Impact of COVID-19 on The Telecommunication Industry

As the global economy grappled with the outbreak and impact of the Covid-19 pandemic, `work from home’, and `social distancing’ became the new buzzwords of the business landscape. The telecommunication industry had a big role to play in facilitating the shift to a remote working culture — as video conferencing and other communication technologies emerged as key enablers for smooth business operations.

As countries across the world imposed mobility restrictions and with people confined round-the-clock to their homes, data consumption touched an all-time high. With an increased demand for domestic data consumption, telecom companies became increasingly focused on improving their network resiliency. The pandemic, therefore, had a huge impact on their planned investments, especially in the 5G arena.

It would be apt to say that the telecom industry emerged as the golden child of the pandemic-triggered economic slowdown. However, the increasing demand for communication services, along with the restrictions that the pandemic imposed threw a new set of challenges for the players in this sector.

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How the Pandemic Impacted the Global Telecom Sector

Let us understand how the pandemic impacted the telecom sector as a whole:

• Network usage and strength

Network usage touched an all-time high during the pandemic, and there was an exponential rise in voice and video calls made across the world. Providing users with a smooth and reliable network experience — while catering to a rise in demand for data services — became an ongoing challenge and focus for telecom companies ever since the pandemic started. It also led to collaborations which one would have not even dreamt of. For instance, telecom operators across the US began collaborating with each other to increase capacity by borrowing each other’s spectrum.

• Impact on consumer dynamics

Telecom giants across the world took stringent measures to provide better user experiences and to provide network access to people in a wider environment. To facilitate smooth work from home experiences, telecom operators deployed networking tools at attractive economical plans. For instance, some telecom companies in the UK scaled up their capacity to include free unlimited minutes in many of their subscription plans.

During the pandemic, seamless customer service became one of the most important focus areas for telecom providers. As physical stores continue to remain shut, telecom companies need to up their game when it comes to marketing efforts, in order to reach out to homebound consumers. Innovation and thinking out of the box became the need of the hour.

• Other industries affected by the pandemic had a ripple effect on the telecom sector

Though there was a surge in demand for telecom services, the telecom industry itself is dependent on several other industries for its functioning. These industries, in turn, were adversely affected by the global lockdowns and this impacted the functioning of the telecom sector. Let us delve into the related sectors that were impacted by the global shutdowns:

– Hardware and equipment manufacturing sector

A major disruption occurred in the global manufacturing supply chain, which, in turn, affected the availability of spare parts for handsets and network equipment manufacturers. In some cases, it even impacted the availability of handsets and equipment and caused costs to go up. Realizing the catastrophic effect this could have on the telecom sector, governments across the world permitted manufacturers to operate even in red zones.

– Effect on Sim card purchases

Global lockdown restricted the movement of people. As a result, there was a sharp dip in the purchase of new Sim cards as well as on 4G migrations. This eventually impacted the revenue of cellular service providers. The pandemic and the subsequent lockdown delayed the 5G spectrum auctions and their consequent rollout as network operators were focused on meeting increased demand and ensuring the quality of services was not impacted. The restrictions on manufacturing and the mobility of goods also had an impact on the availability of 5G enabled handsets.

• Telecom played a key role in disseminating Covid-related information

The telecom sector was instrumental in helping governments track infected individuals and curb the spread of the virus. Countries like the US, China, and India have a vast landscape and a highly mobile population. These countries were able to contain the spread of the virus with the help of data communication and contact tracing. Many other countries also adopted a similar approach.

However, the usage of cellular data to track and control the spread of the virus is already raising concerns about data privacy in the future.

• Financial implications

Though the demand for telecommunication and other peripheral services remained at an all-time high during the pandemic, small players in the industry may face cash flow issues in the future. For instance, telecom companies that collaborated with sports-centric media organizations saw their revenues being hit as all sporting events were called off during the Covid-related lockdowns.

The big giants of the telecom industry are also reassessing their future investment plans. They are restructuring their network infrastructure and investment portfolio and aggressively investing in 5G technology. When it comes to speed and reliability, 5G is clearly emerging as the future of communications. The industry is witnessing collaborations at a scale that have never been seen before. Companies are focusing on technology mergers and acquisitions in order to secure a larger customer base by leveraging each other’s strengths.

How the Telecom Sector Emerged as the Poster Child of the Pandemic

• The telecommunication sector also stepped up to meet the challenges of the call center industry, as contact center companies moved their operations to remote working setups within a short span of time. Softphones and VoIP technology played a key role in enabling this transition to happen smoothly. Cloud-based VoIP mobile dialers helped call centers to build a strategic and multi-faceted workforce — be it in a single location, multiple centers, or with work from home agents. Also with real-time messaging, and collaboration tools, VoIP-powered softphone technology allowed customers to reach agents across locations and time zones. They facilitated communication as would happen in a traditional office while providing data security and flexibility.
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