Rising living costs are forcing consumers to rethink their spending priorities, and telecoms companies that fail to respond are now facing the biggest threat to their business, according to EY’s annual report, Top 10 risks in telecommunications 2023.
With household budgets squeezed, EY’s research finds 60% of households are worried about rising broadband subscription prices and almost half (45%) feel they are overpaying for content services. These shifts in consumer sentiment are reshaping expectations of value, putting pressure on operators to adapt their offers and pricing models.
Although network reliability continues to be a concern for consumers, infrastructure resilience and reach has dropped to fifth place in this year’s ranking, its first fall from the top spot since the COVID-19 pandemic began. Other challenges, notably cost-of-living pressures and security, have become more urgent.
Tom Loozen, EY’s global telecommunications leader, commented: “Connectivity was a lifeline during the pandemic, but the environment has changed. In today’s economy consumers focus intensely on the value they receive from telecom providers. Telcos that ignore this shift risk losing customers. Regulatory pressure is also increasing, with authorities urging operators to offer more accessible options such as social tariffs. Operators must therefore design clear, simple and secure propositions that reassure and attract customers.”
Cybersecurity and trust concerns escalate
Concerns about security and trust have climbed from third to second place on the 2023 telecommunications risk radar. EY’s data shows 76% of telcos reported an increase in cyberattacks year-on-year. Despite rising threats, many organizations still undervalue security at the strategic level: 39% of telecoms chief information security officers (CISOs) say security is not adequately considered in strategic investment decisions.
Internal alignment problems also weaken security posture. Although CISOs reported greater prominence for security during the pandemic, only 31% believe they enjoy moderate to high levels of trust with product development teams. This disconnect between heightened vulnerability and insufficient board- and cross-functional engagement increases risk.
Consumer anxiety about data privacy has also intensified: 46% of consumers believe it is impossible to keep personal data secure online. This perception makes trust-building and robust security more central to customer relationships and regulatory compliance.
Sustainability reporting loses momentum
Poor management of the sustainability agenda has become a more pressing industry threat, rising from fifth to fourth in the 2023 ranking. The quality of climate change disclosures among telecom operators has declined year-on-year, and 39% of respondents do not publish a specific net-zero strategy, transition plan or decarbonization roadmap—despite growing demands for concrete action from customers, investors and regulators.
Customer expectations around sustainability are increasing. Thirty-nine percent of consumers say connectivity providers need to do more on sustainability, and 68% of large enterprises are now more interested in 5G use cases that support sustainability goals. Adrian Baschnonga, EY Global TMT Lead Analyst, said sustainability should be an integral part of the telco customer promise, not just an optional premium feature. Businesses will prioritize suppliers that can help them meet their own sustainability targets, and telcos can play a central role as enablers of a more sustainable economy.
Talent retention and workplace culture remain critical
For the second year running, failure to improve workforce culture and ways of working is ranked third on the risk radar. Employee and employer expectations continue to diverge: 91% of technology, media & telecoms (TMT) employees want to work remotely two or more days a week, while 25% of TMT management teams expect staff to return to the office full time. High turnover compounds the issue—53% of TMT employees say they plan to leave their role within 12 months, compared with an average of 43% across all sectors.
Loozen noted: “Staff turnover is making telecom leaders more pessimistic about the long-term cultural impact of the pandemic, while many employees feel empowered by remote work and believe company culture has improved. Telcos need to listen and adapt now, or risk losing their best people.”
EY’s Top 10 risks for 2023 highlight the industry’s shifting priorities and the areas requiring urgent attention:
- Insufficient response to customers during the cost-of-living crisis
- Underestimating changing imperatives in security and trust
- Failure to improve workforce culture and ways of working
- Poor management of the sustainability agenda
- Inability to accelerate efficiencies through digitization
- Failure to establish infrastructure resilience and reach
- Failure to take advantage of new business models
- Failure to maximize value of infrastructure assets
- Ineffective engagement with external ecosystems
- Inability to adapt to a changing regulatory landscape
To remain competitive and resilient, telecom operators must align product and pricing strategies with shifting consumer priorities, strengthen cybersecurity and cross-functional governance, make measurable progress on sustainability, and modernize workplace practices to retain talent. Addressing these interconnected risks will be crucial for telcos seeking to protect market position and drive long-term value.