US Telecom Industry poised for faster growth in 2017: An Analysis of emerging trends
2016 was an year of dramatic growth for the US telecom industry. Smartphone usage have kept growing and that is a good sign in terms of business and profits for telecom. Opportunities are growing across all the sub sectors with extraordinary growth in the use of mobile devices. 2017 will remain important for several other reasons too. Some new technologies are in the process of emerging and that makes 2017 and 2018, years of transition. Much is expected to happen in these two years. The telecommunication industry’s role is growing driven by technological changes and increased use of AI. Connectivity’s role is growing central to many things in modern lives and with it the telecom landscape is through a major and meaningful transition. The world is ready to welcome 5G.
Connectivity will remain central to autonomous driving and several other related services. The use of mobile devices in US has increased sharply and as per a Deloitte report, the US citizens are gazing at them at least 9 billion times a day. This is an increase of 13% compared to the previous year. Smartphone sales in US have also remained strong because of growing smartphone usage among the middle aged people. The 45+ people that were once lagging behind the younger consumers in terms of smartphone usage are now using them at a higher rate.
However, this is not the only area where the telecom industry’s opportunities have grown. In several other areas too, the telecom industry has seen its opportunities grow. The use of smart watches and fitness bands has grown. From 2014 to 2016, the sales of these products has seen tremendous growth. Internet of Things and content delivery are two other potential areas that are going to provide better opportunities for the industry.
The network technology has advanced greatly with speeds having grown multiple times better. In the coming years, the most likely areas of growth are going to be the consumer oriented things comprising the IoT like wearable, connected cars, smart homes, smart businesses, cities etc. 2016 has also seen several big deals happening and most likely the number of such deals will grow in 2017.
2016 saw several mergers and acquisitions happening. Cable industry was particularly the charm of the game. The biggest merger was that of three of the largest cable operators in US. Charter, Time Warner and Bright House merged their operations under the name of Charter to form the number three video provider after AT&T, Direct TV and Comcast. AT&T purchased DirecTV in 2015 and is now planning to acquire Time Warner. Verizon has also planned to acquire XO communications to support its 5G wireless service.
The rise of 5G has sparked a lot of excitement. A wave of change is set to rise in 2017. 5G technology is yet to be defined fully but the carriers are busy with lab and field trails. It holds promise and no carrier wants being left behind in the race. 5G promises better speed higher efficiency and less latency. As per a Reuters report Verizon is going to hold trials in 11 US cities in the first half of 2017.
The customers and providers of IoT have been waiting eagerly for 5G to arrive which is because of its better speed and lower data latency. The need for speed has grown and future will require nothing less than the fifth generation of wireless connectivity. It is expected that consumer trials by other companies will also start taking place by the end of 2017. Verizon is trying to gain the early mover advantage by introducing 5G earlier than its competitors. Full mass market coverage is expected to be finalized by the year 2020. The Reuters report notes that 5G’s speed will be around 10 -100 times that of 4G LTE.
This kind of speed and ability to handle loads of data will prove beneficial for the IoT providers. Fewer devices will be required to carry the load which will allow providers to cut down costs. Providers will be able to cover larger networking areas while utilizing fewer devices. This will greatly reduce the costs related to the deployment of hardware for connectivity. IoT is going to prove more disruptive in the coming days allowing businesses, government and consumers to interact with the world in new and more sophisticated ways. It is expected that the companies will spend almost $5 trillion on IoT in the next five years.
An analytical revolution has begun with the proliferation of connected devices and a vast increase in use of data. Business Insider conducted a survey of 500 respondents across a wide array of industries that included a large number of C Suite and executive level participants. Its report projects that the number of IoT devices is going to grow from 6.6 billion in 2016 to 22.5 billion in 2021. Autonomous vehicle market will also grow important in 2020. The level of interest in autonomous vehicles indicates that it could become a reality in just some years.
Another important area where opportunities for the telecom sector are going to increase is biometrics. In 2017, the number of smartphones equipped with Biometrics is expected to grow over 1 Billion. More than 300 million smartphones are expected to be equipped with neural network machine learning capabilities globally. This will enable smartphones to perform smarter jobs. The need to stay connected on the go has increased in our lives. The telecom industry is going to benefit immensely from these trends. Based on this analysis, the business outlook for the telecom industry in 2017 is shiny and its performance will be stronger compared to 2016.
Sources:
https://www.telecompetitor.com/2016-a-big-year-for-telecom-ma/
https://www.forbes.com/sites/liyanchen/2015/06/01/the-worlds-largest-telecom-companies-china-mobile-beats-verizon-att-again/#3c2921c64df4
https://www2.deloitte.com/us/en/pages/technology-media-and-telecommunications/articles/telecommunications-industry-outlook.html
https://www.businessinsider.com/verizon-trials-5g-in-11-us-cities-2017-2?IR=T
https://www.reuters.com/article/us-verizon-5g-idUSKBN1611S9