Trends to Watch in 2021
As we have done for the past several years, LB3 and TC2 have compiled a list of the trends we believe will have the greatest importance to, and impact on, enterprise ICT customers in the new year. We will explore each of the following areas in greater detail with one or more podcasts dedicated to each topic … we hope you will tune in.
- Listen to the introductory podcast here.
1. COVID-19’s Impact on Enterprise ICT Needs
2020 was quite a year. Not only did COVID-19 wreak havoc on our healthcare systems, it fundamentally changed the ways in which many companies conduct business. These changes will extend well into the upcoming years for most businesses and have far reaching consequences. In a forthcoming two-part podcast, we will discuss COVID-19’s impact on business customers from both networking and contracting perspectives. We will explain how best to manage your company’s voice and data network costs in this new environment and how to view changing spend in the context of your current and future contractual commitments. In Part 1, we will focus on understanding your evolving network needs in both COVID- and post-COVID environments. In Part 2, we will dive deeper into how to structure your contract commitments in light of these operational changes, and what to do if you find yourself in shortfall.
2. National Leadership Changes
With a new president, administration, and Congress will come a change in leadership at the 5-member Federal Communications Commission and different policy priorities, although it will take time for changes to be implemented. Just a few weeks ago, the Senate confirmed a new Trump appointee as FCC Commissioner, who could potentially serve until mid-2024. When the current FCC Chairman resigns on January 20, there will be some musical chairs on the executive level of the FCC’s headquarters: then-President Biden will appoint (i) an interim Chair from among the four current commissioners, (ii) a new commissioner to fill the seat vacated by the current Chairman, and (iii) eventually, a permanent Chair, which could be one of the current commissioners or a new commissioner. The new FCC Chair will ultimately make changes in senior agency personnel to ensure they are aligned with his or her policy directions. The Commission’s regulatory agenda for 2021 will inevitably include a number of telecom and tech issues of both financial and operational interest to enterprise users, including toll-free access reform, managing the skyrocketing Universal Service Fund contribution factor (now almost 30%), broadband expansion, 5G deployment, and continuation of the net neutrality saga. Regulation of social media had not been expected to be a priority for the new FCC, but that may change in light of the recent debate on the limits of free speech and whether platforms should be able to block or flag certain content.
3. Vendor Developments
We believe that 2021 will see continued execution by network and IT services suppliers on key 2020 initiatives. Enterprises should keep an eye on several key provider strategies including: T-Mobile’s increased focus on the large enterprise wireless market (and their growing 5G capabilities fueled by the valuable mid-band spectrum acquired from Sprint); Lumen’s market-facing transformation from legacy wireline carrier to digital solution provider (and the threat it may pose to their primary competitors); and what benefits (or other impacts) might finally be realized from AT&T’s network virtualization and the Verizon 2.0 initiative; and of course the inevitable push to abandon/retire legacy circuit-switched voice and TDM data services. Join us in the coming months for a more in-depth discussion of each of these topics.
4. Managed Services
The market for managed network services is undergoing significant changes, including with regard to tooling, solutions, deal structures and service providers. Many of these changes are creating significant downward pricing pressure, which is increasing the attractiveness and affordability of outsourcing the management of your network infrastructure. To best take advantage of these market changes, it’s critical to understand who the major players will be in 2021, what provider and solution attributes are most important to focus on in enterprise scale deals, and how to structure a flexible commercial construct that will enable, rather than hinder, continuous improvement throughout the term of your deal.
- Listen to the related podcast here.
SD-WAN is enabling Internet First strategies as the basis of a new era in wide-area networking characterized by greater flexibility to meet the demands of a cloud-centric world. Opportunities to save money while enhancing capability and performance can co-exist, but there are risks, challenges and competing choices to consider to make the best decisions and avoid the most common pitfalls. In our upcoming podcast, we will address these and other key considerations you should keep front of mind when figuring out how to leverage the Internet First evolution for your company in 2021.
