The digital pressures weighing on telecoms

Digitization is profoundly changing the competitive boundaries of the telecommunications industry. Core voice and messaging businesses have continued to shrink, in part because of regulatory pressures, but also because social media has opened new communications channels beyond traditional voice service. Today, companies face another wave of change, from new digital devices and more robust models for delivering telecom services—a point confirmed by a recent survey of 254 executives from companies representing more than a third of global revenues in telecommunications, media, and technology.

We asked the respondents about three areas of industry disruption: new consumer touchpoints created by devices based on Internet of Things technologies, over-the-top (OTT) business models that disintermediate existing communications platforms and services, and the potential of these changes to commoditize the incumbents’ brand positions (exhibit). A lot is up for grabs as the boundaries between telecommunications and information technology continue to blur. Our survey suggests that industry leaders are well attuned to the far-reaching implications of these shifts. How to counter—or, better yet, surpass—the attackers is a bigger challenge.