The Future of Work: How AI can help telcos keep up

What will the Future of Work look like?

The Future of Work is a complex mix of external and internal drivers which will exert pressure on the telco to change – both immediately and into the long-term. Drivers include government policy, general changes in cultural attitudes and new types of technology. For example, intelligent tools will see humans and machines working more closely together. AI and automation will be major drivers of change, but they are also tools to address the impact of this change.

AI and automation both drive and solve Future of Work challenges

Futuore of work AI automation analytics

Source: STL Partners

This report leverages secondary research from a variety of consultancies, research houses and academic institutions. It also builds on STL Partners’ previous research around the use of A3 and future new technologies in telecoms, as well as organisational learning to increase telco ability to absorb change and thrive in dynamic environments:

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The Future of Work

We begin by summarising secondary research around the Future of Work. Key topics we explore are:

Components of the Future of Work

Future of work equation

Source: STL Partners

  1. The term Fourth Industrial Revolution is often used interchangeably with the technologies involved in Industry 4.0. However, this report uses a broader definition (quoted from Salesforce):
    • “The blurring of boundaries between the physical, digital, and biological worlds. It’s a fusion of advances in artificial intelligence (AI), robotics, the Internet of Things (IoT), 3D printing, genetic engineering, quantum computing, and other technologies.” 
  2. Societal and cultural change includes changes in government and public attitude, particularly around climate change and issues of equality. It also includes changing attitudes of employees towards work.
  3. Business environment change encompasses a variety of topics around competitive dynamics (e.g. national versus global economies of scale) and changing market conditions, in particular with relation to changing corporate structures (hierarchies, team structures, employees versus contractors).
  4. Pandemic-related change: The move towards homeworking and hastening of some existing/new trends (e.g. automation, ecommerce).

Content

  • Executive Summary
  • Introduction
  • The Future of Work
    1. The Fourth Industrial Revolution
    2. Societal and cultural change
    3. Business environment change
    4. Pandemic-related change
  • How will FoW trends impact telcos in the next 5 to 10 years?
    • Expected market conditions
    • Implications for telcos’ strategic direction
    • Workforce and cultural change
  • Telco responses to FoW trends and how A3 can help
    • Strategic direction
    • Skills development
    • Organisational and cultural change
  • Appendix 1
  • Index

Related Research

 

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SK Telecom’s journey in commercialising 5G

SK Telecom (SKT), Verizon and Telstra were among the first in the world to commence the commercialisation of 5G networks. SK Telecom and Verizon launched broadband-based propositions in 2018, but it was only in 2019, when 5G smartphones became available, that consumer, business and enterprise customers were really able to experience the networks.

Part 1 of our 3-part series looks at SKT’s journey and how its propositions have developed from when 5G was launched to the current time. It includes an analysis of both consumer and business offerings promoted on SKT’s website to identify the revenues streams that 5G is supporting now – as opposed to revenues that new 5G use cases might deliver in future.

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At launch, SKT introduced 5G-specific tariffs, that coupled large data allowances with unique apps and services designed to ensure data consumption and demonstrate the advantages of 5G access. 5G plans were more expensive than 4G plans, but the price of 5G data per MB was less than that for 4G to tempt customers to make the switch.

SKT’s well-documented approach to 5G has been regarded as inspirational by other telcos, though many consider a similar approach out-of-reach (e.g. for other telcos, coverage issues may limit their ability to charge a premium, or 5G-value-adding services may be lacking).

This report examines the market factors that have enabled and constrained SKT’s 5G actions, as it moves to deliver propositions for audiences beyond the early adopters and heavy data users. It identifies lessons in the commercialisation of 5G for those operators that are on their own 5G journeys and those that have yet to start.

5G performance to date

This analysis is based on the latest data available as we went to press in March 2021.

There were 10.9 million 5G subscribers in South Korea at end-November 2020 (15.5% of the total 70.5 million mobile subscriptions in the market, according to the Ministry of Science and ICT) and network coverage is reported to be more than 90% of the population (a figure that was already quoted in March 2020). Subscriber numbers grew by nearly one million in November 2020, boosted by the introduction of the iPhone 12, which sold 600K units that month.

SKT’s share of 5G subscribers was 46% (5.05 million) in November, to which SKT added a further 400K+ in December, reaching 5.48 million by the end of 2020.

The telco took just four and a half months to reach one million 5G subscribers following launch, significantly less than it had taken with 4G, which had attained the same milestone in eight months following 4G’s commercial launch in 2011.

