I’ve been in telecommunications most of my working life and a large focus of my recent career has been on enabling the digital economy. So you’d think digital would already have transformed the way I lived and worked.
Not as much as I thought! It took a global pandemic to shift my habits.
Pre-COVID, I was struggling to work from home even one day a fortnight and only made the odd online purchase. Post-pandemic I’ve worked from home for the last seven months and am now making all my purchases digitally. And I’m not alone. Like me, many Australians have come to depend on our Communications Service Providers during and after lockdown.
CSPs have played a crucial role in keeping us working, shopping and connecting with the people we love. While the pandemic limited most aspects of everyday life, we all clung to the security that we could still rely on our mobile phones and Wi-Fi hotspots.
So, it should be no surprise that Accenture research shows CSPs have increased the trust consumers and businesses place in them. Almost half of consumers (46%) believe their CSP’s COVID-19 response actions and support were above expectations.1 Almost two thirds (62%) trust their CSPs for their data security – more than they trust governments.2
But as CSPs scan the post COVID-19 landscape, important questions still need to be answered.
Is there a risk of price wars?
The last recession, in 2008, resulted in communications industry price wars across many markets as restrained consumer spending and aggressive discounting by new market entrants led to significant ARPU declines.
While the current recession is very different in nature to the one in 2008, the sector is once again facing the risk of price wars. Although we are not witnessing it at scale yet, declining disposable incomes and rising unemployment may result in consumers migrating to lower priced plans. In this environment, the risk of increased competition and price wars could erode revenues and margins.
Where are the new opportunities?
In response, CSPs must build defensive strategies and take advantage of new commercial opportunities to avoid similar ARPU decline. Our research found strong demand for CSPs to:
- Capture future home services – While the smartphone has acted as the remote control for our lives for more than a decade, now consumers are spending more time at home, CSPs have an opportunity to develop personalised, intelligent smart home services built around the individual user and the household.
Consumers are increasingly interested in accessing new digital services, with CSPs as the preferred service provider in many cases. Three in five consumers plan to invest in home automation systems in the coming year, and many in the industry expect a surge in voice control smart home devices.3
Looking ahead, Consumers will increasingly favour CSPs that also provide digital services such as smart home, e-health and digital payments.
It may even be that some CSPs operate as multi-sided platforms, playing a pivotal orchestrator role at the centre of Future Home ecosystems, moving from proprietary systems to open APIs.
- Power SMB digital transformation – With many SMBs impacted by the crisis, CSPs will see a significant decline in their traditional revenues from this important segment. To sustain their business, CSPs need to develop new products and services that support the digital transformation of SMBs in response to changing consumer behaviour.
Due to the closure of the traditional channels, 35% of SMBs moved to online only sales.4 An AlphaBeta survey found 9 in 10 Australian firms adopting new technologies to support business continuity during COVID-19. Connectivity, important before, is now an imperative post COVID 19. Half of SMBs expect to increase their spending on broadband as the shift to digital that they made in response to the pandemic becomes a permanent move.5 Almost two-thirds expect to see an increase in the use of PaaS public cloud over the next 12 months.6
- Underpin the rise of telehealth and other connected industries – The spike in telehealth during the crisis is also here to stay, with an April 2020 poll by Sermo of 1,300 doctors finding 60% were planning to continue offering telehealth services after the crisis.7 As economies adjust to a post-pandemic world, both telemedicine and online education market are expected to continue to grow at expansive rates.
To play in these and other connected markets, CSPs need to focus on Edge and 5G Network Slicing to tailor and customise the network for specific applications. For example, the mission-critical IoT slice can ensure increased performance reliability for health and education use cases.
- Become an active player in smart cities – With IDC forecasting a ~20% increase in smart city spending in 2020 compared with 20198, CSPs have an opportunity to become the go-to connectivity player, with an emphasis on security. CSPs can also move beyond connectivity, orchestrating a platform of partners (even former competitors) to support the rollout of smart infrastructure.
What’s next for CSPs?
In a world where incumbency is no longer an advantage, CSPs have an opportunity to grow in new customer-driven domains, subsidise services to monetise data and shift their focus from connectivity to digital services, media and entertainment. This will require reinventing their businesses and transforming their operating models to meet evolving customer needs by:
- Offering relevant products and services to support consumers’ changing lifestyles and work patterns
- Strengthening online capabilities in line with increased consumer digital engagement
- Embracing 5G to meet consumer demand and give SMBs high-speed, reliable connectivity
- Re-evaluating employee support as remote working becomes more permanent
- Moving to a virtual, cloud-based ecosystem
As economies begin to re-open and people like me look around for new digital services, CSPs can emerge stronger by building on the trust and relevance they and developing new partnerships, products, services and business models to help us all live, work and play in the Never Normal.
1 Accenture Communications & Media COVID-19 Consumer Study, May 2020
3 How Will COVID 19 Change the Consumer? Data driven insights into consumer behavior: Wave 7
Findings, June 2020, Accenture Consumer Research
4 COVID 19 Communications & Media SMB Survey
8 Worldwide Smart Cities Spending Guide, IDC, 2020