- The telecommunications industry has formed a crucial pillar of the COVID-19 response.
- Whether the high demand for TMT companies is a short-term spike, a ‘new normal’ or a longer-term goal, depends on how recovery and the new normal plays out.
- Where next for telecommunications? outlines the forces changing the industry and potential responses telecoms providers can take.
Demand for internet connectivity surged during the first months of response to COVID-19. Forced to isolate, work or learn from home, Australians, like those in other countries, found their use of the internet on the up. In response, NBN Co boosted nbn network capacity by 40 percent for internet providers,1 while the Australian Government asked media streaming platforms such as Netflix and Stan to reduce the amount of data needed to stream its programs to help reduce network load.2
Amid the unprecedented change brought by the pandemic, the telecommunications, media and technology (TMT) industries have proven pivotal. While many sectors have had little recourse but to wait out consumer changes and the effects of isolation and lockdowns, the TMT industry has had to step up, playing a critical role in helping people and businesses navigate the crisis.
As PwC Australia’s paper, Where next for telecommunications? outlines, TMT organisations have played a critical role in how society and government has responded to the pandemic. They have helped to develop and test COVID-19 related safety technology, platforms to stay connected with work and family, and content for people to consume while locked down. Critically, they have provided access to the news and health advice necessary to help keep people safe
But as we move on from the shock of COVID-19 towards management and what could potentially be a long road to recovery, where do telcos go next?
Where next? Key findings
Below are some highlights of the findings in the full Where next? report.
- Nine forces changing the industry — PwC has identified nine forces of change (page 3 of the report PDF) that could shape the post–COVID-19 recovery phase of the Australian telecommunications industry. One key force is accelerated digitisation. To control costs, and be responsive to customers’ requirements in an uncertain environment, network operators need to accelerate their digitisation plans. While many had already started pre-pandemic, those plans need to be completed quickly. This means addressing challenges such as the use of legacy equipment and complexity of technology stacks. Business continuity issues may shift resources away from existing transformation programs, however digitisation is crucial to future growth and with disruptions and cyber threats on the rise, of critical importance.
- The economic implications of COVID-19 on TMT — As part of our Australia Rebooted series, we modelled two different recovery scenarios for the nation. Depending on which road the country goes down, each will have different impacts on the telecommunications industry. A Fortress Australia approach — where borders are strong and decisions made ‘nation-first’ — would likely result in increased regulation and government intervention for TMT, whereas an Enterprise Australia road to recovery — where private industry carries the burden of driving growth out of the crisis — could instead see telecommunications as the lynchpin in enabling corporate Australia to boost productivity. (see page 6 for a full list of implications in each scenario).
- Potential consumer revenue opportunities — A surge in demand already present from people living and working from home means long term changes to consumption patterns could be on the cards (see page 7). While fixed broadband, mobile broadband and fixed wireless access are likely areas of usage growth, new growth opportunities for telecom operators may lie in creating robust connectivity products that enable work from home and multi-screen entertainment to work more smoothly, as well as greater degrees of home automation. If the reality of a prolonged downturn causes the surge to subside, prepaid mobile may also grow as price-sensitive consumers look to cut costs.
- Possible business and wholesale growth areas — The demand from employees working from home may lead to revenue growth in IaaS/SaaS, managed services and unified comms (page 8) if this is embraced as a long term option for many businesses. Business Innovation and consumer demand for content may drive growth in International IP and data. Telecommunications operators are also presented with a great opportunity to renew their product and service offerings to business to more closely couple their network skills with ICT offerings. For example, distributed cloud and security that enable businesses to connect employees now dispersed across many locations, rather than a unitary HQ as in the past.
- How to respond to uncertainty — There will be many trade-offs for businesses making strategic choices going forward. For leaders, we’ve identified potential responses for each of the nine forces of change we see. For example, when it comes to changes in consumption behaviour, telecommunications companies should look to respond to the demand to working from home by providing data solutions and WFH-friendly pricing plans. (See page 9 for potential responses to all nine issues).
No matter what the future holds, telecommunications operators have a significant role to play in avoiding the creation of a digital divide between our cities and our regions, as well as continuing to build the foundations of access, inclusion and digitisation, while technologies are harnessed to accelerate the economic recovery of Australia for consumers and businesses alike. Considering the different scenarios outlined, being flexible and uplifting underlying digital capability is a priority.