Arthur D. Little: Teleco can Thrive Amid Surging Data Demand
70% of the global population was subscribed to a mobile service by the end of 2023. This number is expected to reach 75% by 2030, driven primarily by growth in low- and middle-income countries (LMICs).
Here Arvind Rajeswaran, Principal at Arthur D. Little, tells us how mobile connectivity remains a pivotal force in driving digital innovation worldwide.
Telecoms navigate 6G investments and competitive pressures
“The telecommunications industry faces the dual challenge of meeting growing data demands and managing the substantial costs of infrastructure investments,” says Arvind. “Data consumption worldwide is experiencing a rapid transformation.”
With the surge in digital content and the growth of telecom networks, global data consumption is expected to soar from 3.5m petabytes (PB) in 2022 to an impressive 10m PB by 2027.
“Significant investments are anticipated in network upgrades, with 6G demanding the same substantial funding as 5G,” continues Arvind. “Although 6G is projected to be three to five years away, expenditures are expected to reach US$340bn by 2027.”
Intensified regulatory pressures and the surge in energy costs are factors pushing for decarbonisation, urging many telecommunications companies to expedite their energy initiatives and invest more in efficiency.
“Customer expectations and competition has been heating up from both traditional and non-traditional players with more direct challenges between telcos and hyperscalers,” he says. “Telecommunications providers are urged to diversify their revenue streams beyond connectivity by tapping into content subscriptions, strategically optimising their operations and embracing ecosystem partnerships to fully leverage growth opportunities both in the Business-to-Consumer (B2C) and Business-to-Business (B2B) market.”
B2C revenue growth rates have stagnated due to increasing price competition, with a significant surge in data demand, driven mainly by video content consumption and by the proliferation of new high-definition devices. Traditional telecom services are being replaced by over-the-top (OTT) platforms, such as VoIP for voice calls, chat apps for messaging and video streaming for IPTV.
“Additionally, simplified tariffs, regulatory changes and ample infrastructure have boosted the wholesale market and lowered entry barriers for low-cost alternative operators, leading to the commoditization of operators' offerings,” he adds.
Transforming B2B telecom with IoT
The B2B market, on the other hand, is transforming significantly due to the adoption of the IoT. Traditional telecom services are being replaced by over-the-top (OTT) software solutions like unified communications and SD-WANs. This shift is expected to drive demand as companies implement their digitalisation strategies.
“To sustain growth, telecom companies must innovate, collaborate, forge partnerships and strategically invest in technologies to develop integrated solutions. Effective monetisation strategies, offering personalised premium data plans and value-added services are essential to generate additional revenue and enhance profitability,” says Arvind.
On the other hand, the shift towards 5G, fibre and Open RAN technologies presents opportunities for enhanced service offerings and operational efficiencies. Additionally, leveraging advanced analytics and automation is crucial for streamlining network management and boosting performance.
“By targeting these strategic areas, telecom companies can significantly increase revenue, cultivate deeper customer loyalty and establish a robust foundation for sustained success in a dynamic and rapidly evolving market,” he finishes.
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