Top 5 Industry Issues: The Mid-Summer Scuttlebutt

Summer months are a good time to take stock of where we are. Why? Businesses tend to hit a lull because many executives go on vacation. But it's also during this time I have lots of conversations with executives, owners, consultants, advisors, vendors, and others to hear what's on their minds.?

Some points are coming up continually in all my conversations, and I'd like to share some here so we all get that water cooler talk we've been missing. Here are my Top 5 themes I continue to hear regardless of origin, followed by a recommendation.

The Big Capital Pullback

Nearly everyone is talking about how things are slowing down in the 5G rollout and what that means for their business. You can't pass a media article that isn't talking about this in some way. We're several years into the 5G deployment, and the goal is always to cover "where the people are," i.e., big, dense areas. That drives a high capital spend until you cover those areas. You then shift to less dense. The problem is that it's expensive for a lower return. The answer is to pull back and moderate spending. Guess where we are?

Recommendation: Take a look at your business to understand how this shift will impact your revenue or capital requirements. If you don’t have a strategy, now’s the time to build one!

The 5G Revenue Challenge??

Unlike 4G LTE, where we had an iPhone that suddenly resulted in significant sales, there hasn't been a killer device or application for 5G. Some mention fixed wireless in the press, but most in the business know it's not enough to justify the significant 5G capital spend. We're hearing about private wireless, network slicing, and other things, but there isn't a game-changer anyone's identified yet, which is a problem for many.

Recommendation: Shift the conversation with your customers about technology features into value delivered and take the time to understand the pain points they're facing. This isn't the same level of innovation as introduction of an iPhone, but it's a tried and true way to build a solid business that generates revenue from investment.

The Morass that is Maps and Locations

Everyone is struggling with all of the maps and trying to reconcile what is the "ground truth" of what will be funded. In fact, the FCC just released a rule and order to allow A-CAM (e.g., "Connect America") high-cost subsidy money to incumbents if they serve locations at a new speed of 100 Mbps down/ 20 Mbps up.?

The challenge is that, at the same time, we have the USDA making awards to locations, …and a new tribal opportunity window that can impact the map, … and the new A-CAM program may change what is considered "served," … and the entire challenge process that states will have to run could impact even more locations.?

It's incredibly confusing, and many providers are getting frustrated in the process. Even if you don't plan to apply for money, just tracking for your own purposes what of your locations are served (to keep someone from getting subsidized overbuild dollars) is a real pain!?

Recommendation: Make sure you know your own customers and locations (regardless of maps), but more importantly, focus on delivering a great service and experience. Whether you or someone else gets funding, the common point is customers – the better you serve them, the more likely they will choose and stay with you.

BEAD Money: A Long Time Coming

Folks are beginning to understand how long it's going to take to get federal dollars to states and then states to get them to providers. Most states did not have the resources or infrastructure (or experience) to dole out that much money.?

This doesn't even touch all the challenges the program has for a provider, such as the significant letter of credit requirements, Buy in the USA, climate change, prevailing wage, and other issues that make it darn near impossible for a smaller provider to participate. Many think that all the money will end up with the largest operators since they are the only ones with the resources to comply with all these changes.

Recommendation: Use this time to educate yourself on the process. Read your state's 5-Year Action Plan and Initial Proposal, make connections in the state broadband office, expand your banking and financial relationships and expertise, and build your longer-term vision and strategy.

The AI Opportunity

Like every other industry, AI is all the rage in my conversations. Everyone thinks it has a significant opportunity in telco, and everyone is also trying to get their head around where to use it, how to use it, and how to manage it. Several companies are out there investigating how to bring it into the telco's IT and operational stack, but we're in the early days. Its potential is significant in transitioning how the network operates (and the resulting cost structure). Still, we're in the very early innings here, and it seems like every firm is talking about it.

Recommendation: For this last point, I thought the best way to get a recommendation was to ask ChatGPT. Here's what it said:

"Remember that AI adoption is a journey, and it's important to develop a comprehensive strategy that aligns with your business goals and industry trends. By focusing on network optimization, customer experience enhancement, data analytics, security, talent acquisition, collaboration, ethics, and regulatory compliance, you can position your telecommunications business for success in the AI-driven future."

I may have to let it write my newsletters ;)

Which of these themes resonates with you? What other themes are you seeing in the industry today?

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