As the new coronavirus spreads across the US, forcing Americans into their homes for what could be months of waiting, here are five ways the telecom industry is being affected.
Further, it's also likely that the industry – and the wider economy – will see additional ramifications as time goes on.
1. Store closings
Starting Tuesday, T-Mobile is closing about 80% of its stores. T-Mobile said it would leave 20% of its stores open "in locations designed to be within a 30-minute drive for most customers." And the company added that it will maintain employees' "target income even during these initial closures this month."
"We continue to focus on hygiene and sanitization efforts in the stores that remain open and intend continue deep cleaning, keep hygiene and cleaning products in stock through shortages and make shifts in staffing to relieve our teams," the operator wrote. "This is one more way we can create a safer environment for our employees who do keep working."
Similarly, Sprint said it will temporarily close around 71% of its retail stores across the country. Meantime, Verizon said it will close its stores on Sundays, reduce store hours on other days, and limit the number of employees and customers in those stores.
Apple, for its part, initially closed its stores outside of China until March 27, but updated that language recently to specify only that the closures will remain in effect "until further notice."
AT&T hasn't indicated plans to close stores, but Verizon warned Tuesday in an SEC filing that the outbreak of COVID-19 could have a "material" impact on its financial and operational results.
"Public and private sector policies and initiatives to reduce the transmission of COVID-19, such as the imposition of travel restrictions, the promotion of social distancing and the adoption of work-from-home and online learning by companies and institutions, could impact our operations and the amount and ways our customers use our networks and other products and services," Verizon wrote. "In addition, COVID-19 may affect the ability of our suppliers and vendors to provide products and services to us. Some of these factors could increase the demand for our products and services, while others could decrease demand or make it more difficult for us to serve our customers."
2. Layoffs and furloughs
So far no US telecom companies have announced layoffs or furloughs related to COVID-19. But that might change.
The Wall Street Journal reported that Marriott International, the world's largest hotel company, said it has started to furlough what it expects will be tens of thousands of employees due to hotel closings around the world.
The publication noted that employees at the affected hotels won't be paid while on furlough, but the bulk will continue to receive health-care benefits.
In response to such developments, governments around the world are looking at doling out billions of dollars in economic stimulus packages above and beyond the ones that may have already been passed.
Given Verizon's warning – and the titanic fall in Wall Street shares Monday – it's probably no surprise that US analysts are warning investors off of some telecom stocks.
"There is still pain to come" for some US telecom companies, despite a slight Wall Street recovery Tuesday, warned the Wall Street analysts at Raymond James, according to Seeking Alpha. "We do not believe the stocks will be rewarded for being steady (free cash flow) machines as these broader leverage and growth fears become paramount."
Others however argued that now is the time to buy shares in some telecom companies. "The selloff in ATUS [cable company Altice USA] has been extreme," wrote the Wall Street analysts at New Street Research. "This looks like a buying opportunity (for both stocks but especially ATUS)."
4. Internet traffic
European Internet providers and Internet exchange hubs have reported record-setting increases in Internet traffic in recent weeks, thanks to their stuck-at-home customers. That increase appears sustained, based on new traffic figures at Internet exchanges in places like Amsterdam and Milan.
Some providers in the US are seeing similar rises.
"Week over week we're up 20% on traffic with the peak stretching through the whole day instead of just in the evening," Dave Temkin, co-founder of Internet connectivity organization Community IX, told Light Reading Tuesday. Community IX handles Internet interconnection hubs – which help route traffic from one provider to another – in Seattle and Florida.
Indeed, network-monitoring company Sandvine reported that YouTube traffic is up by more than 10% worldwide.
However, citing data from network-monitoring company Ookla Speedtest, PCMag reported that Internet speeds did slow in China and Italy during coronavirus outbreaks there, but that the networks did not stop working. That, the publication reported, likely indicates that Internet providers may not be crippled by COVID-19 traffic spikes.
"As daytime internet usage increases, core networks should be able to handle the load," Craig Matsumoto, a senior analyst with S&P Global Market Intelligence's 451 Research (and a former Light Reading editor), said in a statement. "These access networks and authentication systems have already been stress-tested somewhat, either when families were together for the holidays, or during evenings when entire neighborhoods begin streaming video and playing online games. The rise in working and studying from home will increase the total bandwidth traversing the Internet, but it might not cause as many problems as we think."
5. Network construction
So far none of the major network equipment suppliers like Ericsson or Huawei have offered any clear, measurable warnings over the supply of their gear. Further, manufacturing facilities in China have mostly reopened after the country managed to contain the spread of the virus there.
However, there are some small indications that the construction of wireless networks, at least in the US, could be affected by the virus.
"We have now become aware that at least one tower company has imposed a two-week suspension of field service, including work on repack-related construction, while it evaluates the evolving situation," the FCC noted in a filing Tuesday, without identifying the tower company. "We anticipate that there may be additional suspensions of service and other developments in this unfolding situation that may impact the transition."
"This is a very dynamic situation that is evolving and can change with jaw-dropping speed," acknowledged two tower industry executives in an article in WirelessEstimator, a publication that closely tracks the US cell tower industry. The executives didn't call for a halt on tower work, but offered suggestions on how to prevent the spread of COVID-19. "We should all continue to monitor the situation and adjust as events warrant without overreacting and making a bad situation even worse."
Source: Mike Dano, Light Reading