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Straight Talk Service Provider

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COVID-19 and the unprecedented macroeconomic situation will clearly impact the Telecoms Operations and IT sector, especially in those areas of software spend that are directly linked to enabling and monetizing delayed 5G network services. However, the negative impact should not be overstated. Yes, in the short term, we will see service providers focusing on maintaining existing IT systems and prioritizing business continuity and resilience. However, once this immediate period has passed, we expect activity to hold up in several areas.

If there is one thing we can anticipate in “the new normal,” it is that service providers will need to be better prepared for the unexpected. Service providers will need to manage their network capacity requirements in an environment subject to unpredictable surges in demand and changing traffic patterns. Adding more physical infrastructure is costly, so it will make sense for operators to make maximum use of network management tools. Broadband providers in particular will also be under pressure to guarantee service resilience and quality of service for key applications and services. Customer experience will also be pushed to the fore by increased consumption of latency-sensitive services, such as video streaming and video conferencing.

According to Ericsson, service providers have experienced traffic increases of 20–100% due to the shift to remote working and education, as well as increases in streaming services during lockdown, with much of this absorbed by fixed residential networks. But what is just as relevant as the recent increase in traffic is the fact that it will now be a lot more difficult to predict future spikes or service performance and quality requirements. It is this very uncertainty that will encourage investment in network management and optimization software. A number of major vendors have indicated in recent briefings that they expect network optimization, assurance, and automation tools to play an important role in maintaining business continuity. There are also some early indications that demand remains robust. For example, Ericsson’s managed services business area has seen growth in its optimization business in the early part of the year, with optimization solution deals with the likes of NTT DoCoMo, FarEasTone, and MTS.

There will also be several other areas of resilience and opportunity in the telecoms operations and IT sector. An acceleration in the shift to digital customer engagement, self-service, and e-commerce will also provide an opportunity for digital platforms supporting these areas. Increased pressure to automate and digitize customer engagement will create opportunities for customer management solution vendors.

We also anticipate increased pressure on service providers to shift to the cloud to deliver telecoms IT applications. In the short term, workloads will be migrated to the cloud to support remote working and business continuity, but also going forward, there will be dramatically increased levels of uncertainty surrounding service demand and this is where the elasticity and scalability of cloud will come into its own—the advantage of being able to scale up or down applications and workloads dynamically in an unstable and uncertain market is likely to increasingly outweigh any lingering service provider concerns over security, data protection, or reduced control.

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