Telecommunications, Media & Technology

11 Trends Defining Telecommunications, Media and Technology in a Digital World

For the past seventy years, the U.S. and western countries have dominated the direction of global standards. From light bulbs to semiconductors, the standards were almost uniformly adopted, and formed the foundations for innovation and interoperability. But now, as technology standards in China and western countries continue to diverge, corporations operating in both markets will need to design for two internets with different data and privacy laws, and standards that are either open or closed. As one example, the United States wrote the standard for 4G. Now China is writing its own standard for 5G, with a multinational partnership creating the 3GPP standard for 5G technologies in parallel (at best) or opposition (more likely). The original intent of 5G was to be a new, open global standard for the internet to connect the world. Although there is a small chance political calculations and U.S.-China relations could radically change, 5G is already dividing nations into pro-U.S. or pro-China factions driven by the need to control national security. Any projections of growth and innovation promised by 5G may be impeded by the U.S.-China dispute.

For more than 20 years, the legacy Big 3 U.S. telcos, AT&T, Verizon and T-Mobile, have owned the telecommunications infrastructure we’ve relied on. The Big 3 are increasingly being disrupted by tech companies such as Amazon, Facebook, Google and Space X. The top tech companies already own much of the infrastructure carrying data and content people consume. They’ve started to sell internet access and mobile services while leveraging a combination of public networks and the mobile virtual network operator (MVNO) model. Google Fiber and Space X’s Starlink are only two examples of how Big Tech has the resources to compete long-term. The MVNO model that’s allowing the Big 3 to remain gatekeepers of telco infrastructure isn’t going to remain a digital moat much longer. Rakuten is one company already proving this with a fully cloud-based and fully virtual network architecture as it looks at entering the U.S. market and could compete with extremely competitive price points. Albeit, new regulations and trust busting on Big Tech may temporarily hamper some of these companies and create opportunities for the Big 3. However, emerging technology will continue to increase the pace of disruption among telcos.

Major telcos have seen low churn rates so far in 2021, which amplify the impact of add or losses of customers, especially individual post-paid accounts. Retaining customers is key to profitability for telcos as the cost of acquiring customers is about five times the monthly average revenue per customer. Even a one to two percent churn rate costs telcos millions of dollars in revenue. Data is the most important investment telcos can make in limiting churn and growing loyalty. Signals and patterns to predict churn are embedded in both first and third-party customer data, and telcos need to develop AI and big data-driven solutions to proactively identify and handle churn candidates rather than being reactive.

Read more: How Wireless Providers Can Limit Churn

Telcos are overly reliant on selling the network -- i.e. voice and data connectivity -- in a North American market that is largely saturated by the Big 3 telcos and growing at roughly the rate of GDP in terms of net new customers. To create new revenue streams, telcos need to create solutions for customers in the form of new service offerings or the monetization of existing assets. For consumers, data, home security and family management are important. For small businesses, the lifecycle of startup, running a business and scaling are key opportunities for telcos to provide services and solutions. For enterprise businesses, the ability of 5G to support low latency and thousands of devices with mission-critical resiliency with the use of data and automation opens exciting new possibilities in verticals such as energy, manufacturing, and agriculture. Telcos should be reaching out to partners across verticals to explore what Industry 4.0 will look like as cloud storage, cloud compute and connectivity come together.

Read more: How Connectivity Providers Can Fast Track Digital Customer Experiences

The worldwide shortage of chips due to a drought in Taiwan and spike in demand during the pandemic have revealed a major challenge with the semiconductor supply chain and the reliance of many downfield players on a few bottlenecks. With companies anticipating that the shortage will last a few years, the major industry players are faced with the decision: either make their own chips or someone else’s. These are very different business models. Going fabless - how some companies design microchips but contract out their production rather than owning their own factories - is higher margin, but leaves the designer reliant on manufacturers. By contrast, being a contract manufacturer is a commodity business with lower margins, albeit one in high demand right now. The largest chip companies both design and make chips but as chips become smaller and more complex, the investment in fabrication comes at the expense of research and development. Going fabless enables focus on growth areas—graphics processing units for AI-driven cloud-based data centers and mobile device processors – and more focus on innovation. Open innovation allows for greater partnership between organizations, and this complementary approach allows for leapfrogging innovation with higher agility, rather than just incremental innovation.

The Halo fitness tracker is a recent example from Amazon on how connected our lives have become. Halo processes the wearer’s tone of voice and Amazon claims “to help users communicate more thoughtfully with family, friends and colleagues.” It also scans body fat. However, with more devices in more contexts connecting us and tracking every action—then control and portability of the data will need to be resolved. Google, Amazon, Facebook, Apple are not only enablers of these connected lives, they are among the largest holders of customer data. These tech giants are approaching monetizing and protecting that data differently as consumers become more aware about how much data is being collected.  Regulations, privacy rules and business models have yet to catch up to handle the accompanying data, whether transactional, electronic health records or behavioral tracking. Two trends that companies should be exploring immediately are 1) data trusts, or a structure where data is placed under the control of a board of trustees with a fiduciary responsibility to look after the interests of the beneficiaries and 2) data wallets, where users can manage data through a trusted, independent party and then give companies permission to access specific data under certain guidelines including duration, use and value exchange parameters. As consumers assert control over their data and data rights, organizations at all levels need to explore how they will be compliant with regulations and, more importantly, earn and keep the trust of consumers.  

Much of the artificial intelligence/machine learning conversations to date have focused on the need for access to huge amounts of data to feed algorithms and neural networks, an area dominated by companies such as Google, Amazon, Microsoft, and Facebook, or the Chinese mega-tech companies, Baidu, Alibaba, and Tencent. But recent advances in machine learning, including “less than one”-shot learning where ML algorithms can learn information about something from one or only a few training samples or images. This example indicates that certain key ML capabilities may be achievable without needing large amounts of customer data. A recent MIT example using these techniques reduced the training set of images needed to identify handwritten numbers from 60,000 to 10. This puts complex AI-driven solutions that rely on supervised learning, like natural language processing and image recognition, within the reach of start-ups and smaller companies which should lead to accelerated innovation. Companies should start examining use cases that may have once been out of reach and determining if new techniques like one-shot learning could work and create value.

Ambient intelligence allows technologies to act on user’s behalf, without a user giving a direct command. Popular devices like Amazon’s Alexa have laid the ground work for this technology and many customers are already comfortable with smart devices completing household tasks. As more consumer technologies remain connected in a passive listening mode, some are experimenting with acting based on consumer preferences or on preset automation workflows. An example would be a connected coffee maker turning on at the beginning of a workday when being notified by your IoT-enabled hot water pump that the shower just turned off. Although data privacy concerns are abundant in many of these scenarios, with the right privacy and security measures in place consumers will become more comfortable with devices sharing data and streamlining many tasks in the background. Home automation, workplace safety and automotive and retail could all be impacted as ambient technology becomes embedded in consumers’ lives making for higher degrees of personalization and more frictionless experiences. Brands need to prepare for ambient technology as the next evolution of experience interactions that follow in the footsteps of desktop browsers and mobile apps.