Top threats facing telecommunications companies highlighted by new report

Published: Friday, 11 September 2020 08:16

While telcos have largely risen to the challenge of withstanding a surge in network demand during the COVID-19 pandemic, pressure to maintain infrastructure resilience and expand reach emerges as the most pressing sector challenge. This is according to the EY report, ‘Top 10 risks in telecommunications 2020’, which combines EY industry insights and consumer survey data to shortlist the most urgent threats facing today’s telcos.

With initial pandemic lockdowns across the globe triggering traffic spikes of up to 70 percent, telcos have successfully assumed an elevated societal role as connectivity providers. But with 42 percent of UK consumers stating that telcos should focus resources on maintaining broadband quality and 32 percent of US consumers citing concerns about home Internet reliability, speed and connection since the pandemic began, telcos need to do more to sustain positive customer perception about the service they receive.

Tom Loozen, EY Global Telecommunications Leader, says: “Overall, networks have withstood a sharp increase in home working, entertainment and schooling during the pandemic and telcos have commanded favorable customer opinion as a result. However, revenues are set to decline across most product categories and telcos must not become complacent. The journey to recovery will require new thinking and competencies, shifting the customer promise from speed to reliability, so telcos can thrive in the ‘new normal.’”

The inability to scale digitization initiatives ranks second on the risk radar. The COVID-19 pandemic is accelerating this drive, with 78 percent of telcos now either re-evaluating or adapting the speed of automation and digital transformation programs. Despite this reappraisal, historical barriers remain – including inadequate skills in analytics and AI.

Failure to mitigate escalating geopolitical and competitive disruption lists ninth in the ranking and is a theme that underpins all of the top 10 risks. With network equipment supply chains increasingly being disrupted by global trade forces, there are concerns that 5G rollouts could be delayed. Meanwhile, technology players are moving to exert more control over value chains and new mobile entrants continue to drive down pricing to gain market share.

Adrian Baschnonga, EY Global Telecommunications Lead Analyst, says:
“We are facing a perfect storm of geopolitical upheaval, with the COVID-19 crisis dampening global trade amid intensifying competition around 5G technology and ongoing trade disputes. As a result, country-level operating environments are diverging, and it is becoming ever more essential that telcos adopt agile risk frameworks that can adapt to specific market scenarios.”

Building trust is now mission critical

Ranked fifth are risks associated with changing imperatives in privacy, security and trust. Less than half (47 percent) of UK consumers feel they are in control of their online data, and reports of privacy issues relating to contact tracing apps and video call platforms have heightened concerns during the pandemic. The report highlights that the sector typically underestimates the link between trust and revenue growth, with nearly half (46 percent) of telcos perceiving cyber security as either compliance- or crisis-driven rather than as a proactive endeavor.

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