Due to its ability to provide critical services, COVID-19 is having a limited impact on the worldwide telecommunications sector, according to a report. International Data Corporation (IDC) said worldwide spending on telecommunications and pay TV services will reach almost $1.6 trillion this year, which would be down by 0.8% from last year.
The telecommunications sector has benefited from the global shelter in place and quarantine policies, which has led to millions of employees working from home as well as more online learning and gaming usage. On the flip side, the economic impact of businesses closing, higher unemployment, reduced consumer spending and frozen tourist activities will have a negative impact on the telecommunications market.
Telcos have largely shifted their focus from rolling out 5G to providing more network capacity to stay ahead of the surge in bandwidth demand from homebound users.
"As the 5G revolution is being put on hold or delayed by the pandemic, the already proven technologies and business cases will keep the ball rolling in these uncertain times," said Kresimir Alic, research director with IDC's worldwide telecom services team, in a statement. "Hosted VoIP/UCaaS, collaboration tools, SD-WAN, IoT, along with network optimization and increased reliability will keep consumers and businesses connected during the tough days of pandemic and global recession."
Windstream provided examples of the demand for its UCaaS and SD-WAN services in Monday's first quarter earnings report. Windstream said demand for its unified communications as a service (UCaaS), which is called Office Suite, remained strong during the COVID-19 pandemic with approximately 540,000 UCaaS seats installed. Windstream also touted the more than 3,200 SD-WAN customers it has under contract, which it claimed was the largest SD-WAN deployment in the U.S.
IDC said the mobile segment, which is the largest sector of the market, would post a slight decline this year due to lower revenues from roaming chargess, slower net additions and fewer overage charges due to stay-at-home policies.
Fixed data services spending will increase by almost 3% this year, also due to the demand for more fixed internet connectivity from home users. IDC expects spending on fixed voice services will continue to decline as consumers drop those services to save money during the pandemic. Fixed voice services are expected to survive going forward since they are included in service providers' bundles, according to IDC.
While pay TV services are being boosted by the lockdowns, they're impacted by the economic downturn (mainly the lack of sports advertising), which will lead to slightly less spending for the year.
Telecom services spending will drop in all geographic regions this year, according to IDC. The largest market, the Americas, will see a very slight decline of 0.04%. Europe, the Middle East, and Africa (EMEA) and Asia/Pacific (including Japan) will dip more primarily because of the larger price-sensitive audience in the low-income countries of Africa and Asia. Growth is not expected in EMEA or Asia/Pacific before 2022 as the users in emerging markets are expected to remain cautious about spending for some time.