As we approach 2024, the telecommunications industry is poised to undergo one of the most significant changes of the past decades. From the disruptive influence of AI to the evolving battleground of broadband providers and the surge of tech giants into wireless services, the telecommunications landscape is on the verge of a fundamental transformation.
#1: The power of AI
With the global market for AI in telecom projected to reach $38.8 billion by 2031, AI represents the single most powerful lever in improving profitability across the telecoms sector. A study by McKinsey underscores the necessity for telecom companies to incorporate AI-powered solutions if they are to remain competitive. Particularly in customer service, AI can improve user experiences and lower operating costs by up to 70% through task automation. Further, wireless providers leveraging AI will also be able to deliver personalized voice and data plans with dynamic pricing based on individual usage patterns, preferences and market conditions. In the race for market dominance, AI stands as the single most powerful lever driving profitability across the telecom sector.
#2: Broadband providers are fighting back
The broadband market, home to nearly 3000 providers in the US, is undergoing a transformative shift. Broadband players are now the US’ fastest growing wireless providers, with Comcast and Charter accounting for 16% of all gross wireless additions in Q3. In fact, with over 7 million total subscriptions, Charter is poised to become the US’ largest MVNO in 2024. At the same time, major carriers like T-Mobile, Verizon, and AT&T are making significant forays into the broadband space, putting smaller regional players in front of a pivotal moment. With over 33% of US wireless customers either already using a broadband bundle or looking to switch, regional broadband companies have a unique opportunity to become the one-stop shop for their customers’ diverse entertainment and connectivity needs. By understanding and capitalizing on evolving consumer preferences, these companies can not only survive but thrive in a dynamically changing market.
#3: Tech companies go wireless: A new era of subscription services
In times of increasing economic uncertainty, more technology companies and D2C businesses are prioritizing profitability and thus seek out high-margin recurring revenue streams that sustainably bolster their bottom line. As evidenced by Apple, the predominant strategy is transforming their company into a subscription business. Subscriptions accounted for more than 25% of Apple’s Q3 revenue and brought in a hefty 71% gross margin, almost double that of Apple’s hardware division. And what’s the one subscription that everybody needs? That’s right, wireless.
In 2024, we will see a spell of new wireless services from a diverse range of companies, including neobanks, eCommerce players, device retailers, entertainment services, and more. These tech companies will offer customers tailored bundles and exclusive value-added services and content, providing a more personalized and immersive experience.
Overall, the new wave of mobile services is set to become a major force in the telecommunications industry, providing both companies and consumers with a new and vast range of benefits. Especially from a loyalty perspective, branded wireless services offer a significant increase in brand touchpoints, enabling brands to build a dedicated audience and win a greater share of wallet. That's why it's not surprising that companies like Google, Uber, Amazon, and others have either already launched their own wireless services or are planning to do so.
Much like how Stripe changed the banking industry over a decade ago by making payments programmable, telecommunications will provide progressive companies with unseen opportunities to create entirely new customer experiences. Ultimately, this won’t just elevate their brand perception, but also generate new recurring revenue with attractive margins.
