Impact of COVID-19 on The Telecommunication Industry

As the global economy grappled with the outbreak and impact of the Covid-19 pandemic, `work from home’, and `social distancing’ became the new buzzwords of the business landscape. The telecommunication industry had a big role to play in facilitating the shift to a remote working culture – as video conferencing and other communication technologies emerged as key enablers for smooth business operations.

As countries across the world imposed mobility restrictions and with people confined round-the-clock to their homes, data consumption touched an all-time high. With an increased demand for domestic data consumption, telecom companies became increasingly focused on improving their network resiliency. The pandemic, therefore, had a huge impact on their planned investments, especially in the 5G arena.

It would be apt to say that the telecom industry emerged as the golden child of the pandemic-triggered economic slowdown. However, the increasing demand for communication services, along with the restrictions that the pandemic imposed threw a new set of challenges for the players in this sector.

How the Pandemic Impacted the Global Telecom Sector

Let us understand how the pandemic impacted the telecom sector as a whole:

• Network usage and strength

Network usage touched an all-time high during the pandemic, and there was an exponential rise in voice and video calls made across the world. Providing users with a smooth and reliable network experience – while catering to a rise in demand for data services – became an ongoing challenge and focus for telecom companies ever since the pandemic started. It also led to collaborations which one would have not even dreamt of. For instance, telecom operators across the US began collaborating with each other to increase capacity by borrowing each other’s spectrum.

• Impact on consumer dynamics

Telecom giants across the world took stringent measures to provide better user experiences and to provide network access to people in a wider environment. To facilitate smooth work from home experiences, telecom operators deployed networking tools at attractive economical plans. For instance, some telecom companies in the UK scaled up their capacity to include free unlimited minutes in many of their subscription plans.

During the pandemic, seamless customer service became one of the most important focus areas for telecom providers. As physical stores continue to remain shut, telecom companies need to up their game when it comes to marketing efforts, in order to reach out to homebound consumers. Innovation and thinking out of the box became the need of the hour.

• Other industries affected by the pandemic had a ripple effect on the telecom sector

Though there was a surge in demand for telecom services, the telecom industry itself is dependent on several other industries for its functioning. These industries, in turn, were adversely affected by the global lockdowns and this impacted the functioning of the telecom sector. Let us delve into the related sectors that were impacted by the global shutdowns:

–        Hardware and equipment manufacturing sector

A major disruption occurred in the global manufacturing supply chain, which, in turn, affected the availability of spare parts for handsets and network equipment manufacturers. In some cases, it even impacted the availability of handsets and equipment and caused costs to go up. Realizing the catastrophic effect this could have on the telecom sector, governments across the world permitted manufacturers to operate even in red zones.

–        Effect on Sim card purchases

Global lockdown restricted the movement of people. As a result, there was a sharp dip in the purchase of new Sim cards as well as on 4G migrations. This eventually impacted the revenue of cellular service providers. The pandemic and the subsequent lockdown delayed the 5G spectrum auctions and their consequent rollout as network operators were focused on meeting increased demand and ensuring the quality of services was not impacted. The restrictions on manufacturing and the mobility of goods also had an impact on the availability of 5G enabled handsets.

• Telecom played a key role in disseminating Covid-related information

The telecom sector was instrumental in helping governments track infected individuals and curb the spread of the virus. Countries like the US, China, and India have a vast landscape and a highly mobile population. These countries were able to contain the spread of the virus with the help of data communication and contact tracing. Many other countries also adopted a similar approach.

However, the usage of cellular data to track and control the spread of the virus is already raising concerns about data privacy in the future.

• Financial implications

Though the demand for telecommunication and other peripheral services remained at an all-time high during the pandemic, small players in the industry may face cash flow issues in the future. For instance, telecom companies that collaborated with sports-centric media organizations saw their revenues being hit as all sporting events were called off during the Covid-related lockdowns.

The big giants of the telecom industry are also reassessing their future investment plans. They are restructuring their network infrastructure and investment portfolio and aggressively investing in 5G technology. When it comes to speed and reliability, 5G is clearly emerging as the future of communications. The industry is witnessing collaborations at a scale that have never been seen before. Companies are focusing on technology mergers and acquisitions in order to secure a larger customer base by leveraging each other’s strengths.

How the Telecom Sector Emerged as the Poster Child of the Pandemic

• The telecommunication sector also stepped up to meet the challenges of the call center industry, as contact center companies moved their operations to remote working setups within a short span of time. Softphones and VoIP technology played a key role in enabling this transition to happen smoothly. Cloud-based VoIP mobile dialers helped call centers to build a strategic and multi-faceted workforce – be it in a single location, multiple centers, or with work from home agents. Also with real-time messaging, and collaboration tools, VoIP-powered softphone technology allowed customers to reach agents across locations and time zones. They facilitated communication as would happen in a traditional office while providing data security and flexibility.

