Digital Disruption Is Changing the Way We Do Business

Friday, July 12th, 2019 Back to press releases >

Digital disruptive companies have turned nearly every traditional business model on its head; they have created new companies that rise to multi-billion-dollar valuations and market capitalisation. These new disruptors are also crushing long-standing incumbents; some examples are shown below:

Uber has become one of the world's biggest personal transportation firms, but it doesn't own a car. Similarly AirBnB are unique in the hospitality sector as they do not own a hotel. Each leverages the internet to co-ordinate millions of contractors to provide the service on their behalf.

Netflix is a media streaming service that now takes up 22% of all internet traffic, and Tesla Motors avoids the complexities of car dealerships and inventory by allowing a customer to order and customise a Tesla car via an on-line portal, building it to specification.

There are two things all of these new disruptive businesses have in common. One is that they all do business through the Internet and the other is they all leverage real-time multimedia communications platforms as part of their business model.

The Internet is now the U.K.'s second-largest economic contributor behind the property sector, having overtaken both manufacturing and retail. The turnover of the UK digital tech industries was £184 billion in 2017, up from £170 billion in 2016. It is growing at twice the rate of conventional industry, and the growth in turnover of digital tech companies in 2017 was 4.5 percent compared to the 1.7 percent increase in the national GDP.

Everyone is aware of the decimation that has taken place on the UK high street and the corporate structure implemented by some of the disruptors enabling them to pay only a fraction of the tax due on UK revenue. However, the digital disruptors won't be going away and the digital economy is growing 30 percent faster than the next industry sector.

As business people, most of us running small to medium-size enterprises (SMEs), we should have a digital transformation strategy to grow our websites, social media and digital communications presence; to integrate all media sources with a digital multimedia real-time communications system.

We should all be concerned with the quality of broadband available in Britain. Most small businesses throughout the UK are still using ADSL as an entry-level broadband product, because nothing better is available in their exchange at this time.

Why is it that the majority of SMEs are left with such poor broadband service? In my view this is a national disgrace! Particularly as I write this article I'm reminded that when as a country we were faced with the banking financial crisis of 2007/8 over the following eight years SMEs created 1.75 million jobs in the UK whilst large corporations only created 350,000 jobs; therefore SMEs created over 83% of all new jobs in the UK over this eight year period.

As a result, one can argue that it is the SMEs in the UK that should be the priority for government, not low tax or even no tax paying billion dollar disruptive companies.

The situation will start to improve over the next 60 months as Openreach, the national network infrastructure provider announced earlier this year that the complete UK telecommunications network will be moved from a voice centric to a data centric network. As the upgrade program is rolled out throughout the UK, all existing voice call traffic will be switched over to broadband circuits.

With the old Analogue, ISDN 2 and ISDN 30 telephone lines being completely withdrawn for sale by 2023 and made obsolete by 2025, all businesses should start planning for the implementation of a replacement for the existing legacy telephone system particularly if your system is older than four years.

Digitel has been working closely with Openreach and other communications partners to ensure that all of our customers are kept up to date on the changes over the 60 month period.

Good quality broadband is absolutely critical to the success of the vast majority of businesses, especially with the merging of voice traffic onto broadband. This is why in my opinion the Openreach network upgrade programme should have been carried out 5 to 6 years ago, however, better late than never.

It is important to note that Internet traffic increased by a factor of 300 from 2002 to 2017. Industry analysts forecast that over the next five years Internet traffic will continue to increase, both because of normal Internet traffic growth, and the introduction of 5G mobile in 2020. It is important that the capacity of the broadband network keeps ahead of the curve due to the ongoing increase in internet traffic.

5G mobile data will increase data rate by a factor of five compared to 4G, and mobile data usage is expected to increase by a factor of ten or more. Most of the increased traffic from 5G introduction will be carried between phone towers by the existing fixed line broadband network.

This expanding traffic will be driven by new applications; introduction of the Internet of things (IOT) and artificial intelligence applications (AI) along with the shift of broadcast entertainment to the Internet, and new virtual reality applications will add to the increasing load. This requires a UK broadband network that delivers the serious investment required to build a network of gigabit speeds rather than megabits if the network is to cope with future growth.

However, it is not all doom and gloom, Openreach and their roll-out of Fibre To The Premises (FTTP) will at last extend fibre connections into your building and will deliver more broadband speed with more consistency of available bandwidth at a reasonable price. But at this time it is subject to availability throughout the UK. (If you wish to check availability please contact our customer service department or your account manager who will be pleased to check for you)

As business managers we are faced with the new challenge, of adapting our businesses to survive in an age of digital disruption. However, if we embrace the change, take advantage of new technologies and capabilities in an increasingly on-line, connected world, we can do more than survive, we can thrive!