Top 5 Strategic Imperatives for the Telecom Industry

Top 5 Strategic Imperatives for the Telecom Industry

Innovative Monetization Strategies Are Critical for 5G Success

RELEASE DATE
04-Aug-2023
REGION
Asia Pacific
Deliverable Type
Market Research
Research Code: PEAB-01-00-00-00
SKU: TEMP_2023_55
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Description

The uncertain future economic viability of the telecom business necessitates immediate changes. As mobile operators struggle with an identity crisis, their vendors have been acquiring new strengths to tackle the potential with digital through M&A, e.g., Ericsson acquired Vonage, and global IT players have been encroaching into the network space, e.g., Microsoft acquired Metaswitch and AT&T network cloud for network capabilities, to tap on the same opportunity that mobile operators are after with 5G.

The industry cites cost and monetization as challenges faced with 5G. However, the business case could still make sense at a high cost if monetization was not an issue. Therefore, monetization may be the bigger problem, but cost must still be managed. Innovative business models need to be crafted to re-engineer costs and reduce risk. A 2022 Frost & Sullivan survey found that 60% of respondents do not believe the “build it and they will come” approach will be sustainable from 5G onwards. Mobile operators and their regulators need to consider new approaches to improve prospects.

If there is a need, 5G will be embraced. 5G is finding a place in some of the most automated industries, e.g., in existing semiconductor factories in Taiwan, driven by augmented reality and artificial intelligence. The reality is that some companies and parts of the industry are moving faster with 5G because there is an exact fit for the need being addressed, but others require some development for it to fit. The success of a few companies that are taking a different approach and achieving better outcomes, e.g., Rakuten Mobile, signals time for a review of the relevance and effectiveness of global alignment. Competing global IT players can craft and execute monetization strategies faster than the global associations that bring together more than 750 mobile operators.

Beyond connectivity, the need for end-to-end integrated services cannot be met without greater collaboration. The legacy mentality of control needs to give way to trust, as the future growth of the telecom industry depends on how well companies can collaborate. Of the partnerships that have been announced, many are collaborations with companies that do not compete. Part of the reason for this could be attributed to collaboration skills being rare amongst the telecoms industry workforce, where a large majority of workers still comprise men and the industry struggles with discrimination. Another reason is that tapping the opportunity requires companies to be more open, which is still not intuitive (especially in the telecom industry). The telecom industry faces a skillset shortage that hampers the adoption of new emerging technology and practices. Attracting top talent is challenging because it is no longer a high-growth industry. Incorporating automation in parallel further adds complexity as mobile operators need to find the right balance between human touch and automation. Finding the way forward with culture and talent needs to fall back on a clear strategy for business transformation.

The industry understands change is necessary, but achieving change is an uphill challenge. Until recently, decisions have been for the short term. The business transformations necessary at this juncture are meant for the long term, where clarity is elusive and success is not guaranteed. This increases the difficulty in getting everyone on board, investors and customers alike. However, the future of the telecom industry is at stake should effective change not be made an immediate strategic imperative on mobile operator CEO agendas.

Author: Quah Mei Lee

Table of Contents

Top 5 Strategic Imperatives for the Telecom Industry

  • Top 5 Strategic Imperatives for the Telecom Industry
The uncertain future economic viability of the telecom business necessitates immediate changes. As mobile operators struggle with an identity crisis, their vendors have been acquiring new strengths to tackle the potential with digital through M&A, e.g., Ericsson acquired Vonage, and global IT players have been encroaching into the network space, e.g., Microsoft acquired Metaswitch and AT&T network cloud for network capabilities, to tap on the same opportunity that mobile operators are after with 5G. The industry cites cost and monetization as challenges faced with 5G. However, the business case could still make sense at a high cost if monetization was not an issue. Therefore, monetization may be the bigger problem, but cost must still be managed. Innovative business models need to be crafted to re-engineer costs and reduce risk. A 2022 Frost & Sullivan survey found that 60% of respondents do not believe the “build it and they will come” approach will be sustainable from 5G onwards. Mobile operators and their regulators need to consider new approaches to improve prospects. If there is a need, 5G will be embraced. 5G is finding a place in some of the most automated industries, e.g., in existing semiconductor factories in Taiwan, driven by augmented reality and artificial intelligence. The reality is that some companies and parts of the industry are moving faster with 5G because there is an exact fit for the need being addressed, but others require some development for it to fit. The success of a few companies that are taking a different approach and achieving better outcomes, e.g., Rakuten Mobile, signals time for a review of the relevance and effectiveness of global alignment. Competing global IT players can craft and execute monetization strategies faster than the global associations that bring together more than 750 mobile operators. Beyond connectivity, the need for end-to-end integrated services cannot be met without greater collaboration. The legacy mentality of control needs to give way to trust, as the future growth of the telecom industry depends on how well companies can collaborate. Of the partnerships that have been announced, many are collaborations with companies that do not compete. Part of the reason for this could be attributed to collaboration skills being rare amongst the telecoms industry workforce, where a large majority of workers still comprise men and the industry struggles with discrimination. Another reason is that tapping the opportunity requires companies to be more open, which is still not intuitive (especially in the telecom industry). The telecom industry faces a skillset shortage that hampers the adoption of new emerging technology and practices. Attracting top talent is challenging because it is no longer a high-growth industry. Incorporating automation in parallel further adds complexity as mobile operators need to find the right balance between human touch and automation. Finding the way forward with culture and talent needs to fall back on a clear strategy for business transformation. The industry understands change is necessary, but achieving change is an uphill challenge. Until recently, decisions have been for the short term. The business transformations necessary at this juncture are meant for the long term, where clarity is elusive and success is not guaranteed. This increases the difficulty in getting everyone on board, investors and customers alike. However, the future of the telecom industry is at stake should effective change not be made an immediate strategic imperative on mobile operator CEO agendas. Author: Quah Mei Lee
More Information
Deliverable Type Market Research
Author Mei Lee Quah
Industries Telecom
No Index No
Is Prebook No
Keyword 1 Innovation Strategy
Keyword 2 Business Strategy
Keyword 3 Telecom Industry
Podcast No
WIP Number PEAB-01-00-00-00