How 2023 Macro Trends Will Impact Business Telecom

Buckle up, folks – it looks like we’re in for another wild ride in 2023.

In the business telecom industry, it’s important for us to forecast and respond to the changing needs of the enterprise, especially in a volatile landscape. Their challenges are our challenges, and we must stay aligned to survive.

Although some people still consider telecom to be a utility of sorts, it’s becoming harder to argue that point. Telecom is governed by market forces with less government oversight than you’d expect with utilities. 

Unlike power, gas, and water, the distribution networks and methods for telecom resources have multiplied with a variety of services providing customers with genuine choice – a process that began way back in 1996 with the Telecommunications Act, which means vendors need to stay responsive.

Read on as we chart the changing business landscape, and the tactics that telecom providers will use to meet these fresh challenges.

Interest Rates, Inflation, and Recession

If you’ve been living in a cave, you might not know – but for the rest of us, the current state of the economy is hard to ignore.

Rampant inflation has driven the Federal Reserve to increase interest rates again this February. In fact, in the space of a year the Federal Reserve has raised its benchmark interest rate from near zero to above 4.5 percent. 

This time-worn monetary policy uses the connection between supply and demand to fight inflation. The reasoning is as follows.

• Higher interest rates = people and businesses borrow less, and make fewer purchases

• Purchasing (demand) slows = inventory (supply) rises

• Consequently, more available supply/lower demand = lower prices, slowing inflation

This approach can have a downside, though – as inventories rise, production and manufacturing may slow down to compensate. Jobs are lost, businesses close, and the economy plunges into recession – and all the signs currently indicate that’s where we’re headed.

How Will the Business Telecom Industry Respond?

As businesses scramble to cut costs, one possible route to survival relies on leveraging the operational efficiencies remote work offers. As this breakdown from Global Workplace Analytics demonstrates, employers can save more than $11,000 per worker per year this way.

To achieve these efficiencies, businesses will look to cut back network resources and infrastructure at their corporate locations – abandoning traditional (and expensive) WAN solutions like MPLS, or Point-to-Point.

However, this leaves a gap in cybersecurity at an unacceptable level of risk. Telecom providers are increasingly looking to manage risk with Software-Defined Wide Area Network (SD WAN) solutions, layered with Secure Access Service Edge (SASE) security packages.

This provides remote workers with cybersecurity functionality comparable to the traditional models, as well as more efficient and economical access to the cloud-based services which increasingly make up the modern working environment.

Cybersecurity

The changes in network infrastructure described above are also a source of interest for cybercriminals. 

The escalation in cybercrime during the pandemic (increasing by 31% in 2021) has shown no signs of slowing, even as everyday activities have resumed. The digital transformation of our businesses, organizations, and personal lives continues to provide huge opportunities for criminal activity. 

The increase in distributed workforces accessing enterprise networks via home internet will potentially provide a greater number of attack surfaces and further vulnerabilities for cybercriminals to exploit.

How Will the Business Telecom Industry Respond?

Tech-based issues have tech-based solutions. Using the flexible topologies and secure edge solutions SD WAN and SASE provide, a new approach has been developed – Zero Trust Network Access (ZTNA) – which is rapidly becoming the IT industry security standard.

Rather than playing whack-a-mole with increasingly complex network architectures using firewalls as hammers, ZTNA rethinks the process. Combining a philosophy of “zero trust” (or guilty until proven innocent) with intelligent gateways at every endpoint on the network, ZTNA continues to assess every user – even after they’ve been verified and accessed the network.

Skilled Labor Shortages and Retention

“The Great Resignation” is still a factor affecting the U.S. and other developed economies with whole industries and geographic regions still experiencing the resulting labor shortages.

While widespread changes in working patterns were initially considered to be a result of the pandemic, there’s a growing body of thought that sees the Great Resignation as the result of a combination of underlying trends. Demographic changes like early retirement in the professional sector and automation in the workplace are now believed to be driving the labor shortages.

How Will the Business Telecom Industry Respond?

This is an area where the telecom industry is feeling the pinch, too. As Charter Communications CEO Tom Rutledge admitted recently;

“There is no labor force anywhere for any jobs… We have thousands of unfilled positions.”

It’s not just telecom – the IT industry is experiencing skills shortages sector-wide.

This lack of local talent, along with the recession, means that enterprises will be forced to lean even harder into the remote working solution to source the necessary skills to keep things running.

In terms of how the telecom industry hopes to assist enterprises with labor shortage and retention issues, it’s possible that solutions may be required to ensure that remote workers have sufficient internet capability at home to meet their working needs.

It’s certainly an issue facing enterprise decision makers – the operational savings of a distributed workforce are only possible if minimum connectivity standards can be maintained. But who’s going to foot the bill? Will we begin to see minimum bandwidth as a condition of employment? And do companies need yet another barrier to recruitment and retention?

Supply Chain Issues

Global supply chains have rallied somewhat, after the widespread breakages we saw resulting from lockdowns during the pandemic. 

However, there’s still a lot of work to be done – as businesses look to replace or augment their previous “just-in-time” (JIT) logistics operations with something a little more resilient, other global issues have provided further evidence that we can’t rely on pre-pandemic practices.

New Covid variants continue to be a factor, and the unavoidable infection risks of manufacturing environments wreak havoc on the health and productivity of the workforce in those industries.

Conflict in the Ukraine, and the resulting sanctions against Russia have obviously created additional stress on the supply chain, particularly energy supply (which impacts every sector of the economy).

How Will the Business Telecom Industry Respond?

Some issues are too far reaching to avoid, and the telecom industry is far from immune to the problems afflicting the global supply chain.

A solution that has provided some protection from the ripple effects that create delays and bottlenecks in supply has been AI integration.

Using AI to forecast network equipment supply needs, based on historical data, has allowed telecom providers to more effectively manage network maintenance and network expansion decisions.

Harnessing insights into equipment failure rates allows for better predictions, and tracking growth patterns in emerging markets allows providers to stay ahead of requirements several months in advance. 

Navigating an economic downturn (and coming out in one piece) is a challenge – but there are tools to help you make it through. 

Lightyear is one of these tools. Our flexible procurement platform makes light work of sourcing the best telecommunications services for your business needs, and it’s backed by industry experts with decades of business telecom experience – we’ve seen it all, from boom to bust and back again. Get in touch and let Lightyear be your guide.