2019 Telecommunications Industry Outlook - 5G ushers in a new world of opportunities
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2019 Telecommunications Industry Outlook 5G ushers in a new world Technology, Media & of opportunities Telecommunications
2019 Telecommunications Industry Outlook | 5G ushers in a new world of opportunities Interview with Mic Locker In 2019, fifth-generation (5G) wireless technologies are virtually certain to dominate the thinking of providers across the telecommunications industry. According to Mic Locker, managing director in Deloitte Consulting LLP’s Technology, Media & Telecommunications (TMT) industry practice, it’s critical that as telecommunications companies make technology investments, they also continue to focus on devising business models for monetizing 5G and other opportunities. In 2019, telecom providers should also look to take advantage of voice-assisted technologies and IoT, including the connected car and home.
2019 Telecommunications Industry Outlook | 5G ushers in a new world of opportunities
Where do you see opportunities
for growth in 2019?
2019 will present several opportunities for providers to bolster Once available, 5G is expected to create significant business
current revenue sources—or to create entirely new revenue opportunities for telecom companies,3 helping them gain revenue
streams. Many of those opportunities will arise from changing in the fixed broadband market and business-to-business (B2B)
market conditions and consumer preferences—and from the first opportunities such as smart cities and Internet of Things (IoT). It
large-scale rollouts of 5G technologies, which are expected to create will also provide the ideal environment for telecommunications
significant business opportunities for telecom companies. providers to employ “network slicing” to customize their offerings.4
In the context of 5G, this will enable sharing of a given physical
Even before the rollout of the 5G, there is work to be done.
network to run IoT, mobile broadband, and very low-latency
Consumers continue to display an insatiable appetite for mobile
applications—including many connected-car and connected-home
data. With more data-heavy applications securing their place
functions that have the potential to create entirely new revenue
in consumers’ daily lives, we only expect this trend to continue.
sources for providers in 2019.5
Consumers demand higher data limits, and they opt in for
unlimited data plans. According to the US edition of Deloitte’s 2018 Two other key revenue-generating opportunities for telecom
Global mobile consumer survey, 37 percent of respondents now have providers will be mHealth and mPayments. In the area of mHealth,
unlimited data plans—up from 25 percent in 2017.1 We now see operators can monetize services targeted to the growing number
providers offering lower prices for these plans as well as a variety of of subscribers who have adopted health care–centric wearables
bundled services, decreasing the average revenue per user (ARPU). to, for example, help them ensure they’re taking the proper dosages
To balance the competitive landscape and possibly stabilize pricing, of medications. In the world of mPayments, on the other hand,
telecom companies will likely be looking to expand their boundaries mobile operators can play a different role: as an integrator for
and search for new opportunities. devices, applications, methods of mobile payment, and customer
identity management. One study estimated that this strategy could
One of the main opportunities could come from consolidations and
help telecommunications providers increase their mobile payments
partnerships, especially in the areas of cable and content. Today, we
revenue at least fourfold by 2022.6
observe a high number of consumers who prefer video streaming
services over cable subscriptions. Our Digital media trends survey
revealed that 55 percent of US households now subscribe to
paid video streaming services while pay-TV penetration fell to
63 percent—down from 75 percent the previous year.2
In response, cable companies are looking to augment their pay-TV
business with communications services—and by extending their
programming distributions beyond fixed lines. Changing dynamics
and competitive pressures from both sides can encourage
telecommunications providers to consider M&A deals to integrate
content and media into their offerings. Partnerships are also likely
to increase as providers attempt to accelerate development of
new business models and services based on 5G technology.
32019 Telecommunications Industry Outlook | 5G ushers in a new world of opportunities What should businesses be mindful of as they plan for growth? While the opportunities highlighted in the previous section could Another top-of-mind issue for providers in 2019 will be regulations present telecom providers with a potentially massive upside, they pertaining to “net neutrality.” Complicating matters is that two will require significant investments in terms of building and delivering states—California and Washington—have already passed laws that services. In addition to network investments, telecoms should challenge the US Federal Communication Commission’s December continue to focus on creating business efficiencies and streamlining 2017 repeal of net neutrality rules that prohibited broadband processes. In the case of IoT, for example, consider the sheer providers from blocking websites or charging for higher-quality number of devices that will be added to various networks. Most service or content.8 The net neutrality story will undoubtedly telecommunications providers’ billing systems, for example, aren’t continue to develop over the coming year. equipped to support that workload today. Telecommunications providers also should start thinking about how they’re going to monetize their investments in new technologies. What are the specific business and revenue models? Who are the customers, and which products and services will be targeted to them? For example, a retail chain might have a goal of improving customer experience by using an augmented/virtual reality (AR/VR) application enabled by 5G and small cells. In many cases, the business model and revenue model could be entirely new. Of course, security and privacy will remain critical issues for providers in 2019—especially given consumers’ growing anxiety about the sharing and storage of their personal data by third parties. According to Deloitte’s 2018 Digital media trends survey, 73 percent of all US consumers indicated they were concerned about sharing their personal data online and the potential for identify theft. In addition, 69 percent believe companies are not doing everything they can to protect consumers’ personal data. However, 73 percent said they would be more comfortable sharing their data if they had some visibility and control.7 The opportunity for telecommunications providers, therefore, is to offer visibility and control of personal data in exchange for personalized services and advertising. 4
2019 Telecommunications Industry Outlook | 5G ushers in a new world of opportunities
What do you see
emerging in the sector?
