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The Future of Telecom Investing is Here

September 15, 2017

Due in no small part to the flourishing of iPhones and Samsung devices, the telecom business has enjoyed lavish economic success as of late. It should come as no surprise to hear that telecom has begun to invest some of that capital in new technologies. Major areas of investment have included innovations that integrate wireless technologies with machine-to-machine (M2M) communications and Internet of Things (IoT) devices like wearables, in addition to artificial intelligence, machine learning, and even balloon- or drone-based broadband connectivity. This article explores the latest trends in the telecom industry, focusing on just what technologies telecom companies are exploring now and in the future.

The first question for those looking to invest in the telecom industry is: where will there be opportunity for growth? Where will the biggest upward shifts be occuring in the coming years? And, specifically, which kinds of products will be driving these trends toward growth? Firstly, many experts have noted that existing technologies such as smartphones are still performing well and should be expected to continue to grow. In concrete terms, smartphone sales have a 10 percent year over year growth, with the greatest increases in the 45-54 years of age demographic.1 Wearables are another area of tech innovation that has shown significant growth in recent years. Sales of smartwatches doubled between 2014 and 2015. In 2016 those numbers tripled, reaching up to 12 percent of the American mobile market.2 But what does the future have in store for even newer technologies?

Some of the more emerging technologies, like artificial intelligence and air-based connectivity infrastructre, have yet to be fully tested in the marketplace. That doesn't mean, however, that as investors we can't still look to the future for smart telecom investments. Machine-to-machine (M2M) wireless communications technology, for example, has already shown substantial revenues for wireless services providers.3 In fact, according to experts, the global M2M market should see gross revenues of more than $53 million by 2019. That number is more than a $20 million increase from 2013.4 M2M, to be fair, is not entirely new. The technology has been used for some time in remote monitoring through the use of sensors, RFID tags, and a Wi-Fi or telecom link between devices—a key technology nonetheless in the development of IoT.

Other technologies, which are perhaps further out on the horizon, are more experimental and may seem somewhat less practical, at least at first. One "disruption" commentator has recently predicted the genuine emergence of a kind of Skynet. That's right, broadband connectivity delivered by flying drones or hovering ballooons. While there are even more seemingly remote scenario—for instance, delivering connectivity via space crafts!—some are predicting that this technology will be thoroughly in place by the year 2020.5 Such an innovation will likely cause quite significant shifts not only in the day-to-day use of telecom and mobile devices, but will mean important changes in the investment landscape as well. Whatever the outcome, investing in these new modes of telecom connectivity will be key to the futre of telecom investment.

Another key area of investment will be security. Telecom carriers occupy a unique position in combatting the emergence of new forms of cybercrime. As tech writer Christopher Surdak writes, "As custodians of the networks, carriers play a pivotal role in fighting the new threats that are emerging." He continues: "Customers will begin to expect, then demand, more proactive protection from the entire internet value chain, and carriers will be expected to support these expectations with a range of technical and operational innovations." This need for cybersecurity, as Surdak notes, should lead to significant revenue for carriers, but only if they recognize and respond to the need accordingly.6

Another area is AI. Artificial intelligence can be of use not only to enhancing security—through advanced predictive analytics and machine learning—but it can also be used to improve customer experience, heighten product features, and predict future user actions. In fact, artificial intelligence promises to affect almost every aspect of the telecom industry: from security to connectivity to IoT integration to mobility, telecom companies are seeing more and more ways AI can improve the telecom experience. For the investor, this means greater revenues start with smarter artificial intelligence technologies.

Technology investment as a whole can seem somewhat unpredictable, with all sorts of innovations purporting to "disrupt" the industry as we know it. Telecom is not exempt from this facet; indeed, one must keep a constant eye on innovation trends to stay smart as an investor. However, there are some things we know for sure as smart telecom investors. For instance, by looking at existing trends like the success of smart phones and wearables, we can better prepare for the ways future technologies will change the telecom landscape. By staying smart about current trends telecom investors can play it smart for investing in the future.

1 https://www2.deloitte.com/us/en/pages/technology-media-and-telecommunications/articles/telecommunications-industry-outlook.html

2 https://www2.deloitte.com/us/en/pages/technology-media-and-telecommunications/articles/telecommunications-industry-outlook.html

3 http://www.nasdaq.com/article/telecom-calling-on-new-technology-industry-outlook-cm353620

4 http://www.nasdaq.com/article/telecom-calling-on-new-technology-industry-outlook-cm353620

5 https://qz.com/354164/these-six-forces-will-disrupt-the-telecommunications-industry-by-2020/

6 https://qz.com/354164/these-six-forces-will-disrupt-the-telecommunications-industry-by-2020/

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