Can telecoms survive the permacrisis?

Despite all indications to the contrary, it’s still the beginning of 2023 – or, as one social media post put it, “January was a tough year, but we made it”. It definitely feels like it was the longest month, maybe because I didn’t take my usual new year trip to CES. But now that we’re through it, what does the rest of 2023 have in store?

With everything that is going on the world, to say times have been tough would be an understatement. The fact that the Collins English Dictionary declared “permacrisis” as its 2022 word of the year seems… a reasonable choice. And – if we’re to believe everything we read – much of the world will be?in recession ?this year.

This has had repercussions for all kinds of companies. It’s tough out there these days: even the tech giants are rolling back on some of their more?elaborate projects . It’s clear that there’s a keener eye on all forms of spend and investment right now – not to mention the risk that invariably accompanies the pursuit of innovation.

For those of us with an interest in the telecoms sector, the question is of course to what extent it will be affected. In a way, I would say that telco is relatively safe from economic uncertainty. For one thing, communications products and services remain very high on the needs list. Quite simply, connectivity has become a defining feature of modern society and continues to be one of its biggest drivers.?

It’s well known for instance that internet use surged to new highs during COVID lockdowns before slowing down after the peak. However, in Europe alone it is expected to start growing again at a rate of?20–25% per year ?once the effects of the pandemic have been reabsorbed, according to a report from ETNO, the European Telecommunications Network Operators Association.

When it comes to data use, the numbers just keep growing. We’re currently talking in terms of exabytes (EB), each of which is equal to a billion gigabytes – otherwise known as the data language spoken by telco people of my vintage for many years???. Ericsson’s most recent Mobility Report forecasts that total mobile data traffic (excluding that generated by Fixed Wireless Access)?will nearly quadruple by 2028 , jumping from around 90 EB per month now to 325 EB per month.

This is all very good news for anyone involved in the IoT or M2M market.?ETNO ?has predicted that the number of active IoT connections in Europe will jump from just over 200 million in 2021 to 770 million in 2028. After years of a lot of talk and not very much progress, it seems it is finally becoming an intrinsic part of our societies.

If you don’t believe me, take a look at the apps running on your smartphone. If there’s one to control your lights, doorbell or heating, get you onto public transport, into a building or track your fitness, you’re in the IoT club. If you have any kind of smart device in fact – including appliances, wearables and cars – you’re in the IoT club too. In fact, it’s becoming increasingly impossible to manage many aspects of our daily lives without these gadgets. I can still live without a?voice-activated toilet ?or?connected fork ?though…

For operators in the consumer space, the obvious pressure will continue to be on cost and pricing, as I mentioned?last time . But they would be wise not to take part in a race to the bottom: what customers are looking for now is high value for money, or in other words, quality products and services. This makes the current environment a good one for challengers, as well as internet and mobile telephony more generally.

The one area that will probably suffer to an extent, at least in the short term, is B2B. As companies weather their own storms and difficulties, this will inevitably have an impact on their expenditure and investment plans, especially if recession does come calling. But here, the climate crisis and energy shock have opened up a new source of differentiation in the form of sustainability. By shifting to renewable energy sources and more environmentally friendly products and practices, operators could build a new niche for themselves as ESG concerns take their place at the top of the agenda.

It’s anyone’s guess how long this “difficult” period will last – with COVID, the recession only lasted a couple of months, while it took a year and a half to ease after the financial crisis. Either way, recovery will take time – but I continue to believe that there is a unique window of opportunity for classic telecommunications companies to gain market share, even in the permacrisis, by embracing new technologies like fiber, and by providing a simple, quality service to customers. It will be interesting to see what happens and how different operators adapt. I’m here for it.

Photo credit:?Pexels, Pixabay