Preparing for a global recession
10 August 2020 | Mo Firouzabadian
In an increasingly crowded marketplace, a global recession will bring a series of challenges for CSPs to address. Mo Firouzabadian, SVP for developed markets at Evolving Systems explains
There’s always a temptation to reduce extreme political and economic complexity to a few simple reasons, perhaps never more so than now as around the world we collectively, if not simultaneously, begin to emerge from the Coronavirus pandemic. As we all know, the commercial landscape today differs radically from the one we left behind three or more months ago.
Simplifying things, though, is attractive. For one thing, doing so makes for better soundbites - and in a world where news feeds are designed to meet rapidly diminishing attention spans, it’s both tempting and easy to assume things are either better, or worse, than they really are. For marketers in particular, complexity and messaging are hard to reconcile. Patient analysis and measured action is, recent months have often taught us, rarely a hallmark of government policymaking.
Nevertheless, there are at least on a macro level, some unavoidable economic realities we now face in the wake of Covid-19. For one, it seems certain we are entering a serious, global recession. While the depth and length of the downturn cannot be accurately predicted (not least because which interventions happen remains to be seen), the next 12 to 24 months or quite likely longer than that, will be fraught for enterprises. We can also reasonably confidently predict that the impact of the recession will be felt differently in different industries. The communications industry’s experience will on the face of it probably be far less taxing than, for instance, that faced by the travel and tourism industry.
It seems highly likely, also, that the Covid-19 recovery will not be a slow return to business as usual. In time, I suspect the pandemic will come to be seen not as interruption to commercial practice but as a tipping point. What emerges as business-as-usual five years from now is unlikely to look, in terms of both best practices and infrastructures, the way it did last November. Post-Coronavirus is not about re-building the old but structuring the new.
For the communications industry, if a global recession is likely to prove challenging, things could be a whole lot worse. No business is recession-proof, but the communications infrastructure in the modern world is as close as it gets; the grid via which virtually all modern commerce flows, is managed, increasingly is monetised, and via which customers are gained and retained. It’s reasonable to predict many companies, in the wake of behavioural and operational changes in working practices driven by Covid-19, will downscale their real estate assets and adopt new commercial strategies. None are likely to seriously downscale their investment in communications networks.
The challenge is that an already crowded CSP market will have to work harder to deliver, creating conditions where every infrastructure investment will have to demonstrate a clear return, yet where such investments are unavoidable in the likely scenario of increased competition for customers. CSPs, to weather the coming downturn, will need to be creative in the services they offer, efficient in the execution of those services, and far better than ever before in managing relationships with their customers.
The latter area, in the wake of Covid-19, will be particularly interesting. For many consumers, the pandemic has brought to the fore the importance of their mobile devices at the same time that distancing requirements have, in some cases, made it harder to maintain service (with retail outlets closed, etc.) Mobile devices have also become a failsafe means of disseminating (by pushing) vital information. As competition for subscribers increases, how will service providers convert these realities into increased market share?
At Evolving Systems, our belief is that right now, as the new economy unfolds, telcos would be wise to rebuild their competitive strategies, articulating their direction in the Post-Covid world rather than jumping in with 'more of the same'. A different set of use cases is likely to be required in the post-Covid world.
By Mo Firouzabadian, SVP for developed markets at Evolving Systems.
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