Failure to respond to rise in cost-of-living tops telecoms risk radar

Deniza Cristian 04/01/2023 | 15:37

The rise in the cost-of-living has driven consumers to re-adjust spending priorities. Telcos’ failure to respond to this changing mindset is now the biggest threat facing the industry, according to the annual EY report, Top 10 risks in telecommunications 2023. With consumer spending under increasing pressure, EY research shows that 60% of households are worried about rising broadband subscription prices, and nearly half (45%) believe they overpay for content services.

 

While network reliability remains a consumer pain point, infrastructure resilience and reach has fallen from No. 1 in the ranking for the first time since the onset of the COVID-19 pandemic – now at fifth position as other challenges become even more pressing.

Tom Loozen, EY Global Telecommunications Leader, says:

“While connectivity represented a lifeline for many during the height of the COVID-19 pandemic, the landscape has changed. In today’s economic climate, consumers are hyper-focused on the value they’re getting from telecoms providers, and telcos ignore this shift at their peril. The threat is compounded by increasing pressure from regulators, with some demanding that telcos do more to offer consumers ‘social tariffs.’ In response, telcos must create clear, simple and secure propositions that re-assure and appeal to customers.”

Telcos struggle to keep pace with cyber risk

Underestimating changing imperatives in security and trust has risen from third to second place on the 2023 telecommunications risk radar, with 76% of telcos reporting growth in cyber attacks year-on-year according to EY research.

A disconnect has emerged between heightened levels of vulnerability and board-level scrutiny, and 39% of telecoms chief information security officers (CISOs) believe security is not adequately considered as part of strategic investments. Further, the security function is being undermined by inadequate relationships with the wider business, despite its growing prominence during the pandemic (noted by 58% of telecoms CISOs). Less than a third (31%) of CISOs believe their relationships with product development teams are grounded in moderate or high levels of trust.

This is compounded by increasing anxiety among consumers, for whom the pandemic has exacerbated pre-existing fears around data disclosure. Indeed, 46% of consumers believe that it is impossible to keep their personal data secure when using the internet.

Sustainability reporting has stalled

The report also finds that poor management of the sustainability agenda is becoming an increasingly urgent threat to the industry, rising from fifth position last year to fourth place on the 2023 ranking. The quality of telecoms operators’ climate change disclosures has declined year-on-year, according to EY Global Climate Risk Disclosure Barometer, and 39% of respondents do not disclose a specific net-zero strategy, transition plan or decarbonization strategy – despite growing calls for tangible action from all stakeholders.

Customer expectations in the sustainability domain are intensifying, putting pressure on operators to keep pace. Thirty-nine percent of consumers say connectivity providers need to do more to address sustainability concerns,  and 68% of large enterprises are more interested than before in 5G use cases that can help meet sustainability goals.

Adrian Baschnonga, EY Global TMT Lead Analyst, says:

Sustainability is more than an add-on to premium products, it should be a vital part of the telco customer promise. Consumers want to see clearer evidence of action, while businesses will prioritize suppliers that can support their sustainability initiatives. Looking ahead, telcos have a central role to play as catalysts of a more sustainable society.”

Talent turnover remains key risk

At third position for the second consecutive year on the 2023 telecommunications risk radar, failure to improve workforce culture and ways of working is an evolving risk as the views of employers and employees continue to diverge. While 91% of technology, media & entertainment, and telecoms (TMT) employees want to work remotely for two or more days per week, 25% of TMT management teams believe their people should return to the office five days a week. Alarmingly, workforce churn is a greater threat in TMT: 53% of TMT employee respondents say they plan to leave their current role in the next 12 months, compared with an average of 43% across all sectors, according to our 2022 Work Reimagined Survey.

Loozen says: “Staff turnover is making telecoms management more pessimistic about how the COVID-19 pandemic has affected company culture, but employees feel empowered through remote working and believe that work culture has improved since the health pandemic began. Now is the time for telcos to listen to their people and adapt, or risk an exodus of their best talent.”

The Top 10 risks included in the 2023 report are:

  1. Insufficient response to customers during the cost-of-living crisis
  2. Underestimating changing imperatives in security and trust
  3. Failure to improve workforce culture and ways of working
  4. Poor management of sustainability agenda
  5. Inability to accelerate efficiencies through digitization
  6. Failure to establish infrastructure resilience and reach
  7. Failure to take advantage of new business models
  8. Failure to maximize value of infrastructure assets
  9. Ineffective engagement with external ecosystems
  10. Inability to adapt to changing regulatory landscape
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Deniza Cristian | 19/12/2022 | 18:45

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