The Covid-19 Opportunity for Operators

Our survey shows consumers could be willing to spend more

One of the topics I talked about during CCS Insight’s recent Predictions Week was how operators can build on their stellar efforts during the Covid-19 crisis (you can watch all the sessions from the event here).

The telecom sector has enjoyed a welcome boost to its reputation this year as the health crisis has clearly shown the value that businesses and consumers place on high-quality connectivity. In many of my recent conversations with network operators, I’ve heard about improving loyalty and higher customer satisfaction. As I said in my Predictions session, operators’ brands may never be the most loved, but they’re at least getting a little more appreciation.

Five months into lockdown, we carried out some consumer research to gauge how people view their telecommunications provider and whether the pandemic may influence their future buying decisions. We surveyed more than 2,000 people in the UK and US.

Telecom companies sometimes get a bad press, so it was heartening that eight in 10 home broadband customers in both markets said they were either “very satisfied” or “fairly satisfied” with the level of service they had received while some of the severest Covid-19 restrictions were in place.

And of course, these good customer experiences were achieved in the face of surging and at times unpredictable levels of usage that arrived at very short notice for operators. Our research showed people shopped more online, used more subscription services such as Netflix and played more online games while they were confined to their homes.

But the challenge for the telecom industry has always been to turn demand into revenue. As Marc Allera, CEO of BT’s Consumer brands, pointed out in his interview during our Predictions event, it’s hard to think of another sector in which usage has grown so strongly, while average spending has practically stayed the same.

I believe there are clear opportunities for providers prepared to move quickly or think a little differently. During lockdown, some operators temporarily upgraded people’s tariffs, for example offering free content or faster download speeds. Can they now use this goodwill by encouraging people to sign up to these services more permanently?

About one in seven people in our survey said they would be happy to spend more on their home broadband package, in return for a better service. This could be welcome news for premium providers, which could seek to lure customers from rival networks with an emphasis on network quality.

One of my predictions that drew a lot of interest was that network operators offer dedicated “work from home” packages to consumers in 2021. These could include secondary broadband lines into the home, guaranteed speeds and reliability, MiFi devices bundled with connectivity, IT support for remote working or even home office equipment, all designed to make for a better work-from-home experience.

According to our research, about one in five people in the UK and US plans to buy a new laptop or home computer within the next 12 months, and more than 10% reckon they’ll spend more on online subscription services (see chart below).

But don’t be lulled into thinking that tough economic conditions won’t become a significant drag on people’s budgets for technology and connectivity. Yes, some people will have emerged from the pandemic better off and more able and prepared to spend more, but countless others won’t have that luxury. It’s one of the reasons why we’re expecting total mobile phone sales in the UK to plunge 15% in 2020, to its lowest volume for a decade.

The telecom space won’t be as hard-hit as other industries like aviation, hospitality and tourism. But it’s in no way immune to the consequences.

In some ways, Covid-19 resets the competitive landscape, and our research reveals new opportunities in the consumer market. Operators surprised me with their impressive levels of agility during the pandemic; those that continue to act quickly and think differently will probably be the most successful.

For further information about our research and its findings, please contact us.

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