Deloitte’s 2022 telecom industry outlook, questions and recommendations for telcos

Executive Summary:

In 2022, the telecom industry will face new opportunities and challenges presented by a dynamic regulatory, technological, and competitive environment. Deloitte’s annual telecom outlook dials into the biggest trends shaping the telecommunications industry, from more competitive broadband markets to cybersecurity in the 5G era.

The telecom sector continued to make progress in augmenting its network capacity with additional fiber and wireless deployments to meet the constant demand for higher-speed networks in 2021. However, as we start the new year, we see an emerging set of issues and opportunities presented by a dynamic regulatory, technological, and competitive environment that may influence the sector’s progress in the coming year:

  • The potential for more competitive broadband markets. Faster mobile and fixed wireless connections create more viable alternatives to wired connections and new opportunities for bundled service offerings and business models for service providers. With ever-expanding options for high-quality communication and internet services from telecom, cable, wireless, and satellite internet providers, consumers will enjoy enhanced flexibility in purchasing and consuming services in the new year. However, these trends may also lead to a more competitive environment in 2022.
  • A shift to more decentralized government broadband infrastructure funding. The $1 trillion Infrastructure Investment and Jobs Act (IIJA) passed in November earmarks $65 billion for continued broadband adoption and deployment. While government programs dedicated to expanding and improving telecommunication infrastructure and services have traditionally been managed at the federal level, it appears the bulk of the bill’s federally allocated broadband dollars will flow through more decentralized state-based models.
  • Rising interest in multi-access edge computing (MEC) and private cellular networks. The enterprise market for private cellular networks and edge computing is gaining momentum. The market is still nascent but promises to be competitive, with many different players vying for their share. Network operators will have to compete against other players, who may prove key partners in delivering their solutions. Ecosystem players will likely begin to stake out and define their role in this emerging but rapidly evolving market in the coming year.
  • The need to reassess cybersecurity and risk management in the 5G era. While the widespread adoption of 5G offers many benefits, it also creates new security concerns and challenges. As operators have taken steps to evaluate and minimize threats arising from 5G and software-centric networks in their own organizations, they are in a unique position to offer 5G security services to enterprises seeking to deploy their own advanced wireless networks.

Strategic Questions for telcos to consider:

• With spectrum being a scarce resource, how can operators prioritize its use to maximize its value? • How can operators use FWA to create additional synergies between their wireless and fiber asset deployments to improve their cost structure and benefit customers?

• While telcos may initially benefit as a wholesale provider of wireless capacity, what are the long term consequences if mobile virtual network operators begin using their wireless scale to build out their own networks?

• What should the telco’s role be in developing and delivering 5G private cellular networks and enterprise-oriented edge solutions? Will it take the form of spectrum leases, fiber backbone, and backhaul, or something more?

• What are the telco’s core competencies and value proposition in delivering 5G enterprise networks? Which business models will allow telcos to optimize value?

• What capabilities are required to execute on a given strategy or business model? Can telcos develop new capabilities internally? To what extent should they do so?

• How can telcos use their approach to cybersecurity as an opportunity to differentiate themselves and capture value in the 5G enterprise market?

• Where can telcos switch from reactive security mechanisms to more proactive ones?

• As telcos migrate from legacy networks to modern architectures, do they have appropriate risk management and governance organizations in place?

Recommendations for Telcos:

• Reassess core value proposition in an evolving competitive landscape with more players vying for the same customers.

• Reevaluate how and where to participate in terms of both service offerings and geographies. • Look for ways to differentiate services on non-performance attributes since consumers perceive minor differences among provider offerings.

• Determine organizational effectiveness in monitoring and responding to more distributed, state-based mechanisms for awarding federally allocated broadband funds.

• Monitor ecosystem and business model development in the emerging 5G enterprise edge compute and private cellular network markets.

• Build on the unique position to offer differentiated 5G security and risk management services to enterprises seeking to deploy advanced wireless networks.