Covid 19 Pandemic to Show a Dramatic Impact on the Consumption of Digital Content and E-commerce, Considerable Growth Witnessed in Network Infrastructure Spending
The outspread of Coronavirus is highly affecting industries especially manufacturing, retail, healthcare and pharmaceutical, advertisement, and IT & Telecom in terms of digital spending and IT expenditure. As the world is experiencing social distancing and lockdown in almost all the countries, digital advetisment spending has dropped by a substantial rate due to closure of retail stores, shopping malls, hypermarkets, and commercial businesses among others. Similarly, large enterprises as well as small and medium enterprises are expected to reduce their research & development spending on overall ICT components owing to the current pandemic situation. Among these, IT hardware product is the worst-hit components amid coronavirus. This is mainly due to the reliance of these products on the production and manufacturing industry. The demand for networking devices such as routers, beacons, and mobile hotspot dongles is expected to see a surge in the present situation. However, closure of manufacturing plants and factories might lead to the supply-demand gap in the near future owing to lesser or no production of new devices.
Additionally, considering the work from the home policy adopted by almost all of the IT businesses, organizations are allowing their employees to work from end-point devices such as personal and company-owned laptops. With the implementation of this policy, companies are focusing more on the security and privacy of the company’s data and information, which is projected to boost the growth of the network security market.
While referring to the positive impact of COVID-19, 5G technologies and 5G infrastructure are anticipated to see fast-forward adoption across the world. With total lockdown in almost all the countries around the globe, the demand for increased network bandwidth is fueling due to work from home, online education model adopted by schools, colleges, and universities. Additionally, with stay home initiative, people are moving towards online entertainment medium like online streaming platfroms such as Netflix, Amazon Prime Video and Hulu among others, which is further increasing the traffic on telecom networks. This expected to result in an exponential growth for video streaming market and video on demand market.
To overcome the network bandwidth situation, telecom giants such as AT&T, Inc., Comcast, and Verizon are testing the capabilities to handle the growing demand and increasing the speed of broadband plans. For instance, in March 2020, Verizon Communications announced the planning of increasing capital expenditure (CAPEX) by USD 500 million in 2020 owing to COVID-19 pandemic. With this increased CAPEX in network infrastructure, Verizon Communications will be aiming to accelerate the company’s 5G transition.
On the contrary , major players such as Netflix, Inc. and Amazon Prime video offering video streaming and video-on-demand content are reducing traffic on networks by lowering the bit-rates to ease the pressure on telecom infrastructure networks. For instance, in March 2020, Netflix, Inc. announced around 25% reduction in network traffic on European Networks while ensuring the good quality content to be delivered to its users. Similarly, YouTube has also reduced its streaming quality in Europe to minimize the stress on network operators.
