Digitalization could unlock $2tr in value for telecoms

The telecommunications sector is in a position to unlock $2 trillion in economic value through digital transformation, according to new research from the World Economic Forum.

The report identifies four broad digital transformation themes expected to have the biggest impact on the telecoms sector, and that must be addressed to capture the full value of digital transformation.

The first theme involves virtualization of the physical hardware layer to usher in networks of the future that are self-optimizing and secure.

WEF's second theme envisions operators extending value beyond being a mere bit pipe through integrated IoT offerings, consumer and enterprise digital services, as well as reimagined communication models taking advantage of advances in augmented and virtual reality as well as natural human interfaces.

Operators will meanwhile need to deploy features and tools designed to transform customer engagement and deliver unparalleled digital experiences.

Finally, operators must fill capability gaps by developing new innovation models capable of delivering rapid innovation, greater convergence and new services.

Of the more than $2 trillion in value at stake for the industry, WEF predicts that the value to the telecom industry could exceed $1.2 trillion in cumulative operating profit from 2016 to 2025. The remaining $800 billion or so involves potential value created for society and consumers.

WEF's report also indicates that the telecoms sector is critical to unlocking $10 million in digital transformation value for five other key industries – e-commerce, automotive, electricity, logistics as well as media and entertainment.

But the industry itself has so far been largely missing out on the digital windfall – WEF estimates that operators’ share of the industry profit pool has declined from 58% in 2010 to 47% in 2015, and is forecast to drop to 45% in 2018.

The report states that this is why it is critical for the sector to embrace digital transformation.

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