This year will be foundational for 5G, but legacy telecom systems and the need for new revenue sources pose potential stumbling blocks for the industry, according to Deloitte’s annual report on the outlook for the telecommunications industry.
Craig Wigginton, global telecommunications sector leader for Deloitte and author of the report, said that revenue growth for carriers “is of critical importance” in 2018.
“Revenue yield on data services (revenue per bit consumed) continues to decline as consumers use more and more data, with static or declining monthly bills,” Wigginton wrote. “Hence it is critical to identify rapid investment opportunities across the telecom portfolio—including 5G, IoT, and cross-industry partnerships (such as mHealth and mPayments).”
Wigginton also said that he expects to see telecom carriers continue to make inroads in the media space this year, either through more mergers and acquisitions or through partnerships.
“Mobile content and video are some of most significant consumer use cases for 5G, so expansion into the content arena is only natural for carriers seeking growth,” he said, adding that he expects to also see continued M&A activity in infrastructure such as fiber and towers. According to a 2017 Deloitte report, the company estimated that a fourfold increase in domestic mobile data traffic will drive the need for between $130 billion to $150 billion in fiber investment over the next five to seven years in order to adequately support broadband, rural coverage and wireless network densification.
Wigginton also pointed out that legacy telecom IT systems will have to keep up as operators push into new areas.
“These legacy IT systems are key but costly assets for any telecommunications provider and are the focus of far-reaching digital transformation efforts designed to improve customer service, streamline processes, consolidate ERP/financial systems, and so on,” Wigginton said. He went on to note that Deloitte has predicted that 2018 will be a period of “invisible innovation” with a focus on software and internal hardware capabilities such as artificial intelligence and augmented and virtual reality; more, and more capable, sensors; and better and faster chipsets.
Watch a video synopsis of Deloitte’s telecom industry outlook with Wigginton below: