The forecasts for the telecoms industry in 2018 have been rather mixed. On one hand, we’ve heard from the Economist Intelligence Unit that in the world’s 60 largest markets, telecoms revenues will fall by 2% next year, while ARPU will also decline. On the other hand, the GSMA has predicted that the IoT will present a huge $1.8 trillion revenue opportunity for mobile network operators.

These opposing predictions perfectly sum up where the industry’s at today, as we reach the end of 2017 and look ahead to the New Year. Whilst there is apprehension from many within telecoms, there is also palpable excitement. Excitement about the opportunities digital transformation will bring, the new revenue streams created by the IoT, and what an increasingly mobile and global workforce will mean for communications.

So, in light of events and happenings throughout the year, here are BICS’ predictions for 2018:

Operators will embrace new approaches, collaborate with OTT players and adopt a ‘connected world’ mind-set

The decline in revenues from traditional services will continue, as consumers and businesses swap voice and SMS for feature-rich, low-cost OTT platforms. China’s Tencent recently became Asia’s first company to be worth more than $500 billion, joining Facebook in this elite club of tech firms. With plans to roll-out its communications services in Malaysia – and likely other regions in the future – Tencent’s trajectory reflects a wider global shift.

Next year, we’ll see more MNOs collaborating with partners in different sectors to deliver the type of services the public and enterprise are demanding. An operator could utilise its network infrastructure to host and deliver a third party’s cloud services to a large enterprise, or could engage with businesses leveraging the IoT to deliver connectivity and help manage the ecosystem.

Mergers and acquisitions will continue next year, boosted by the IoT

Some of the biggest M&A deals were proposed and closed in 2017: Windstream bought Broadview Networks, Verizon closed deals with both XO Communications and Yahoo, whilst Idea Cellular and Vodafone India announced a merger which would create the continent’s largest – and the world’s second-largest – telecoms firm.

M&A in telecoms and tech is predicted to hit $415 trillion next year: a figure we don’t doubt. Many traditional telecoms giants that have fallen from the lofty heights of old will be looking to partner with innovative disruptors in a bid to stay relevant and drive revenues. Connectivity and network infrastructure will form the backbone of a growing number of industries as they turn to the IoT. We therefore expect to see M&A activity spilling into sectors like automotive, robotics, data analytics, immersive technology and more.

Communications-as-a-Service will drive application-to-person communications and the return of SMS

One of BICS’ highlights of 2017 was the acquisition of Communications-as-a-Service (CPaaS) company, TeleSign. The partnership is a sign of our preparation for an anticipated rise in adoption of CPaaS from next year onwards. This involves a business outsourcing communications to a single provider, allowing enterprises to engage more efficiently and cost-effectively (via a subscription model) with their customers.

SMS will be a vital component of CPaaS; something we started to see in 2017 and which will gain traction next year. This offers an instant and reliable way of automating communication with end-users, even in those regions that lack advanced network infrastructure. Banks, GP surgeries, schools, airlines, delivery companies, social media platforms and more will adopt CPaaS to communicate with and authenticate the identity of their customers. The result? Better customer service for end-users, a robust and secure approach for enterprises, and a revitalised revenue stream for operators.

The telecoms industry must look to embrace change and innovation next year, and in doing so can realize the full benefits that the connected world will bring.

An article by Daniel Kurgan, CEO of BICS