Change is in the air for the telecommunications sector as vendors and service providers grapple with the fallout from COVID-19. While it may be too soon to carve all of the changes into granite, it does seem as though the industry is headed towards the dawning of a new era.
The lessons learned to date are that, for the most part, service providers were largely well equipped to meet the 30% to 40% increase in bandwidth demand on their networks as millions of employees and students became home bound.
As some carriers noted, the planned capacity increases for an entire year were reached during the height of the coronavirus pandemic due to shelter-in-place and lockdown policies. Adding more capacity going forward is top of mind for most service providers.
But now that service providers, businesses and other organizations know that their employees can work from home (WFH) how many will return to the office space once the coronavirus restrictions loosen up across the board? World Wide Technology's Neil Anderson, senior director of network solutions, expects a hybrid-working environment to emerge.
"So with the employees, we don't expect that there's going to be a return of 100% going back to central working locations and office locations," Anderson said. "It depends on the industry. You can't be a surgeon work from home. But for knowledge working at carpeted office spaces, we think that there's actually going to be a significant reduction somewhere on the order of 30% to 40% of the employees continuing to work from home.
"Some of that may be out of a company led initiative where they say 'Hey, this worked pretty well. Let's take advantage of that and save some money on real estate costs.' Or it may be employee comfort level. We don't expect that everyone's going to be comfortable going back until this really, really settles down. On the consumer side, we think consumers are going to continue to be fairly cautious, fairly skeptical. They're going to continue to insist on contact free models for a while"
Anderson said businesses and service providers would continue to focus on contact free models "for a long time."
COVID-19's impact on future employees
On the telco side, Verizon was able to send 115,000 of its 135,000 employees to WFH by mid-March. Conversely, Charter Communications came under fire for not allowing some of its employees to work from home during the early stages of the coronavirus.
While not commenting directly on Charter or Verizon, Anderson said potential employees would keep in mind how a company handled WFH during the coronavirus pandemic.
"It's our belief that there's going to be a couple of different types of organizations that come out of this. Those who do that really well put employee safety first and were able to accommodate very, very flexible work schedules and those who didn't do that," Anderson said. "It's my belief that that's going to become a little bit of a new differentiation as employees look at where they want to work in the future. Who handled this really well? Who put employee health first? Who really struggled with that or insisted on people still coming in to work potentially in unsafe places?
"There are some operators that I think have done it exceptionally well, and we've worked with a few of those. I think there's a few other operators who choose to take a different path."
Anderson also sees a swing towards corporate managed access points, more robust routers and corporate provided phones as part of an increased focus on standardized home office infrastructure that can be managed by a business or service provider.
"We see organizations that are looking at more permanent solutions," Anderson said. "If this isn't just a blip and I'm going to have persistent home offices, maybe I need to do something more permanent?
"We think that there's going to be a period where people are going to have to think about investing in more standardized home office infrastructure that is it managed, especially for those workers that they're going to permanently leave out there."
Instead of investing in large-scale campus refresh projects, businesses and service providers may direct their capex toward more robust, permanent home office solutions.
"We have campus switching as one of the weakest technology sectors we track for this reason," said Alan Weckel, founding analyst for 650 Group. "We expect enterprises class networking vendors to push more software-based solutions on top of residential-based services in the second half of this year. Those solutions weren’t needed and were not developed, so there is a certain component of time-to-market to get that type of software written."
While fewer investments in campus refresh projects may have an impact on companies such as Cisco and Juniper Networks' campus portfolios, Anderson said they could instead pivot to providing newer, more secure home-based services and applications.
Anderson said the coronavirus pandemic has moved the digital transformation ball farther down the field for businesses and other organizations. Those that had already started working on their digital transformations have fared well compared to the businesses that were still relying on legacy solutions. By using cloud-based applications and online inventories for mobile ordering and mobile pickups, digitized companies were able to quickly adapt to contactless services
"The enterprises who were very far along in being able to programmatically control their network with automation certainly have a distinct advantage," Anderson said. "Because you can operate your network from anywhere, you've got a lot of visibility and you've got a lot of tools that are fairly automated. We see people that are doubling down on digitization and doubling down on cloud initiatives, because it's becoming more and more evident that those who are doing that are having success."
Service providers will invest in more robust home solutions
As the companies that already provide network connectivity and business solutions to end customers, service providers need to shift their attention to providing better home-based solutions and applications.
At an investor conference last week, AT&T's John Stankey, who is currently AT&T's chief operating officer before taking over as CEO in July, said his company was evaluating how AT&T can meet the evolving needs of its business customers.
"I think that they will not slow down on 5G," Anderson said of service providers. "If I'm looking for mobile as part of my backup solution, or even as my primary solution, that could be a good medium for me to connect to home offices. So I think they will continue to invest there and continue to accelerate that.
"I also think that right now they're doing some load shifting inside their core networks, from a capacity standpoint, over towards home broadband usage. I could see them investing more in those home residential broadband services because you're going to have to treat a lot of these like business connections. It'll be interesting to see how they handle that."