After a year of global events that nobody could’ve seen coming, there might be an element of risk at this point in attempting to predict what 2021 might have in store as far as the telecoms sector is concerned. Alex Parmar-Yee, Client Partner at global affiliate network www.Awin.com, takes a look
However, taking into account the lessons learnt during 2020, as well as insight regarding the surge in demand for some products and, of course, the political landscape; here are some of our thoughts on how 2021 could pan out for the industry in a wider sense:
The future of 5G
At the start of 2020, the general consensus amongst industry insiders was that this would be the year that 5G technology would finally be able to break through all the hearsay and filter into more of a mainstream market. Whilst it did indeed hit the headlines, it wasn’t exactly for the right reasons, thanks to conspiracy theories regarding the 5G infrastructure, and the government using limits and bans on Huawei tech to reduce how much Britain relies on Chinese tech.
A recent YouGov poll revealed that more than a third of Britons admit to having a ‘poor’ understanding of what 5G entails; and with the hopes for roll-outs being delayed due to the ongoing pandemic and government restrictions, we expect that 2021 will see an increased push on the infiltration of 5G, but with a slightly slower or more stalled kick off to the year.
There will no doubt be an introduction of 5G products to help consumers become more accustomed to its advantages. The recent release of the iPhone 12 to the UK market is a perfect example; the fact that all models in the line-up come equipped with 5G capability signifies that the tech is moving towards the mainstream, and while it might not be much use in an immediate sense, it will at least future-proof customers’ phones for the eventual universal roll-out.
The ongoing effect of COVID-19
The various, and often surprising, announcements of national lockdowns and social distancing restrictions in countries around the globe has meant that the amount of time individuals now spend within their homes – either working or during their down time – is higher than ever before. Needing to stay at home more has made us much more reliant on home internet connections and broadband speeds, with the team here at Awin witnessing a spike in new broadband deal purchases. Until August, sales were up a third YOY – much higher than the typical market growth of 7%.
As many offices and employers are now embracing the notion of flexible working or working from home full time, we expect that this trend will continue apace into 2021, if only part-time. This will keep the demand for fast and reliable home broadband up, as working from home becomes part of the ‘new normal’ across an abundance of industries.
Broadband switching behaviours
The unplanned spike in broadband sales during the end of Q1 and beginning of Q2 make for an interesting point when forecasting what is likely to occur come 2021, as essentially there is a limit on the number of households that may need internet.
The contractual period of 12-18 months where people are unable to switch providers easily will mean that a huge chunk of UK households are now tied into contracts that they will be unlikely to leave. This will effectively reduce the number of people likely to have been won over by tempting Black Friday 2020 or January 2021 deals and will make for a weaker January, with a forecasted increase in consumer switching behaviour in March (for those tied into 12 month contracts) and August (18 month contracts).
Quality over quantity
In 2020, the abundance of different switching behaviours has allowed us at Awin to see some interesting trends in terms of product mix.
Two years ago we saw the demise of ADSL accelerate with it dipping to shy of 15% of broadband sales in 2019. So far in 2020, ADSL represents just 8% of all broadband sales through Awin and total volumes are down 20% on 2019. However, the story here is not solely focused on the uptake of fibre adoption, but actually about the move to faster products.
Fibre+ (50-80Mbps) sales are up 241% year on year and now make up nearly a quarter of all broadband sales. The 80+ Mbps bracket makes up 11.3% of the market – driven by speed upgrades on the Virgin cable network, the roll out of fibre to the premises through Openreach, and the growth of local fibre networks. Awin’s granular benchmarking data shows that the average speed of broadband purchased in January 2019 was 71Mbps compared with July 2020’s much faster 126Mbps.
Consumer perceptions and priorities are changing as the world around them adjusts to the events of 2020, and there seems to be less of a focus on price and more on quality of investment when it comes to broadband. In 2021, this means there will be an increased importance on promoting and selling premium speeds both by advertisers, and also for publishers.
Ultrafast and FTTP products often struggle to get featured in traditional price comparison, but this may start to change alongside the shift in consumer priorities. From a retentions side however, this premium price will likely shift customer expectations and they may be less forgiving over outages or lapses in services, and rightly so as people rely more and more on their home connections to earn a living and stay entertained in their homes.
Alex Parmar-Yee is Client Partner at global affiliate network www.Awin.com