While global spending on telecommunications and pay television (TV) services increased during 2023, growth started slowing in the second half of the year, with expectations that it will slow further in 2024.

According to the latest International Data Corporation (IDC) Worldwide Semi-Annual Telecom Services Tracker, worldwide spending increased 2.1% year-on-year to $1 509-billion in 2023, one percentage point lower than IDC's previous forecast.

The deceleration was attributed mostly to slower-than-anticipated growth of 0.5% to $574-billion in the Americas, attributable to a combination of sluggish economic growth, relatively high inflation and saturated markets, which created an unfavourable environment for market development.

Comparatively, the Europe, Middle East and Africa (EMEA) region recorded growth of 3.3% to $454-billion, while Asia Pacific achieved 3% growth to $481-billion.

In the EMEA region, which faced similar economic issues, but where telecommunications operators were allowed by regulators to increase their tariffs in line with inflation using a Consumer Price Index model, the market grew somewhat faster than expected, explains IDC Worldwide Telecom Services research director Kresimir Alic.

However, while the tariff adjustments also led to an accelerated migration of customers towards cheaper tariff packages and more affordable operators, the actual value growth rates were typically less than half of the nominal tariff increases.

For 2024, the IDC expects worldwide spending on telecommunications and pay TV services to increase by 1.4% and reach a total of $1 530-billion.

“The five-year outlook for the global connectivity services market remains positive, albeit slightly less optimistic than the previous forecast.”

Overall, the market environment is expected to remain relatively unfavourable for several more years, he says, highlighting persistently high inflation and an unstable political situation fuelled by conflicts in Eastern Europe and the Middle East.

However, analysis by service type confirms that well- established trends persist, even in the face of changes in top-line forecasts.

The mobile segment continues to be the largest, driven by the growth in mobile data use and machine-to-machine applications, offsetting declines in spending on mobile voice and messaging services.

In addition, the fixed-data services segment continues to grow as a result of the increasing demand for higher-bandwidth services.

“However, spending on fixed-voice services is projected to deteriorate over the forecast period as the decline in traditional voice revenues is not fully compensated for by the increase in IP voice,” Alic notes.

“It is obvious that the development of the connectivity services market remains very slow and the anticipated growth of the telecommunications’ revenues is way too low to keep their owners happy.”

The emergence of artificial intelligence (AI) and advanced analytics, however, is enabling the telecommunications operators to modernise their business operations and improve efficiencies.

“Our research has already identified a huge number of use cases, including customer service chatbots, virtual assistants and field technicians, as well as the usage of AI for network modernisation and predictive maintenance, network traffic management, personalised marketing, fraud detection and prevention, churn predictions and revenue assurance,” he says.

“These enhancements, together with many others that will be invented soon, should undoubtedly help telecommunications operators to streamline operations, enhance customer experiences and stay competitive in this rapidly evolving industry.”