The telecom industry can look forward with optimism to the year ahead, due primarily to healthy demand for mobility and data services.
For telecom companies with an ear toward consumers and an eye for innovation, 2013 may bring more opportunities than challenges, according to Craig Wigginton, vice chairman and U.S. Telecommunications leader for Deloitte & Touche LLP.
What are the key issues facing the telecom industry in 2013?
Wigginton: A dramatic uptick in data consumption should translate into growth opportunities for telecom companies in 2013. For an increasing number of people, mobility is now fully integrated into their daily lives, including at their workplaces. Moreover, consumers are starting to see beyond the monthly bill and derive more value from the features and applications on their devices.
Operators are rolling out fourth generation (4G) networks, and complementary technologies are further enhancing broadband. Meanwhile, a steady stream of new devices and services capable of exploiting that bandwidth will come online, including many in vertical markets, especially banking, mobile payments, automotive telematics, and health care.
Among the near-term challenges for telecom providers may be spectrum availability and the continued hearty capital requirements needed to build, enhance, or upgrade networks. The projected increase in data usage will outpace the technological advances of 4G, potentially resulting in a spectrum shortage as early as 2014. Innovation should continue, but telecom companies will need technical solutions to overcome spectrum constraints, while intensifying pressure on the government to unlock more spectrum.
We also expect continued consolidation in the marketplace, driven primarily by the need for scale, spectrum positioning, and vertical market development.
What are some steps telecom companies can take to manage through the current climate of economic uncertainty?
Economic uncertainty is not expected to be a significant factor for mobile in 2013. A few years ago, there was concern about whether the slow economy would push consumers to drop their mobile devices, yet this has proven not to be the case at various demographic levels and across a broad range of the mobile marketplace. In fact, it is estimated that in 2012 the U.S. mobile ecosystem generated economic activity of nearly $200 billion—the equivalent of one of the 50 largest economies in the world.
Companies need to remain focused on marketplace growth and innovation in other strategic areas, particularly vertical industries and the cloud. The expanding array of data services provides tremendous value to consumers, in turn creating value across the mobile ecosystem. As the consumer market matures, “connected things” and enterprise services offer new growth opportunities. Meanwhile, to support their customer bases, telecom companies will need to revisit core fundamentals—asset efficiency, cost control, and service improvement—to preserve shareholder value.
As noted, companies will have to decide which technological solutions —smaller cell sites, leveraging non-licensed spectrum, spectrum sharing, etc.—to apply to alleviate spectrum constraints in the short term while awaiting a long-term policy fix.
What are high-performing companies doing to foster innovation and growth?
The overall evolution of mobile networks provides ongoing opportunities for carriers, equipment manufacturers, handset/device manufacturers and others in the industry. Incrementally faster network speeds and sophisticated devices are paving the way for even more innovation.
Specifically, we anticipate more activity in all of the verticals (e.g., wireless carriers getting involved in telematics). In some cases, this means partnering and joint ventures; in others, acquisition.
In nascent markets such as mHealth, mBanking and mCommerce, telecom companies that have the capabilities are building targeted services and applications while leveraging the apps and content provider ecosystems. The opportunities are wide open driven by one question: What do consumers want? For example, in mHealth, continuous monitoring has potential for people with chronic diseases (e.g., diabetics who need to monitor blood sugar levels) and also as a wellness tool for healthy individuals.
While current and emerging services provide tremendous value, participating companies must maintain consumer confidence, in particular by addressing ongoing privacy and security concerns.
With the evolving notion of “bring your own device” (BYOD) and the changing business environment enabled by mobile and other technologies, the enterprise segment is also ripe for development. Finally, the cloud and monetizing data are two big opportunities for telecom.