Can the telecommunications operating market break out of the "siege" under the epidemic's "stay-at-home economy"?

In 2020, the "new crown" black swan came unexpectedly, wreaking havoc around the world and causing huge impacts on the social economy. As of mid-January 2021, the cumulative number of confirmed cases worldwide has reached nearly 100 million, and the death toll has exceeded 2 million; in my country, although the overall situation has been well controlled, it is still facing a rebound in local areas such as Hebei, Heilongjiang, and Jilin.

In the past year, the COVID-19 epidemic has had a profound impact on all walks of life. Based on my own work practice, I would like to review and summarize the impact of the COVID-19 epidemic on the telecommunications operations market (mainly including public customers, government and enterprise customers), and look forward to the next response actions.

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Public Customer Market Review

The breadth and depth of business have been strengthened

During the epidemic, there were two significant changes in the behavior of public customers, which had a positive impact on the business of telecom operators. First, "the proportion of home learning and life services has increased", which is commonly known as the "home economy", which is specifically manifested in students studying at home online, office workers working from home online, and family life ordering online. Based on the analysis of Shanghai Telecom platform data, during the most severe period of the epidemic after the Spring Festival in 2020, the daytime traffic of household broadband increased several times compared with the same period in previous years; after September 2020, when study and work returned to normal, it still increased by dozens of percentage points compared with previous years, indicating that business usage habits have been formed.

The main impact of the epidemic on Shanghai Telecom’s business is concentrated in the following four points.

• First, there has been a surge in the number of users installing high-speed home broadband and actively requesting speed upgrades to meet the needs of multiple users at home, especially the growth of 500M and 1000M broadband.
• Second, the number of orders for smart home networking has increased several times. According to feedback from front-line installation and maintenance personnel, this is mainly because family members want to work and study in an environment without affecting each other, so they need good signal coverage at all indoor locations.
• Third, the installed base of IPTV and the subscription volume of video packages have increased significantly to match the needs of home learning and leisure.
• Fourth, the sales of smart home products, such as security monitoring and speakers, have increased. An important reason for this is that people are staying at home for a long time, which has led to a continuous demand for improving the living environment.

Secondly, "mandatory requirements for growth", in addition to the mandatory home stay mentioned above, there is also a health code that is required to go out. Some elderly people have learned to use smartphones for this purpose, or turn on data traffic when they are outdoors. Based on the analysis of Shanghai Telecom platform data, in 2020, some mobile phone numbers registered in the names of elderly people over 65 years old changed from elderly feature phones to smartphones, and from turning off traffic to turning on traffic. The impact of this on Shanghai Telecom's business and services is mainly concentrated on two points: first, some public welfare activities were held, including active participation in Shanghai Smart City Week, and active guidance in the business hall to explain business to the elderly group; second, help the elderly optimize their business, such as bundling with broadband to achieve safe use of traffic.

Government and Enterprise Client Market Review

Vertical markets are deeply stimulated

During the epidemic, new management and operation demands have emerged unexpectedly, stimulating the development of informatization in various vertical markets and having a positive impact on the business of telecom operators.

First, the demand for telecom operators' infrastructure, with the focus on the development of dedicated infrastructure, is listed below. First, in the "remote office/home office" mode, small and medium-sized enterprises only need ordinary broadband, public cloud, etc., but enterprises with higher requirements for network security have clearly proposed to build a secure network channel from end (home) to cloud through virtual private networks and other means; and clearly proposed the transformation requirements based on the original private cloud deployment to achieve secure access from the outside. Second, for the more popular "live broadcast +", telecom operators cooperate with some shopping malls to ensure that each store has a stable amount of data when conducting online live broadcasts in a sliced ​​network manner; and cooperate with some industrial parks positioned for live broadcasts to provide "cloud-pipe-edge integrated integration" solutions. Third, for the management of the surge in express and takeaway personnel during the epidemic, telecom operators provide an infrastructure solution that combines multi-network (4G/5G/NB-IoT) access with precise positioning (such as the Beidou platform already launched by China Mobile and others) to support the precise management of vehicles and personnel.

