A look at 2022 from the telecom industry perspective

2022 has been a turning point for telecom operators; while looking to deploy fiber or 5G networks, operators have been trying to attend to the supply-demand side. However, the industry's value creation (ROIC-WACC) has been low or, in some cases, negative.

In my conversations with telecom operators, the following five most pressing issues were consistently raised as concerns:

1-    Monetization - from B2B services (SaaS, PaaS, and partnerships) to B2C's FTTR or 5G use cases, I've found large misalignments between the marketing & sales with the CTIO organizations. There's a general hope that APIs will be the next capability that will allow operators to monetize.

2-    Automation - operators heavily depend on OEMs to guide them in their portfolio, and in general, the industry is still years away from closed-loop automation or decision-making capabilities. Some operators are strictly locked-in with some OEMs on this topic and are hopeful to realize large Opex savings in the years to come.

3-    Hyperscalers partnership - Operators are treating hyperscalers as another OEM. Partnerships are limited, and lots of pushback from both sides - big tech and CSPs. In addition, operators' cloud strategies are paper thin and siloed, and very few operators have a clear direction.

4-    Energy costs – energy costs are climbing to the roof, particularly in European telcos. A few operators had excelled in having alternative energy sources. Some Latin American operators have role-model deployments on this topic. Given the current political-economic situation, I expect this topic to escalate for some time in Europe.

5-    Security - Cyber-security and geo-political concerns have been discussed in-depth by the operator's c-suite. Some OEMs have been bridging the gap by opening CAPEX funding opportunities, similar to Chinese OEMs.

Now what to expect of 2023?

Back to my opening statement, telecom operators have not looked at value creation for years, only for cost - and profit - per bit. Comparably, this industry has been close to a utility P/E ratio, and we won't expect revenues to grow through atomic or organic growth. Operators should look for their revenue-generating source in detail: their subscribers.

Subscribers are the revenue generator and don't care how they get their connectivity service: fiber, WiFi 6, or 5G. They care about the lowest cost and most reliable connectivity.

However, telecom subscribers are looking at a few things, especially during high inflation periods: cutting costs.

The second thing subscribers are after is experience. Unfortunately - for telcos - OTTs fully satisfy this space. New XR services and devices are expected to come by the 2023-2025 timeframe, and service experience - including lower latency - will be essential. Can telecom operators facilitate the delivery of these services and tap into additional revenues? If XR services happen, would operators manage to adopt an “As-a-Service” model for their network resources?

One additional comment on subscribers' experiences is based on my personal experience; If I want to change my fixed broadband speed or my cell phone plan, I need to spend 15-30 minutes ON THE PHONE! Why can't this be automated as an example of any existing OTT service?

How can telecom operators tap into new revenue streams in the short term?

As a subscriber, I'd love to have one OTT service broker for one basic fee. Imagine paying US$25 and accessing Netflix, Disney+, and Spotify. I'd sign up for that and bet many would, but that would require operators to start partnering with OTTs and hyperscalers. I mean authentic coopetition models and not only carrier billing as today.

That might be a few ideas to be explored, but operators should start looking at improving their customer experiences and tap into these missed opportunities.