In the ever-evolving landscape of telecom retail, staying ahead of industry trends is essential.
Recently, at our 2023 Telecom Industry Address, iQmetrix’s SVP of Revenue and Client Experience Jason Raymer delved into our top five megatrends in telecom retail over the past year. Here they are, in reverse countdown order — plus a snapshot of what our Industry Address attendees picked as their top megatrends.
#5 Labor shortages in telecom retail
The retail industry is grappling with a severe labor shortage that has sent shockwaves through the workforce. 63% of retailers are currently operating with a deficit of frontline employees, and half of those frontline employees believe that staffing levels have worsened since the pandemic.
Compounding these challenges, 43% of retail employees are concerned about increased job demands and workloads. Given these concerns, it’s unsurprising that 74% of retail workers are either actively job hunting or contemplating a switch to a new profession. The implications are clear; the retail sector must adapt to these profound labor challenges.
However, there is hope on the horizon. Technology solutions are gaining ground, with 80% of retailers saying they are planning to implement solutions to improve the employee experience, streamline operational efficiency, and provide tools for employees to excel in their roles. Retailers investing in these technologies are not only addressing labor shortages but also positioning themselves at the forefront of a rapidly evolving industry.
#4 AI and its impacts on the telecom industry
The telecom industry has been actively embracing AI, with 34% of telecom industry professionals reporting that their companies have incorporated AI into some aspect of their operations for more than six months. While 31% are in the research and assessment phase, 5% are yet to plan their AI integration.
AI is already delivering real benefits; 73% of companies currently using AI technologies have seen significant increases in revenue, and 80% of these companies have seen significant cost reductions.
Our 2023 Trends in Telecom Retail survey also reflects the growing shift toward use of AI technologies, with 63.1% of telecom retail professionals saying they anticipate an upsurge in AI usage, particularly in improving customer experience and personalization.
#3 Government regulation in telecom — and its effect on the prepaid sector
Regulatory requirements in the U.S. have led to an explosion in prepaid services, driven by the acquisition of Tracfone by Verizon in 2020. the delay in the much-anticipated release of the 5G C band has cast a shadow over several key players in the industry this year.
Additionally, the Affordable Connectivity Program (ACP), which plays a critical role in helping underserved and low-income populations access affordable telecommunications services, has played a significant role in reshaping the prepaid ecosystem. The ACP’s subsidies for eligible individuals has driven increased demand for prepaid services, making them a more attractive and viable option.
This regulatory reshaping of the US telecom landscape has made the lack of regulatory impact on the Canadian telecom sector all the more striking. While the Roger/Shaw merger has been delayed, it is still set to go through. And the CRTC’s efforts to boost competition in Canadian telecom have yet to bear fruit.
#2 Drop in demand for devices, with longer buying cycles
The global smartphone market has witnessed a 6% year-over-year decline in shipments in 2023. Consumers are demonstrating a preference for holding onto their devices for a more extended period and are seeking greater value and cost-effective alternatives in the growing refurbished device market when they do need to purchase new devices.
However, it is also notable that just over half of new device sales in 2022 were premium smartphones – reflecting a shift in preference toward devices with longer lifespans and advanced features like high-resolution displays, powerful processors, and advanced photography systems. Premium devices also tend to have extended periods for updates and support, contributing to their appeal among consumers tired of replacing their phone every other year.
#1 New wireline MVNOs gobbling up wireless market share
Securing the number one spot on our countdown is the remarkable rise of Mobile Virtual Network Operators (MVNOs) in the wireline cable segment. This growth has been fueled by substantial year-over-year subscriber increases and a strategic pivot towards wireless services by cable companies.
Charter Spectrum, in particular, has emerged as the dominant player in this space, outpacing competitors with an impressive 55% year-over-year growth in wireless subscriptions from Q2 2022 to Q2 2023. Additionally, Charter Spectrum has also managed to minimize the decline in cable TV subscribers, experiencing only a 5% drop, a notably better performance compared to Altice’s 10% and Comcast’s 14% decline.
Event poll results: what did Industry Address attendees see as the top trend?
While we saw the rise of MVNOs as the top industry trend to watch, event attendees identified lower demand and longer upgrade cycles as their top trend. Meanwhile, our number four trend – the impact of AI on telecom – was tied for second.
Telecom retail is set for another exciting and challenging year.
As we reflect on the key trends that have shaped the telecom retail industry in 2023, we’re also looking ahead to the possibilities of 2024. As technology continues to drive innovation, we anticipate a dynamic landscape in which retailers who embrace these trends will be best positioned for success in the ever-evolving world of telecom retail.