Telecommunication services, including pay-TV

Telecommunication services, including pay-TV

2023

Global market growth by 3% to $1.55 trillion

At the end of 2023, global spending on communications and pay-TV services is approximately $1.55 trillion. This is an increase of 3% compared to the previous year. These figures are reflected in the IDC study, the results of which were published on November 3, 2023.

According to analytical data, the American region at the end of 2023 shows an increase of 3.3% year-on-year - from $575 billion to $594 billion. In the Asia-Pacific region, the growth rate is estimated at 2.6% - from $486 billion to $499 billion. Europe, the Middle East and Africa accounts for $461 billion in total spending against $447 billion in 2022, This corresponds to an increase of 3.1%. Thus, the telecom market shows positive dynamics in all regions.

The report says that inflation is the main driver of the global industry, but the trends that it forms in different local markets differ significantly. In many countries, regulators have allowed telecom operators to raise tariffs (often using the consumer price index), which allows participants in the telecommunications industry to increase revenue. On the other hand, this policy leads to a redistribution of the subscriber base: many users switch to less expensive tariff packages or choose other providers with better offers. Therefore, in general, the rate of income growth is much lower than the nominal increase in tariffs. At the same time, in some markets, the prevailing competitive environment does not allow for an increase in the cost of services. And in a number of countries, mainly developing countries in Eastern Europe and Africa, tariff increases are hampered by the low purchasing power of the population.

If we consider the industry in terms of types of telecommunications services, the previously formed trends continue, despite the difficult geopolitical situation and macroeconomic challenges. Mobile remains the largest segment, offset by lower spending on voice and messaging, offset by increased internet traffic and the demand for machine-to-machine (M2M) applications. The fixed data services segment is also growing due to the need for higher bandwidth services. At the same time, the cost of fixed telephony is decreasing, and the situation is not helped even by the growing popularity of voice IP communication. The traditional pay-TV market contracted slightly in 2023 due to the growing demand for video-on-demand (VoD) and OTT services, i.e. those that provide services over the Internet.

IDC notes that due to high inflation, consumers and corporate users have come under pressure to balance rising costs and tight budgets. Although the elasticity of communication services is relatively low, and it is difficult for customers to imagine daily life without them, excessive tariff increases can have a negative impact on demand.

Operators need to carefully assess each market for tolerance of price increases. They must constantly analyze and compare the product range, quality of services, prices, and customer support capabilities at all levels. This information should help telecom industry participants find the optimal percentage of tariff increases that will not scare away customers, have a positive impact on revenues and help maintain profits during these turbulent times," said Kresimir Alic, research director at IDC Worldwide Telecom Services.

7 Technological Trends in Telecom Named

Against the backdrop of ongoing digital transformation, the telecommunications industry is undergoing a massive transformation. CSPs and carriers are implementing well-thought-out plans that involve end-to-end changes across the board, from business models to day-to-day operations to improving the customer experience. In a report dated October 13, 2023, McKinsey analysts named seven technology trends that will have the strongest impact on the telecom market.

1. Ever-Expanding Connectivity

5G telecommunications infrastructure provides game-changing opportunities in terms of connectivity and mobile services, and 6G technology will provide even greater potential. We are talking about the development of such areas as telemedicine (remote patient monitoring), metaverses, unmanned vehicles, etc. The demand for high-speed mobile connections is also stimulated by remote work and distance learning. Therefore, as McKinsey notes, operators need to exponentially increase network capacity, expand frequency spectrum, and reduce latency and power consumption.

2. Edge Computing

By distributing compute workloads across remote data centers closer to end users, latency is reduced and services are faster. In addition, organizations will have more control over their information. Edge computing enables real-time processing of data, which opens up the possibility of using it in a wide variety of responsive industries, from remote healthcare to remote control of mining operations.

3. Next-generation transport

The rapid adoption of autopilot, AI, connectivity, and electrification technologies is transforming the ground and air transportation industry. This will make the transportation of people and the transportation of goods much more efficient and environmentally friendly. The main efforts of market participants are aimed at the development of electric, hydrogen and hybrid platforms. In this environment, according to the McKinsey report, telecom companies will need to increase network capacity to support mobility, especially in remote regions, and provide reliable backup coverage in case of emergencies.

4. xRAN

By this term, analysts refer to various architectures of radio access networks (RANs). These include ORAN (Open RAN), VRAN (Virtualized RAN) and CRAN (Centralized RAN). It is said that the deployment of such platforms allows for greater flexibility in the interaction of telecom companies with OEMs and even reduces the requirements for physical assets such as towers, antennas and cables. This will help reduce capital and operating costs, accelerate the rollout of new network services, and encourage competition among vendors.

5. Trust Architecture and Digital Identity

As organizations build and scale digital products and services based on the collection and analysis of massive amounts of data, trust and privacy are becoming increasingly important. Therefore, according to McKinsey analysts, companies should increase investment in cybersecurity solutions. It's about a zero-trust architecture, identity tools, and privacy.

6. Artificial Intelligence

Advances in AI, including generative tools, are opening up new opportunities for organizations to grow and sustain their businesses. Telecom companies can use AI to optimize networks (by managing resources based on real-time traffic and data analysis), solve technical issues, minimize customer churn, and more.

7. Quantum Technologies

Advances in quantum technology could lead to exponential increases in computing performance and data transfer speeds. Telecom executives see the greatest value in the development of quantum key distribution (QKD) systems, which enable the secure exchange of cryptographic keys. On the other hand, quantum computing will jeopardize traditional encryption methods.