Why the telecoms industry might struggle more than most in 2023

Silhouette of telecoms infrastructure against the sunset

There’s little doubt the challenges the UK and other nations have faced in 2022 are continuing into 2023, and there’s every likelihood that they’ll extend into 2024 too. Supply chain disruption caused by COVID-19 has continued, and we face economic uncertainty due to issues with energy supply and cost and wider inflationary pressures. Both businesses and consumers are watching spending. The telecoms industry faces these pressures too, and more, knowing there’s little or nothing they can do about them.

In a recent report, EY describes a range of pressures on the industry over which it does have agency. From an insufficient response to customers during the cost of living crisis, through failure to improve workforce culture and ways of working in the face of a talent crisis, poor management of the sustainability agenda and an inability to take advantage of new business models, the report describes ten challenges the sector needs to stand up to.

The challenges facing the telecoms industry

Where there’s economic uncertainty, firms move into situations in which while some fail, others will grow. M&A activity can increase, with buyers gaining more power as sellers become more stressed and keen to sell. “The top pain points for telcos this year will include cut-throat competition in major European markets,” Kester Mann, director, of consumer and connectivity, at analyst firm CCS Insight tells IT Pro. He adds that “2023 could prove a pivotal year for operators’ ambitions to consolidate”.

If we move away from the strategic level and look more closely at some specifics we can begin to understand the complexity of the situation. For example, there are challenges around 5G rolloutInternet of Things (IoT) deployment that’s associated with it – and the 3G switch-off.

Phil Beecher, President of Wi-SUN Alliance tells IT Pro the question of whether the economics of 5G stack up is a significant one for telcos. “Will 5G networks provide sufficient coverage and be sufficiently resilient to support the rollout of large-scale IoT networks, for example within the context of smart city applications?” he asks. His answer? “As a standalone technology, 5G is not ideal to support networks that need to stay up and running in the event of sustained power outages or extreme weather conditions, such as flooding. It is also questionable whether it will be economic to provide 100% coverage across an entire city, something necessary for IoT networks.”

James Gray, director of Graystone Strategy adds another perspective to the 5G rollout debate, telling IT Pro in 2023. “The debate on monetising 5G will still be prominent,” he says. “It’s becoming more and more urgent to get an ROI on the investment as the recession hits, but there’s still a need for critical mass adoption of the innovations being touted.”

At the other end, the upcoming switch off of 3G is not without its own problems. “I think the impact on consumers and business users and the IoT is underestimated,” Gray adds. “It needs to happen but there are M2M devices of significant quantities caught up in this migration. IoT providers need plans in place quickly. This doesn’t just affect operators there is a whole value chain of service provides, dealers and solution providers that need to ensure their customers and critical services they support are not impacted.”

How telecoms firms can find a way through

It’s not all doom and gloom, and there are some strategic moves telecoms firms can make to find positives. Mann says CCS Insight’s research shows positive trends in businesses’ IT investment plans over the next 12 months. Nearly 85% of senior leaders across the US and Europe point to an increase in planned spending, including almost a quarter who say investment will increase by more than 15%. Meanwhile, only 12% say it would be unchanged and less than 5% say it would fall. There’s surely headroom for some of this investment to be around telecoms.


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Gray points out that MVNOs – a key part of the provider network – may benefit. He tells IT Pro there’s “huge potential for MVNOs to grow their businesses” and win over customers who might not have considered moving away from incumbents. These businesses grew during COVID-19, he continues, so they’ll be bullish about growing in a recession.

Where 5G is concerned, there’s potential for what’s currently a niche activity to grow. “As 5G is now pretty good in some areas of the country, people could be tempted to cut their broadband service altogether in favour of it,” Gray adds. “That’s probably the most significant catalyst for making 5G pay.”

Telecoms firms have invested heavily in infrastructure over recent years. They couldn’t have foreseen the significant economic pressures combined with the continued challenge of finding and retaining staff – including in technical roles. This has hampered their capacity to work with both businesses and consumers.

These challenges are significant, and they’re spread across technological, financial and wider socioeconomic levels. But if telecoms firms take time to understand these challenges, they can work to find a way through. At the end of every one of their issues is a customer, and so the last word should focus on this. “Customers are going to shop around and so loyalty and retention activity needs to be dialled up,” Gray says. That means finding and focusing on what the market wants – and focusing hard throughout 2023 and beyond.

Sandra Vogel
Freelance journalist

Sandra Vogel is a freelance journalist with decades of experience in long-form and explainer content, research papers, case studies, white papers, blogs, books, and hardware reviews. She has contributed to ZDNet, national newspapers and many of the best known technology web sites.

At ITPro, Sandra has contributed articles on artificial intelligence (AI), measures that can be taken to cope with inflation, the telecoms industry, risk management, and C-suite strategies. In the past, Sandra also contributed handset reviews for ITPro and has written for the brand for more than 13 years in total.