Thursday , December 9 2021
Telecommunications

How COVID-19 Impacts Telecommunications Operators’ Economics



There is no question that telecommunications and digital services are crucial for many people across the world coping with the COVID-19 pandemic.

Online education and remote working possibilities have brought a semblance of normality to uncertain times. Telehealth solutions now offload certain activities from healthcare systems, enabling doctors and nurses to focus on saving lives. Videoconferencing and social networks help us stay in touch with our families and friends. Media services and online games keep us entertained while passing hour after hour at home.

None of these technologies could exist without strong and resilient telecommunications and ICT infrastructure. But how is that infrastructure holding up under the pressure of the pandemic?

During the recent ITU-D Study Group 1 public webinar on the Economic implications of COVID-19 on national telecommunications/ICT infrastructure, the International Telecommunications Union (ITU) asked representatives from telecom operators in order to understand the economic effects of pandemics on telecom business from the perspective of operators.

Led by Rapporteur Arseny Plossky of the Russian Radio Research and Development Institute, the ITU-D Study addresses the business models and economic aspects associated with national telecommunications and ICT markets.

The discussion revealed how the pandemic created massive, and sometimes surprising, impacts on operators’ demand, revenue and costs.

Below are the top 3 takeaways that emerged from the exchange carried out by ITU.

Demand Skyrockets and Behaviours Change

It is no secret that broadband traffic has surged over the past months due to the COVID-19 outbreak. This trend was fully confirmed by expert panellists who reported traffic increases of between [JM1] 20% and 80%, though in some cases traffic has returned to levels closer to, though still above, pre-COVID times.

The Regulatory Price Modelling Manager at Türk Telekom Gevher Nesibe Tural Tok, reported an increase in fixed voice calls, contrasting with dips in typical traffic observed by fixed telecom operators across the world over the past few years.

Relevant changes in international traffic and international mobile roaming were highlighted by David Geary, General Counsel Caribbean and Central America at Digicel. While international traffic increased to later stabilise, roaming has declined by around 80%, he said. These observations are significant for operators in countries with high levels of tourism, especially the smaller countries and islands for which roaming revenues represent a big piece of the economic pie.

Beyond the evolution of overall traffic, there have also been behavioural changes significantly affecting certain networks, remarked Director of Mobile Network Operator Product Management at Intelsat, Gerry Collin.

Spikes in videoconferencing, gaming, streaming and other media have boosted uplink traffic, which was typically well below downlink levels, he said. Mr. Collins also noted how new geographical movements of people (e.g. to second residences in rural regions) are boosting traffic consumption in certain areas, with some seeing +100% growth rates. According to him, this situation is putting a considerable strain on networks that were designed with pre-pandemic usage levels in mind.

Mixed Views About Revenue Trends

Impact is much less consistent among countries and operators when it comes to revenues.

Mr. Geary remarked that industry revenues have dropped by 10 to 20%, a situation that may improve slightly to 5-10% decreases for the full year. These results are most likely related to the relevance of lower roaming revenues combined with the sectoral significance of tourism in the economies of most of the countries where Digicel operates, with some of these nations facing the equivalent of an economic shutdown.

On the other hand, Ms. Tural noted how a stronger demand for fixed broadband lines as well as a favourable change in product mix has prompted Türk Telekom to revise their revenue forecasts slightly upward.

New Infrastructure Investments Despite Economic Uncertainties

Despite the global economic recession expected to follow the COVID-19 crisis, telecommunications operators are reporting increased efforts to invest in additional capacity and deploying new network infrastructure and technologies.

Tural reported an increase of 10% in the expected investment for the year, with plans for new FTTH deployments and upcoming launch of 5G remaining intact.

Most networks were able to cope with upswings in traffic with relatively simple upgrades (e.g. software upgrades, activating new bands temporarily granted by regulators) not requiring unexpected relevant hardware investments, Geary explained.

Instead, Digicel is accelerating plans to deploy 4G in uncovered areas as well as fixed wireless solutions, FTTH and sub-sea capacity, although there are relevant uncertainties in the general investment climate, he said.

READ ALSO: Internet Subscribers Hit 141 Million as Nigeria Records 40.14% Broadband Penetration in May

On the other hand, operational limitations can cause potential delays, Collins explained. Even if software-based upgrades are simple to implement, challenges may arise if provisioning hardware is needed, he said. Certain devices or parts may be unavailable or late due to supply chain disruption, he noted, or confinement measures may limit technicians’ ability to perform outdoor installations.

Finally, it is important to highlight that none of the panellists reported any relevant impact on operational costs.

Looking ahead: The digital divide remains top priority

When the webinar discussion turned to the future, all speakers had one topic in mind: the digital divide. Even if ICT and digital services cushioned the impact of COVID-19 on many businesses and people, we cannot forget the billions of humans that cannot access or pay for them. Stephen Bereaux, Deputy to the Director of the Telecommunication Development Bureau, stressed that 3.6 billion people in the world remain unconnected or without meaningful connectivity.

Many operators voiced their intention to redouble efforts to cover the uncovered and to bring the newest technologies to as many people as possible, while improving clients’ capacity and providing cheaper and even free tariffs in some cases.

We also heard some examples of public bodies’ and international organisations’ efforts to provide funding and support for operators on this odyssey, such as the joint ITU-UNICEF Giga project that aims to connect every school to the internet.

Geary also highlighted the important work being undertaken by the UN Broadband Commission for Sustainable Development, whose working group on 21st century financial models is examining the crucial question of how all digital ecosystem actors, including platforms, might contribute to financing sustainable broadband coverage.

The expected economic downturn is likely to limit the combined efforts of both operators and governments. Despite these uncertain projections, it is clearer to me is that universal access and affordability of high-quality connectivity must remain a priority for all countries, and that all players in the digital ecosystem must continue coordinating efforts to bridge the digital divide.


About Bukola Olanrewaju

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