FEATURE: BUSINESS CONTINUITY
HEALTHY END-USER FUNDAMENTALS, POSITIVE 5G MOMENTUM, AND IMPROVED UNDERSTANDING ABOUT THE IMPORTANCE OF ACCESS TO CONSISTENT BROADBAND WILL ULTIMATELY OUTWEIGH THE DOWNSIDE RISKS DUE TO COVID-19
it will be catastrophically so. In fact, one of the key takeaways from the research note is that the longer term impacts of Covid-19 will actually benefit the digital economy and, by extension, optical communications. Te research note highlights the concept of
transmission networks as data traffic growth rates continue to be high; investing in customer experience; leveraging cloud resources of the webscale sector and selectively investing in their own cloud.
So, what now? Looking at the present, LightCounting’s latest research note, covering the first three months of 2020 acknowledged that telcos and data centres are being designated essential businesses that are allowed to remain open. But asks, beyond that, how can we expect the telecom/optics ecosystem to fare? Te specialist industry analyst firm reached
four fact-based conclusions. Firstly, China is geting back to business, more or less. Secondly, bandwidth demand is geting quite the boost from social distancing measures. Infrastructure capex is thirdly showing signs of strength, and last but not least, while equipment and component company sales will be impacted, LightCounting does not believe
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‘punctuated equilibrium,’ which originated by evolutionary biologist Stephen J. Gould. Tis holds that species evolve, not at a slow and constant rate of change, but rather endure long periods of stability, punctuated by short bursts of rapid evolution in response to drastic perturbations in the environment. Te same concept applies to societies and economies as well. LightCounting believes it likely that the coronavirus pandemic will result in an acceleration of trends favouring the ‘digital economy’.
Genie in a botle Te research note used the United States as an example, as tens of millions of students now atend college and secondary schools remotely, and more tens of millions of adult workers, and their employers, get their first experience with working from home. ‘Once that genie is out of the botle it may prove difficult to put it back in,’ the research note stated. Businesses may realise that productivity does not suffer and that there are benefits, such as reduced office costs and reduced greenhouse gas emissions. In addition, heightened awareness of
social hygiene and new habits like touch- free shopping will linger long aſter the coronavirus is finally under control. Tis, said LightCounting, should boost the use of digital wallets, online shopping, food and grocery delivery services, and is already expanding
those concepts to new segments like retail pharmacies. Te virus will also expose and highlight
current weaknesses and inequalities in broadband access and healthcare access, resulting in greater access to fixed and mobile internet in poor and rural areas, and more widespread use of telemedicine. Finally, said the company, the companies
underpinning this shiſt to digital – Alphabet, Amazon, Apple, Facebook, and Microsoſt – are well positioned to weather the inevitable but temporary reductions in smartphone, tablet, and laptop sales, and online revenues – having litle or no debt and hundreds of billions of cash on hand. In contrast, brick and mortar retail chains that were already hurting may be dealt a final blow by this pandemic.
Riding through the storm Of course this future scenario is speculation at this point, and it assumes we manage to somehow overcome the massive economic and societal challenges posed by the pandemic without sinking into a global depression. On the whole, though, said LightCounting, ‘it is difficult to think of another industry we would rather be in, as we ride through this storm,’ We couldn’t agree more! Tis outbreak of positivity is seconded by
a recently published report from Dell’Oro Group, which looks further forward. Telecom capex outlook, it said, remains favorable, even with the increased uncertainty due to the pandemic. Worldwide telecom capex – the sum of wireless and wireline telecom investments – is projected to grow at a one per cent CAGR between 2019 and 2022. Stefan Pongratz, vice president and analyst
with group, said: ‘While we are operating in unchartered territories and it is somewhat unorthodox to project solid capex growth in the middle of a pandemic, we envision that healthy end-user fundamentals, positive 5G momentum, and an improved understanding about the importance of access to consistent broadband will ultimately outweigh the downside risks due to Covid-19.’
Healthy growth Additional highlights from the Telecom Capex Forecast include projected growth for wireless capex to be faster than for wireline. In addition, worldwide capital intensity ratios – wireless plus wireline – are projected to advance at a one per cent CAGR between 2019 and 2022, driven primarily by a healthy uptick in wireless capex/revenue. Investments in China, fuelled by the rapid
shiſt to 5G, are projected to drive the lion’s share of the capex upside-over the 2019 to 2022 forecast period. Following three years of elevated investment levels in the US telecom market, wireless investments will be characterised by robust mid-band capex, increasing millimetre wave investments, and some moderation in low-band projects.n
Issue 27 n Spring 2020 n FiBRE SYSTEMS 17
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