• The telecom sector has become an integral instrument through which the modern world stays connected with each other. With the rise of a remote work culture, communication technologies like video conferencing and file sharing emerged as the chief instruments used by global workforces to collaborate and work together on the same projects. However, disparities in the reach of the sector also brought to fore the divide between the digital and non-digital world.

• The public health sector benefited the most by using the services of the telecom industry amidst the pandemic. Telecom operators stepped up to the global health challenge and supported the health sector’s transition to digital platforms by partnering with organizations to create virtual clinics and providing online health consultations. Digitization initiatives that once took months were mobilized and operationalized in weeks and even days.

• Since all work, socializing, and family interactions were happening virtually, people did not need just any broadband connection. What they wanted was a reliable, viable, robust, and resilient broadband connection that transmitted data and enabled voice and video calls to happen seamlessly. Consumers were willing to pay more for fiber-optic connections. This proved to be a great opportunity for telecom companies to convince their existing subscribers to upgrade from old broadband connections and move to 5G. These potential consumers were also reportedly ready to pay a premium to enjoy the speed and seamlessness of 5G services.

• Telecom operators have an opportunity to provide an expanded set of services with higher bandwidth to various sectors such as entertainment services, educational services, digital-business building, and support retail customers to sell online.

• In India, telecom operators partnered with the government and were instrumental in educating people and creating awareness about COVID-19 related protocols and social distancing norms. They also played a critical role in the government’s efforts to conduct contact tracing and, thus, combat the pandemic.

Future Challenges for the Telecom Sector

Some glaring future concerns that industry leaders foresee and are preparing to handle include the reliability of networks, the ideal time to invest in 5G technology, the risks associated with 5G, and a reassessment of cost structures to offset the revenue decline caused due to the pandemic.

Some other concerns that are projected to arise in the near future are to ensure stellar customer service and positive user experiences despite the huge pressures that telecom companies face on their network infrastructure. With a change in the data privacy framework, the long-term privacy implications and consumer policies will also need to be addressed on a priority basis.

Global Trends in Telecom Sector

What are the projected trends of the telecom sector in the near future? Let us look at what the surveys say:

• Some of the biggest players in the telecom sector, including AT&T, Apple, Verizon Communications Inc., China Mobile Ltd, and Samsung anticipate staggering growth for the sector. They estimate that the global telecom market will grow from $2555 billion in 2020 to $2713.53 billion in 2021 at a CAGR of 6.2%.

• According to industry experts as well as recent surveys, the global telecom market value will be worth $3461.03 billion in 2025 at a CAGR of 6%.

• Asia Pacific emerged as the largest region in the global telecom market, accounting for 34% of the market in 2020.

• North America came a close second with 32% of the global telecom market. Africa was the smallest region in the global telecom market in 2020.

• Internet TV gained immense popularity in both developed and developing countries because of their competitive pricing and with people spending most of their time at home.

• This phenomenal growth in the telecom sector is being attributed to businesses rearranging their operations due to the impact of Covid-19. The operations of all businesses were disrupted due to containment measures, restrictive movements, social distancing, and abrupt closure of all commercial activities.

The Way Forward 

Despite the challenges and the setbacks that the telecom sector and its related industries faced during the pandemic, the general sentiment is that telecom was one of the few sectors that remained unscathed as several other industries like travel and airlines took a severe beating during the pandemic. Businesses, political leaders, businesses, and all stakeholders are now cognizant of the importance of these services, especially in the current scenario when there is a pressing need to make global communication a seamless process. Steps are being taken to resolve both short-term and long-term issues faced by the telecom sector. Even in the face of adversity, increased demand for services helped offset a dip in revenues.

The high-end subscribers and people who were working from home needed a strong and reliable telecom network to work without any glitches. So even though telecom companies lost their market share of Sim card subscribers, they saw a sharp rise in demand for super-fast internet connectivity and broadband connections. 

Post the pandemic, work, entertainment, education, and even socializing went virtual and remote. And it was all delivered to users by telecom companies.

Telecom companies have assisted the government with outreach and analytics to spread awareness about COVID-19. They have been instrumental in providing anonymized data to the government for analytics, which helped them develop effective plans for combating the pandemic.  

Conclusion

Despite the challenges faced by the telecom sector, it has emerged as a rock-solid support system for several industries like IT and call centers. Telecom companies have stepped up to the challenges thrown by the pandemic and the subsequent global lockdowns and were instrumental in helping global governments devise the right strategies to combat the situation and educate people.