Many would note that the economic stress created by government shutdown of large portions of the economy, and other public health safety measures, have damaged small business and helped big business. To be sure, those trends were already in place, but were magnified by the government response to the pandemic.
That impact should be seen in many areas of the communications business as well, where other pressures--especially the growth of competition--were in place even before the pandemic.
Bharti Airtel, long one of India’s largest mobile service providers, says it has survived several near-death experiences. After three or four crises, Airtel now operates in a market with “2.5 providers.” Just several years ago, Airtel operated in a market with about 10 competitors.
Big companies with scale are likely to emerge, post pandemic, with more market share than they had going into the crisis, while many smaller businesses will have ceased to exist. Consolidation, of course, is not new in the connectivity business. But the pandemic arguably has nudged the process a bit.
None of that is going to stop researchers from predicting post-pandemic growth. But markets likely will have been reshaped.
To look only at the hospitality segment, estimates of restaurant bankruptcies and closures ranging from 30 percent to 60 percent in some countries and areas, the base of potential customers for connectivity services is going to drop.
Other small and independent retailers likely will face similar pressures, as more market share will shift to giant online retailers and chains. So we will have to be more nuanced in our reading of “growth” forecasts. A return to growth will happen, but on a base of establishments that might be permanently lower.
Unknown at this point is the effect on enterprise connectivity spending as hybrid work patterns are established. Most believe large enterprises will need less office space than in the past, as fewer people will be congregating at such sites.
That might soften direct enterprise connectivity spending at sites. The impact on employees working from home is not clear, either. Most information workers pay for broadband and mobility service for other reasons than work, and those existing connections can be used for work-from-home purposes, generally with little increased cost, if any.
So long-term impact on connectivity provider revenues is not clear. Direct demand might be lower in urban areas for a couple of reasons. Firms will downsize. Fewer people will work at offices full time, with ripple effects on other businesses in those areas.
With fewer people commuting to urban areas, mobile-related behavior will change as well, generally in the direction of less usage while traveling. Less business travel is expected, slowing the growth of roaming revenue.
Arguably, more international communications will use over-the-top apps and services that limit the growth of carrier revenues from international long distance or messaging.
Though more people will be working from home, more of the time, the whole point of multi-purpose networks and internet-based services is that the additional work-related bandwidth or capacity might not be very relevant.
Most consumer bandwidth supports entertainment video, so all work-related additional load will barely be noticed.
Service providers will have to watch--and adjust--capacity investments. Less capital investment growth will be needed in urban cores, as demand will moderate. In suburban areas, there is likely to be more demand for upstream bandwidth, however.
Perhaps oddly, in some markets suppliers are pushing “unlimited data usage” plans precisely at the point that work-from-home trends make the value less obvious. More WFH means less bandwidth consumption when out of the home. In the home mobility usage will shift to Wi-Fi instead.
But bandwidth demand is largely driven by entertainment video, not WFH demands, which are relatively low bandwidth, in comparison.
The point is that prior assumptions about revenue and growth might have to be revised in light of relatively important shifts in end user connectivity demand.
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