increasingly being disrupted by global trade forces, there are concerns that 5G roll-outs could be delayed, although telcos in South-east Asia have actually begun accelerating their launch of commercial 5G services.

Thailand’s telcos were the first to offer 5G services in ASEAN in May 2020, followed by Singapore’s telcos in August.

Sam Wong, Managing Partner, Asean Markets, Ernst & Young Solutions, concludes: “A key issue telcos in South-east Asia face is the lack of monetisable use cases beyond enhanced mobile broadband, which limits the return on investment.

“Other challenges to tackle include business transformation, Capex and Opex optimisation, 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’.”

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