As we look back on the telecom industry predictions made in early 2024, we see mixed outcomes. At the start of the year, the industry faced a rather gloomy outlook, with key technology players and AI overshadowing telecom. However, as we move further into the year, some positive developments have emerged.
AI has been at the forefront of industry discussion, particularly with the launch of GPT-4o. Despite its impressive features, such as advanced speech and multimodal capabilities, the excitement quickly diminished following a lawsuit by Scarlett Johansson against OpenAI. She accused the company of using a voice eerily similar to hers without permission. Meanwhile, concerns about the risks of AI persist, with scientists warning of potential dangers and advocating for stronger safety measures. AI’s energy consumption has also been highlighted as a growing issue, with projections indicating that by 2027, the energy demands of AI data centres could exceed the entire energy usage of the Netherlands. Nvidia has emerged as a major winner, thanks to its new AI chips, but overall, the technology still faces many challenges before it can fully transform the telecom industry.
In terms of 5G, the promise of widespread adoption remains elusive. While VMO2 and Vodafone have launched 5G standalone (SA) networks in the UK, and Telefónica is making strides in Germany, the overall uptake has been slow. Smartphone sales are recovering slightly, but many customers still lack devices capable of fully utilising 5G services. On the other hand, private 5G networks have gained traction, particularly in industries like manufacturing, oil and gas, and healthcare. Partnerships between telecom operators and businesses have been crucial in these developments, with notable examples in Spain and Malaysia.
Telcos have also been focused on simplification, though this has often translated to job cuts and the sale of non-core operations. Vodafone has exited several markets, including Spain and Italy, while Telstra has reduced its workforce by 10%. Despite these cuts, the role of AI in driving automation and job losses appears limited, with only a small percentage of layoffs attributed to technological advancements.
Security has been another area of concern, with several high-profile ransomware attacks affecting industries, including telecoms. In the UK, new regulations have been introduced to improve cybersecurity, but the industry remains vulnerable to evolving threats. The rise of generative AI has only added to the complexity of tackling security challenges.
Satellite communications have continued to grow, with companies like AT&T, Verizon, and Starlink making significant moves. However, there are concerns about the environmental impact of satellite proliferation, as well as potential disruptions from increasing solar activity. Satcoms remain a vital means of extending network access, but the long-term sustainability of this approach is in question.
The alternative network (altnet) market has also seen significant consolidation, with fibre connections expected to reach 16.7 million UK households by the end of the year. New companies continue to emerge, although some are quickly absorbed by larger players. This trend is likely to continue as the market matures.
In the streaming sector, consumer spending on content has already begun to decline, with rising subscription prices and ad-supported tiers becoming more common. Despite these changes, revenue has increased due to price hikes and the crackdown on password sharing. Streaming services are now bundling subscriptions in a manner reminiscent of traditional cable packages, in an effort to attract new customers.
While 2024 has had its share of challenges for the telecom industry, there have also been several promising developments. The industry is still grappling with issues related to AI, 5G adoption, and cybersecurity, but there is optimism in areas like private networks and satellite communications.
Cerillion plc (LON:CER) is a leading provider of billing, charging and customer management systems with more than 20 years’ experience delivering its solutions across a broad range of industries including the telecommunications, finance, utilities and transportation sectors.