SKT quarterly 5G subscriber numbers (millions)

SK Telecom 5G subscribers

Source: STL Partners, SK Telecom

SKT credits 5G subscriber growth for its 2.8% MNO revenue increase in the year to December 2020, however the impact on ARPU is less clear. An initial increase in overall ARPU followed the introduction of higher priced 5G plans at launch, but ARPU has fallen back slightly since then, possibly due to COVID-19 economic factors.

SKT total ARPU trend following 5G launch

SK Telecom 5G ARPU

Source: STL Partners

In its 2020 year-end earnings call, SKT reported that it was top of the leader board in South Korea’s three customer satisfaction surveys and in the 5G quality assessment by the Ministry of Science and ICT.

As a cautionary note, Hong Jung-min of the ruling Democratic Party reported that 500K 5G users had switched to 4G LTE during August 2020 due to network issues, including limited coverage, slower than expected speeds. It is unclear how SKT was affected by this.

 

Table of Contents

  • Executive Summary
    • Recommendations
    • Next steps
  • Introduction
  • 5G performance to date
  • Details of launch
  • Consumer propositions
    • At launch
    • …And now
  • Business and enterprise propositions
    • At launch
    • …And now
  • Analysis of 5G market development
    • What next?
    • mmWave
  • Conclusion
  • Appendix 1

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What will make or break 5G growth?

5G is a long way from delivering on the hype

This report is a crib sheet outlining the 18 factors that STL Partners believes will have a significant impact on the development of the 5G market. We put forward our core assumption on how we expect each factor to affect the 5G market, and highlight the upside and downside risks to our assumption.

The purpose of the report is to pull together knowledge from across different areas – networks, enterprise services, consumer services, regulatory and commercial environments – to give a holistic view of what we think will influence 5G development. Although everyone in the industry has an eye on how 5G is developing, often this is from a relatively narrow view of the market. But the reality is that over the long term, 5G will not be just another G, but an amalgamation of many emerging and maturing network technologies, increasingly bespoke and fragmented enterprise and consumer demands, with high government expectations for contributions to economic growth. So to understand how quickly or slowly 5G will deliver on these promises, operators, vendors, customers and governments need to consider how a wide range of factors are playing out in their countries. By benchmarking their progress against our core assumptions, upside risks and downside risks, industry players can make a well-rounded assessment of whether they are ahead or behind in 5G development and identify ways to drive the market forward.

This report builds on STL’s extensive coverage of 5G and other enabling technologies:

Key factors influencing 5G development

We have organised the factors affecting 5G development into three categories:

  1. Primary drivers: We believe these will have the greatest impact on 5G development, owing to their influence over the cost and ease of deploying network infrastructure and services, and accessibility and value of 5G connectivity to end-users.
  2. Secondary drivers: These factors have a less direct impact on the 5G market development, especially over the short term, or will only influence a specific part of the market, such as fixed wireless access. However, in some instances telcos have more control over secondary factors than the primary ones, so depending on their strategies, secondary factors could have a disproportionate impact on 5G market development.
  3. Wildcards: These are factors which are less likely or predictable, but that if they do occur would have a decisive impact on how the 5G market (and wider telecoms industry) evolves.

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The 5G-aliser

Over the coming quarters, we will use these 5G factors as a means of measuring progress. The diagram below shows the inaugural 5G-aliser. The top row shows the supply and demand levels for 5G, the middle row shows the absolute level impact of each driver on 5G development, i.e. how important each driver is to 5G growth right now , and the bottom row shows the relative position of each driver. While our intention was to start all drivers at the same relative level, reflecting our core assumption as of March 2020, given the rapid escalation of the COVID-19 pandemic, we have dropped this driver into the red already as we expect telcos’ first priority during the crisis to be on keeping their current operations running smoothly.

The 5G-aliser, March 2020

STL 5G-a-liser March 2020

Source: STL Partners

On a quarterly basis we will monitor the development of the 5G market and update the markers for each driver to reflect the emergence of upside or downside risks, and rising or falling importance of different growth drivers. Evidently, some factors are dependent on local market conditions, so we will also evaluate the drivers on a market by market basis, when important local developments occur.

Table of contents

  • Executive Summary
    • Key takeaways
    • The 5G-aliser
  • Introduction
  • Key factors influencing 5G development
    • Primary drivers
    • Secondary factors
    • Wildcards
  • Conclusions

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