Telecommunication refers to the exchange of information through electronic means over a significant distance. The information is transmitted in the form of data including text, voice, videos, pictures, etc. The data from the sending terminal is converted into electric signals using a transmitting antenna and a transmission medium is used such as wire or even wireless and transfers it to receiving terminal. We have many electronic devices already in use in telecommunication such as cellphones, radios, telephones, television, computer, etc.
Talking about the history of telecommunication, Telegraph is the first telecommunication device invented in the 1830s by Samuel Morse. Then the first telephone was invented by Alexander Graham Bell in 1876 AD. Gradually the evolution of telecommunication occurred. After the invention of cellphones in the 1970s people were interested in this industry and began to realize its importance in the upcoming future. In the late 90s Internet came to the market and became the biggest telecommunication network.
After introducing the Internet to the market, people widely used it and keep advancing its technologies. It made our life easier. Then in the 2010s the telecommunication industry erupted, and most people started to engage in it. Experts started to do more research and advance its technologies. Also on the other hand, as it is constantly evolving there are various threats disrupting its growth. The potential threats that may affect the industry are listed below:
Increased Competition
Due to the advancement in the technologies such as 5G networks, AI, wireless devices, etc., experts in all these sectors are entering the industry. Although there are big companies such as AT&T, Verizon, and Comcast Corporation, day by day new companies are forming and it has become hard for the companies to take a huge market share in the industry. The companies have to look after their cost management, manufacturing, and marketing and have to lower their profits to stay in the market. Many companies have to face huge losses and bankruptcy. In 2002, a large telecom company in the USA named ‘WorldCom’ went bankrupt due to a financial crisis. So increased competition may lead to lower market share for the companies and hamper the growth of the telecom industry.
Cyber Security Threats
As this industry is associated with technologies and is run through an internet network, the information and data are in digital platforms. All the companies have stored their confidential information and data in a safe way and ensured their privacy but also these companies are vulnerable to cybersecurity threats such as hacking, data breaching, and cyber-attacks. There are many cyberpunks and hackers who misuse the technology and find loopholes in the company’s private data network and steal the data for illegal work. Due to this hacking and cyber security threats, many companies have faced financial crises and lost their reputation. Recently in 2022, one of the largest Australian telecom company named ‘TPG Telecom Ltd.’ was the victim of high profile cyberattack where emails of about 15,000 of its customers were accessed.
Its share went down 2.8%. Many other big companies such as Microsoft, Yahoo, Facebook, MySpace, Marriot International, etc. have been victims of cyberattacks. For avoiding these activities, the security system of a company should be highly protected. These cyberattacks not only disturb the telecom industry but also leak the private information of the customers.
Regulation and Government Intervention
There is a separate governmental authority looking after the telecom industry and the companies. The authority prepares draft regulations that must be followed by all the companies. These regulations may sometimes threaten innovation in the internet communications industry. Due to the laws such as the net neutrality policy, and Universal Service Fund, internet providers do not gain profit as per their efficiency. Also due to the increase in the tax rate, the companies may face a financial crisis and increase costs. In the context of Nepal, Nepal Telecom has been trying to bring a strategic partner and initiate the tender process for expanding mobile services but CIAA and NTA have been intervening and delaying the process. Which may lead to huge losses for the company. Likewise, many companies all over the world are not able to operate freely due to different government rules and regulations.
Economic Downturn
The performance of the telecom industry is correlated with the economy. After the COVID-19 period with the fall of the share market, the telecom companies also have to face the recession. The internet service has also been costly. Due to this people are switching from one ISP to other which makes the telecom industry unstable in the short term. Although the previous wave of COVID did not drastically affect the global market for telecom services, the related global supply chain disruptions are already causing shortages of end-user and network equipment and creating concerns for the supply side. “The inflation is already happening and the economy has started to slow down for that reason our view of the market remains cautiously optimistic.” said the research director, Kresimir Alic, Worldwide Telecom Services at IDC. Inflation will put pressure on most of the budget, particularly personnel costs, energy, external spending on services, leases, and capital expenditures. Due to the economic recession, investors are also not totally interested in investing in the telecom industry which may lead to the downfall of the companies.
Technological Advancements
New technologies such as 5G, IoT (Internet of Things), and AI is being introduced in the telecom industry. These technologies have affected the upgrading of small companies as their cost of production is very high.
Nowadays there is minimal use of telephones because mobile phones are portable and have wireless technologies which have particularly affected telephone companies. The automation of tasks has displaced humans from their occupations. All the companies have started to create new business models and are driven toward wireless technologies. This results in creating new competition and the companies which are not able to catch up are being collapsed. As the online business is rapidly growing offline stores are on the verge of extinction. AI technology may fully take over telecommunications and disrupt companies and industries. We can recently see an online AI bot ‘ChatGPT’ which has the capacity to generate and assemble the information available in the online platform by itself in a short period of time. These technologies may be vulnerable to the telecom company working manually.
Privacy Concerns
Technological innovation has outpaced our privacy protection. These companies access our private information on the digital platform. It can be accessed and tracked by governments and corporations in many ways via Cookies and Web Beacons. These digital footprints carry much more data about the individual including the intimate aspects of our life. Companies track our websites, location, access our information and send us recommendations for other services and often sell and share our data with other companies. Due to this government may introduce new privacy laws and legal requirements for the companies and users will also avoid accessing all information which will create complications for the companies to operate freely.
Climate Change
The drastic change in the climate can directly affect the infrastructure of telecom companies. Flooding, landslides, storm, hurricanes, heavy rainfall, and extreme temperatures affect the functioning of the company. In April 2022, several flooding destroyed the Vodacom infrastructure resulting in 17 billion in damage with the loss of 459 lives. The climate also impacts the global supply chain and interrupts the production, and functioning of the company. The workforce will be affected, there will be restrictions to the energy supplies, and also network service will be delayed due to climate change. It may lead to an increase in the costs of repairs, upgrades, and maintenance. The company will not operate smoothly and face a huge loss. So the company should be built only after proper research of the place, surroundings, and climate.
These are some of the potential threats that telecom industries may face in the upcoming future. To avoid these threats, companies, have to advance their technologies and adapt to the change. This industry always keeps on evolving. They have to focus more on providing better customer service and also focus on their problem-solving. To get ahead in this competitive industry they have to do something different than the previous and introduce new business models and implement it wisely.
Thank you Aayush Panta.