The use cases for Telecom Expense Management (or “TEM”) services in 2021 have matured. While the global TEM player list has stabilized over the past two years, your company’s needs for TEM services have likely continued to expand and evolve. No longer do you only need the basics of invoice receipt, processing, payment, audit, inventory and reporting for wireline and wireless services, but now you might need those same services for a much broader range of network services, such as maintenance, cloud based services, Internet of Things services and “subscription based” services. Our annual TEM podcast will update you on how best to take advantage of the new TEM offerings to maximum advantage.
7. The Real Promise of 5G: Not What you Think
The promise of 5G may finally come true in 2021, but not in the way many of us have imagined. None of the major wireless carriers has the resources to blanket the country – or even largescale metropolitan areas – with true 5G coverage, but that has not deterred their marketing departments’ fog machines from spewing dreamy visions of what could someday come to pass. Suffice to say we are not running out to purchase a 5G smartphone any time soon. The real promise of 5G has nothing to do with traditional voice or data communications networks but with “Private 5G” and the Internet of Things. Mixing 5G speed and capacity with edge computing and cloud services makes for some pretty potent productivity. And as the primary or secondary communications link for an SD-WAN network, business continuity is all but assured. Moreover, wireless connections give nimble companies the flexibility and freedom to morph quickly to adjust to changes in their own operations and customers’ needs. Look for private 5G campus-wide networks to elbow Wi-Fi out of the way in many large enterprises. The opportunities for large customers are truly endless; they just don’t involve using a 5G smartphone on the street corner or in your car.
The SolarWinds hack dominated the news cycle at the end of 2020. In 2021 it, and similar security concerns, will figure prominently in planning and procurement cycles. With the increasing incidence and sophistication of cyberattacks, all enterprises need to re-evaluate their security systems, thoroughly assess their networks, and possibly replace equipment and software to protect their production lines, intellectual property, and customers. Of course, enterprises needing to upgrade their security may be constrained by their budgets, existing contractual commitments, and limited proficiency of incumbent suppliers. Ultimate responsibility for protecting networks and information assets rests with the enterprise customer, since vendors who have the resources to backstop their promises with the dollars to satisfy claims insist on limiting their own liability, while vendors who are willing to assume liability for security breaches that occur on their watch often lack the resources to pay damages. And even those whose core business is securing networks are vulnerable to foul play, as the SolarWinds hack has taught us.
On the enterprise E911 front, regulations the Federal Communications Commission adopted in 2018 begin to take effect this year, and they will have a direct impact on business. Beginning this month, companies will need to transmit certain types of location information with 911 calls that originate from certain types of on-premise equipment. Within a year, those requirements will expand to include certain types of non-fixed end user devices, and eventually to all types of equipment. This is going to require a lot of work for companies this year to make sure they understand their compliance obligations, develop their E911 roadmaps, and start implementing their E911 solutions. Be on the lookout for an upcoming podcast that will cover all these issues and bring you up to speed on what you need to do in 2021.
- Listen to the related podcast here.
10. Contract Financial Model Evolves for Network Services
As enterprise customers’ technology needs evolve, so too does the way vendors contract to meet those needs. The trend away from private network topologies to Internet based solutions has ushered in a shift from revenue commitment-based contracts to those based on minimum service terms for individual circuits (or “Service Elements”). It is important for enterprise customers to understand the implications of this trend not only for their existing agreements, but for future procurements. On the upside, individual circuit terms may provide flexibility on a site-by-site basis, assuming the minimum term periods are short enough; but contract governance is more complex. And many of the hard-fought terms and conditions you have negotiated to soften the impact of revenue commitments may become useless over time, as providers argue that circuit terms and revenue commitments are different animals. In the new contracting environment, customers need different forms of protection from individual circuit commitments to minimize financial and operational risks including multi-year terms, automatic renewals, and costly circuit moves. To be prepared for this tectonic shift in contract structure, tune into our upcoming podcast before your next contract renewal or RFP.
Want to learn more about the above? We will be releasing up-to-date podcasts and articles on a weekly basis. Can’t wait? Contact Kevin DiLallo Laura McDonald, or Joe Schmidt or click here for more enterprise-focused articles and podcasts.