Not surprisingly, 5G has been a recurring theme throughout this technology also offers several other advantages that can benefit
2019 outlook for the telecommunications industry. And, it appears 5G networks, including the enablement of secure, error-free,
the market is ready to embrace 5G. According to Deloitte’s 2018 peer-to-peer connectivity for thousands of IoT devices with cost-
Global mobile consumer survey, US edition, 60 percent of respondents efficient self-managed networks. It can also power a new generation
indicated that 5G is now “important” to them. Among those who use of access technology selection mechanisms for 5G networks, such as
their smartphones to watch video content weekly, that interest level sharing of faster and regulated local connectivity for reliable service
rises above 80 percent.9 to device; enablement of local connection prices based on local
supply and demand; and the creation of new business models for
5G is also poised to unleash the full potential of both AR and VR
determining the ideal capability for nonprioritized traffic.11 Telecoms
in the coming year. To feel seamless and deliver value, AR/VR
can accelerate their progress toward 5G by using blockchain to
experiences require the extensive bandwidth and low latency
autonomously monitor and regulate their networks.
that only 5G can provide. These capabilities will create a wide range
of opportunities for telecommunications providers and customers—
everything from autonomous vehicles and virtual training to remote
health care and innovative classroom learning applications. Another
intriguing opportunity is e-commerce, where AR/VR applications
can foster compelling online experiences that could help retailers
close more sales.
Another key emerging trend is consumers’ increasing reliance
on voice assistants—either through their smartphones or
via voice-assisted speakers. In many ways, voice is becoming
the new technology interface for consumers. According to Deloitte’s
2018 Global mobile consumer survey, US edition, nearly two-thirds of
respondents use a voice assistant on their smartphones—a
20 percent year-over-year increase. However, when it comes to
frequent usage of voice assistants, voice-assisted speakers are the
most prominent platform: 69 percent of respondents use them
weekly and 47 percent daily. Among connected-home devices,
penetration of voice-assisted speakers almost doubled over
the past year.
2019 could also see the launch of a low earth orbit (LEO) satellite
system from an LEO satellite provider to deliver improved internet
connectivity to rural users and remote commercial operations.
LEO satellites have the potential to deliver faster connections and
dramatically lower latency—capabilities that are especially critical
in remote locations where data need to be processed immediately,
at the source (rather than waiting for processing on a centralized
data server). Potential target customers are cruise ships, military
installations, rural schools, far-flung oil and gas operations, and
consumers frustrated with the poor performance of their current
satellite internet service.
One final technology to watch in 2019 is blockchain. Blockchain
should be on every telecommunications provider’s radar. Telecoms
can harness blockchain technology to simplify billing systems,
cut down revenue leakage from roaming and identity fraud, and
automate settlements with smart contracts and tokens.10 The
52019 Telecommunications Industry Outlook | 5G ushers in a new world of opportunities
Endnotes
1. Deloitte, Global mobile consumer survey, US edition, https://www2.deloitte.com/us/en/pages/technology-media-and-telecommunications/articles/global-mobile-
consumer-survey-us-edition.html, accessed January 22, 2019.
2. Deloitte, Digital media trends survey, 12th edition, https://www2.deloitte.com/insights/us/en/industry/technology/digital-media-trends-consumption-habits-survey.html,
accessed January 22, 2019.
3. “State of 5G 2017 & beyond: Cradlepoint business intelligence report,” Cradlepoint, 2017, http://digitalzonepromote.com/cradlepoint14/, accessed January 22, 2019.
4. Juan Pedro Tomás, “Understanding network slicing, a key technology for 5G,” RCR Wireless News, January 6, 2017, https://www.rcrwireless.com/20170106/internet-of-
things/network-slicing-5g-tag23-tag99.
5. Deloitte, Global mobile consumer survey, US edition.
6. Andy McDonald, “Telcos have a unique opportunity to drive mobile payments,” ACI Universal Payments, February 28, 2018, https://www.aciworldwide.com/insights/
expert-view/2018/february/telcos-have-a-unique-opportunity-to-drive-mobile-payments.
7. Deloitte, Digital media trends survey, 12th edition.
8. Cecilia Kang, “F.C.C. repeals net neutrality rules,” New York Times, December 14, 2017, https://www.nytimes.com/2017/12/14/technology/net-neutrality-repeal-vote.html;
Ross Benes, “What’s next for net neutrality?,” eMarketer, September 6, 2018, https://www.emarketer.com/content/what-s-next-for-net-neutrality?ecid=NL1007.
9. Deloitte, Global mobile consumer survey, US edition.
10. Chris Arkenberg, Nakul Lele, Jeff Loucks, and Karthik Ramachandran, “How can telecom, media, and entertainment find the value in blockchain?,”
Deloitte Insights, August 27, 2018, https://www2.deloitte.com/insights/us/en/industry/telecommunications/blockchain-telecom-media-entertainment.html.
11. Arun Babu, Ben Davis, and Thys Bruwer, Blockchain @ Telco, Monitor Deloitte and Blockchain Institute, 2016, https://www2.deloitte.com/content/dam/Deloitte/za/
Documents/technology-media-telecommunications/za_TMT_Blockchain_TelCo.pdf, accessed January 22, 2019.2019 Technology Industry Outlook | Cloud and AI advances can fuel agility and innovation
This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication. About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the “Deloitte” name in the United States and their respective affiliates. Certain services may not be available to attest clients under the rules and regulations of public accounting. Please see www.deloitte.com/about to learn more about our global network of member firms. Copyright © 2019 Deloitte Development LLC. All rights reserved.
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