Categories: Tech

Disruptive competition is the top strategic challenge for the telecommunications sector

The FINANCIAL — More than one third (37%) of CTOs and CIOs interviewed by EY see disruptive competition as the single greatest strategic challenge facing the telecommunications sector, according to the report, Digital transformation for 2020 and beyond.

Nearly three out of four survey respondents (74%) place it in their top three challenges, followed by lack of organizational agility (47%) and lack of return on investment 37%). 

Prashant Singhal, EY Global Telecommunications Leader, says:

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“Over-the-top (OTT) communications players such as WhatsApp, Facebook and WeChat have redefined the customer experience in messaging and video services, luring traffic away from telco offerings such as SMS. These trends are playing in response to a market in which consumers and enterprises increasingly see value in multiservice packages, with quad-play and cloud packages driving new opportunities.”

2020 strategic agenda

Operators are focusing investment through 2020 on digital business models and improving the customer experience to address new competition from outside the sector. When asked about their main strategic priorities, 39% of survey respondents identified customer experience as their number one focus area and 61% said it’s one of their top-three initiatives. Digital business models emerged as the biggest strategic priority for 24% of those surveyed and a top-three priority for 71% of respondents.

Asked which digital services offer the best opportunities for incremental revenue growth, the survey respondents cite a wide range of service areas. Operator confidence in Internet of Things (IoT) services is rising, with 31% of respondents viewing smart home as one of the top three drivers of future revenue growth. Meanwhile, 37% see 5G as the network access technology with the greatest impact on the industry over the next five years, the number one answer when respondents were asked about technology trends.

Legacy IT impeding digital transformation

Turning to the obstacles facing operators on their digital transformation journey, legacy IT is seen as the main impediment to transformation — cited by 65% of respondents as a top barrier.

Adrian Baschnonga, EY Global Telecommunications Lead Analyst, says:

“Looking ahead, all players will have to strike a balance between more proactive support of the customer experience and more dynamic business and operating models to thrive in an OTT world. The rise of the software-centric operator, where IT is interwoven in the fabric of the business, will determine the winners and losers.”

 

The FINANCIAL

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