The scale of the challenges posed by the rapidly changing face of telecommunications technology that could leave operators with out-dated networks and business models has been outlined in a new report.

A failure to realise the new roles in evolving industry ecosystems is regarded as the biggest challenge of 10 faced by operators, according to EY’s Top 10 risks in telecommunications 2014 report.

A lack of regulatory certainty on new market structures
and ignoring new imperatives in privacy and security are the next biggest challenges, the report found.

Operators need the flexibility to quickly adjust their business models to new technological developments, and must adapt in a timely manner as opportunities become apparent. If not, they risk missing out on major growth opportunities, the report claimed.

EY cited the rise of OTT services as one such area for potential growth but operators need to make a decision: should they replicate the service and compete, partner with OTTs to offer a joint provision, or offer their own services, such as billing, to OTTs in order to profit from their success?

Delays in decision-making are one of the biggest causes of missed opportunities. To compete, operators need to be prepared to develop new competencies, and it is apparent that many are taking advantage of growth areas: 40 percent of providers now offer M2M services, for example.

A lack of consumer trust is another area that has risen up the ranking due to the fallout over well-publicised mobile data privacy and security scandals.

Adrian Baschnonga, Lead Telecommunications Analyst at EY, commented: “Proactive stances are required on privacy and security issues with partners and policymakers so that new demands for data sovereignty, personal data privacy and cyber-security – which may vary according to geography – can be reconciled in the long term.”

The top 10 risks are:

  1. Failure to realise new roles in evolving industry ecosystems
  2. Lack of regulatory certainty on new market structures
  3. Ignoring new imperatives in privacy and security
  4. Failure to improve organisational agility
  5. Lack of data integrity to drive growth and efficiency 
  6. Lack of performance measurement to drive execution
  7. Failure to understand what customers value
  8. Inability to extract value from network assets
  9. Poorly defined inorganic growth agenda
  10. Failure to adopt routes to innovation

“Capitalising on the opportunity to fulfil new roles in the evolving industry ecosystem is vital if telcos are to make the most of new demand scenarios,” said Derek Smith, UK Telecoms Leader at EY.  

“This will require operators to simplify and streamline internal structures, whilst driving new forms of interaction within organisations. Furthermore, operators will need to develop or acquire fresh competencies and skills to maximise and capitalise on their new strategies."

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