Secondly, during the epidemic, telecom operators relied on their infrastructure advantages and worked closely with partners to promote ICT products or solutions, which was mainly reflected in the following six aspects.

• First, general products for office scenarios, such as Tianyi Cloud Conference and Tianyi Cloud Storage, have better service quality and more economical prices than products from Internet companies because they have their own infrastructure support.
• Second, anti-epidemic products, including smart door locks and video surveillance for home isolation, AI temperature measurement equipment and facial recognition equipment placed in areas with large traffic flow (such as stations, shopping malls, and office building entrances). The relevant equipment can exist as independent products or be connected to the platform to achieve data integration.
• Third, smart city and smart community solutions require unified supervision and intelligent dispatch of various elements in the region (including vehicles, manhole covers, fire hydrants, and pedestrian flows) during the epidemic, so the demand has increased significantly. Shanghai Telecom's smart community projects have grown several times, and some people returning to Shanghai from medium- and high-risk areas can receive calls from the neighborhood committee as soon as they return home.
• Fourth, traffic monitoring, including the management of vehicles, people, and objects, to achieve accurate traceability, especially in the context of the continuous emergence of positive cases of COVID-19 in the cold chain, the construction of full-process traceability has been further strengthened.
• Fifth, in industrial manufacturing, in addition to the government's efforts to promote pilot projects, research has found that some company managers are willing to engage in intelligent manufacturing due to concerns about future epidemics and their efforts to reduce the number of employees (to reduce infection risks and not be affected by prohibitions on mobility).
• Sixth, smart exhibitions. "Creating an online exhibition that never ends" has been the slogan in recent years, but it was not until 2020 that it was truly implemented due to the impact of the epidemic. Similar events such as the Canton Fair and the China International Import Expo are either completely online or both online and offline, and a large number of industry exchanges are also conducted online.

Market Development Outlook

Grasp the new situation and achieve new growth

In 2021, telecom operators are facing three new development situations. First, a new model of social and economic development based on internal circulation; second, 5G will expand from network construction and user scale to deep industry applications; third, the sudden behavior patterns formed during the epidemic have been solidified and need to be fully utilized. Based on this, the author recommends focusing on the following four key actions.

First, the infrastructure has evolved from general to dedicated, and is more closely integrated with the scenario. The cloud-network integration, elastic network, 5G private network (including virtual private network, hybrid private network and physical private network) promoted by major operators have laid a good foundation for the specialization of infrastructure and can be deployed quickly. The "dedicated" here refers not only to government and enterprise users; at the same time, public user services will also have high-quality dedicated services, such as extremely low-latency stock trading networks, and can even be calculated as stock trading network charges in certain time periods according to user requirements.

Secondly, seize the opportunity of digital transformation and promote the development of the government and enterprise market. The relevant businesses are planned to be built according to the following three models: First, standard products, covering the network, terminal, platform, application and other levels, such as AI temperature measurement products, aiming to be used in more scenarios, and are ready to use; second, semi-standard products or solutions, mainly implemented by telecom operators, with simple configuration based on specific scenarios, such as smart community solutions including access control, vehicle gates, monitoring, electronic fences, manhole cover monitoring, etc., adopting a menu-based sales solution; third, customized solutions, mainly responsible for partners, telecom operators are responsible for providing channels and capability platforms.

Secondly, promote the construction of smart homes and make plans for long-term development. Business types include not only existing businesses such as high-speed bandwidth and IPTV, but more importantly, the deep integration of wearable devices and smart home devices into family life. To this end, developers' new residential buildings and smart elderly care pilot projects will be the focus of the early stage.

Finally, promote the construction of new channels for public users. During the epidemic, the consumption behavior of public users has changed the most, which needs to be consolidated. First, strengthen the construction of new contactless electronic channels such as "video +". At present, operators such as Shanghai Telecom also regularly conduct online live broadcast sales, and have achieved good results; second, strengthen community management and further sink marketing activities into the community; third, promote the construction of new cross-industry channels, such as local life e-commerce, so that telecommunications products can be spread and delivered to a wider range.