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The changing landscape

The COVID-19 pandemic continues to transform the way we live and work whilst disrupting businesses across the world. As users turn to the internet for almost everything, services like cloud storage and teleconferencing are becoming critical. While businesses adopt remote work strategies, IT and network teams are revaluating capabilities. They are recommending fixed broadband capacity upgrades, greater capacity in residential areas, more focus on policy control for networks that deliver high-stakes application, and increased focus on reliability and security for residential network infrastructure. VPN usage has spiked significantly as have collaboration platforms. Of course, actual spending on networking hardware and software, at the moment is not happening.

Networks are experiencing increased traffic, and stretching bandwidth limits and telephone network capacities. The telecom infrastructure is in place and the service providers are handling the surge ably. However, the longer the coronavirus outbreak plagues society, the greater the risk of penalties for the telcos. This increase in traffic will not lead to any significant increase in revenues for telecom operators. The short-term residential upgrades are highly unlikely to result in a significant increase in revenues, as increase in internet traffic is not a linear relationship with cash rewards.

The enterprise customer revenues are the ones that are under immediate threat. With more people working from home, the threat to enterprise revenues is very real. Fewer the people in the office, the smaller the connectivity contract that can be won from the corporate customers. Moving up a level, ambitious projects are generally being put on hold. Alongside the potential dampening enthusiasm from enterprise customers, revenues derived from roaming traffic is also disappearing.

Supply chains are certainly strained both for devices and network infrastructure equipment, while the closure of retail outlets is also seeing sales of existing stock plummet and new device launches could be delayed. Should governments be able to combat the coronavirus, the impact to the telecoms industry is minor, but as the weeks turn into months, the consequences could compound to some serious damage for operators.

It is certainly a wide and a deep crisis; the crucial question is how long will it last?

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