Forty years in telecoms: An analyst’s journey in an industry seeking the limelight

Spotlight Article

Telecoms analyst Chris Lewis, founding director of Lewis Insight, looks back on forty years in the telecoms industry and why telcos today are still struggling to find a sense of identity

This year marks my 40^th as a telecoms industry analyst. It all started for me using my foreign languages to do research into European markets for modems and multiplexers around the time that British Telecom was being privatised. Being blind, the spoken word was the perfect media for doing research – which was just as well, as nothing else was available to me in an accessible format apart from sending photocopied articles to a specialist transcription recording service, which I could only listen to a couple of weeks later!

I have continually expanded my industry coverage to embrace all aspects of global telecoms over the intervening decades, with major milestones including the deregulation of European markets in the late 1980s, the US Telecoms Act of 1996, the launch of 3G and the iPhone in the early 2000s, and the advent of Cloud and AI, with a brief appearance from the Metaverse in between.

Deregulation and privatisation have provided an incredible backdrop to all the work I have done with telecoms service providers and suppliers alike. Involvement with regulators, governments, and other interested parties such as the investment community, has continually expanded my analytical horizons beyond technology.

The outside-in perspective and changing market dynamics

What I have noticed, especially recently, is that the inside-out perspective, where everything was about the internal workings of the telecoms networks, has given way to outside-in influences, where other sectors, device providers, applications providers, cloud and AI players, are having a greater influence on the shape of the telecoms industry. The ambitions of governments and regulators back in the 1980s was to break up monopolistic practice and drive greater investment into the technologies that would underpin each country’s economy. The resultant competition has indeed led to wider reach, greater choice, and relatively lower prices for many services.

However, the financial community referred to telcos as ‘utility stocks’ over twenty years ago and the industry’s obsession with next generation and major technology shifts hasn’t changed that view. In fact, the investment community now plays a major role in restructuring the industry, carving telcos into InfraCos and ServCos, aiming to expose the true value of the telecoms sector. Furthermore, what is also exposed are the difference investment cycles and ROIs relating to digging civil works, building towers, and deploying ever more software-centric and cloud-centric technology to deliver the broadband services of the future.

Since I set up Lewis Insight and The Great Telco Debate 10 years ago, I have further expanded my coverage to put telecoms into its context in the broader economy. Changing dynamics have forced me to reevaluate my perspective on the industry on a regular basis.

When describing the size of the $1.5 trillion market, I tend to refer to the French version of a pie chart which they call a Camembert. Rather than the market expanding, the cheese is being nibbled by so many players (mice of different types), whether their origins are in devices, cloud, applications, integration, or data. These are all global players and have scale that no telecoms provider can match, given their primarily national outlook. Regulators, therefore, have to be careful not to stifle the market’s natural tendency to allow consolidation to give telcos the national or regional scale that will help drive investment.

AI, the Metaverse, and the ongoing struggle for revenue growth  

Suffice it to say, the last four decades have been fascinating to follow as an analyst. It is a moot point to ask how many of those years are still relevant to today’s market given the massively changed structure of the industry and the changing relative position of the actual telecoms service providers. The next decade will see ever more influences from outside telecoms shaping what the telecoms players have to deliver to support new business models and possibly even that leap to the Metaverse.

I believe the assumption that this will be accompanied by major revenue growth is flawed, as we are starting to see telecoms companies shedding employees and adopting automation and AI to drive a more efficient, right-sized organisation to support activities more. Connectivity plays a vital role in supporting these new business models, but as it is commoditised and embedded into other activities, it won’t command a premium apart from in some minority cases. It is a vital supporting role but not the starring role many around the industry would have you believe.

So, as I enter my fifth decade as an analyst, I am even more intrigued as to how it will all pan out and especially how AI will help bring together so many diverse elements to deliver services better matched to us as individuals, businesses, and society.

I should add that much of what I say to clients in the industry is said behind closed doors. Arguing against the supplier-driven narrative in the media is best done in this way and carries more weight given the independent position I hold in the sector.

Technology for me has dramatically improved from the days of the spoken word and delayed recorded articles. I now have access to an incredible amount of information via screen readers on my multiple devices, but there is still a lot of work to be done to make everything accessible for everyone.

Finally, one myth I must dismiss is that Varley, my guide dog for the last five years, does not find the inner workings of the telecoms industry at all interesting. I suspect that many outside of telecoms agree with him and the industry needs to work hard to fit in, rather than expecting everyone else to understand the complexity of what it does.

The good news is demand has never been greater, but we need to keep an eye on the product we are selling and how it fits into the broader picture. Ubiquitous high-quality connectivity, fixed and mobile, is what customers expect and I look forward to that becoming a reality in the coming decade.

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