Top 10 risks in telecommunications revisited

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Telecommunications faces a series of burgeoning challenges, whether in the form of new waves of disruptive innovation or shifting regulatory demands. Despite this, the prognosis for the industry is improving, as operators widen their solution sets and take aim at a new wave of growth opportunities heralded by the Internet of Things.

Here is our list of the most critical risk issues facing the telecommunications sector.

1

Failure to realize new roles in evolving industry ecosystems.

As operators consider new growth opportunities in a widening digital society, they face increasing pressure to occupy new value chain roles that can help them cement customer relationships and drive incremental revenue growth. In a world where disruption is the new normal, operators should consider new ways of emulating the success of over-the-top (OTT) services while also making the most of new ecosystems supporting enterprise customers and Internet of Things services.

2

Lack of regulatory certainty on new market structures.

The regulatory and compliance burden facing operators is changing rapidly. Regulatory attitudes toward consolidation remain a key factor as operators consider more rational market structures that can support long-term network investment. At the same time, regulatory frameworks themselves are shifting as convergence and disruption undermine traditional market and service provider definitions. Wider policy initiatives in data protection and the digital society contain both opportunities and challenges for operators.

3

Ignoring new imperatives in privacy and security.

Data privacy and security are now mainstream issues for consumers and businesses the world over. Confidence in telecommunications and technology companies remains under threat, yet operators have long-standing relationships with their customers that provide a solid platform for building higher levels of digital trust. At the same time, shifting compliance burdens on data protection and retention mean operators must have clear viewpoints on their role as custodians of customer data.

4

Failure to improve organizational agility.

Operators’ ability to respond to new customer needs has never been under more scrutiny. In an age when customer demand scenarios are increasingly shaped by over-the-top (OTT) providers and web giants, operators are under pressure to shorten time to market for new services while engaging more proactively with partners and suppliers. Progress demands the transformation of both people and processes, with a focus on improving internal collaboration and overhauling legacy IT systems to create more customer-centric organizations.

5

Lack of data integrity to drive growth and efficiency.

Operators have a wealth of customer and network data at their disposal that can drive better internal decision-making while also supporting transformation of the customer experience. However, the fragmentation of data sets, coupled with the multiplicity of use cases for big data analytics, means that many carriers’ strategies remain at a nascent stage. To maximize their data assets, operators should consider analytics scenarios well beyond churn reduction while also exploring how third parties can effectively share data.

6

Insufficient performance measurement to drive execution.

As the digital ecosystem expands in new ways, many operators have strategies in place that are designed to take advantage of growth opportunities while optimizing operational efficiencies. However, successful execution in a fast-changing marketplace requires new concepts of performance measurement that marry appropriate objectives and incentives with better internal and external metrics. In this light, there is plenty of room for improvement if operators are to make the most of their transformation journeys.
 

7

Failure to understand what customers value.

Customer experience management is the leading strategic priority for senior management in the telecommunications industry. Efforts to personalize services and improve omni-channel customer support are vital to all players, but keeping pace with changing customer attitudes requires a more sophisticated segmentation of user needs backed by simple and well-communicated propositions. While operators are making progress, competition for share of wallet continues to rise.
 

8

Inability to extract value from network assets.

Capital expenditure burdens on operators remain pronounced. While rollout of LTE and superfast broadband is well underway, operators continue to widen coverage areas and raise headline data speeds. Adoption of new technologies such as vectoring is helping to extend the life of copper, yet the Internet of Things signals a new mix of infrastructures, forcing carriers to reconsider their technology road maps. In mobile, network-sharing and tower-outsourcing will remain critical at a time when technology cycles are shortening.
 

9

Poorly defined inorganic growth agenda.

The telecommunications industry globally is witnessing elevated levels of M&A activity as operators pursue new economies of scale through in-market consolidation, which is also helping them to broaden their service offerings as bundles of fixed, mobile and TV services become the norm. At the same time, deals to acquire new capabilities in areas such as IT services and the Internet of Things are also becoming more important. Partnerships are also being overhauled as operators seek new ways of working with OTT players while dealing more closely with their operator peers. Striking the right balance between M&A and partnerships has never been more important.
 

10

Failure to adopt new routes to innovation.

As operators reposition themselves to new sources of value creation, they must explore new routes to innovation. Open innovation agendas require ever more cooperation with other ecosystem actors, while new innovation capabilities must incorporate greater agility if operators are to remain proactive in the face of continuing disruption. Ultimately, a change in mindset is essential — one that prizes new types of organizational DNA and ecosystem engagement.

Assessment of operator risk mitigation strategies

EY - Assessment of operator risk mitigation strategies

Read our entire report Top 10 risks in telecommunications

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