As much of the US settles into a "new normal" that includes spending a lot of time on the Internet to avoid spreading the novel coronavirus, the nation's telecom operators are recording new traffic records almost every day.

Importantly, all that traffic may have significant implications – including financial implications – for a wide range of players in the industry.

Beyond those monetary ramifications, the pandemic could even shift the perception of network connections from the nice-to-have category into the must-have category among policymakers and others.

"If it wasn't clear before this crisis, it is crystal clear now that broadband is a necessity for every aspect of modern civic and commercial life. US policymakers need to treat it that way," FCC Commissioner Jessica Rosenworcel told IEEE.

Indeed, the analysts with Wall Street investment firm New Street Research reported that Congress' latest coronavirus economic stimulus package positioned Internet connections next to electricity, gas and water as essential utilities worthy of loan forgiveness. The analysts pointed out that this is noteworthy considering Republicans have long opposed the notion of the Internet as a utility.

But first, the numbers
As Americans settle into their new work from home (WFH) reality, network traffic too is beginning to show signs of a "new normal." The big takeaways are that there's clearly more traffic, that the growth in traffic is happening during the day, that most of it is traveling over wired connections, and that the networks can handle it. That's partly because networks are generally designed to handle peaks – such as everyone streaming the Game of Thrones finale on Sunday evening – and therefore can easily handle a bump in usage during the day.

"The Internet as a whole is fine," Doug Suttles, CEO of the bandwidth-measurement firm Ookla, told FastCompany. "It can handle a ton."

"The relative strength of our networks gives Americans more options to work and learn from home, to get care remotely, and to keep in touch with family during this stressful period," crowed FCC Commissioner Brendan Carr in a Medium post. "The networks' reliability owes to massive investment and engineering – and making sure that we have the policies in place to foster that private sector activity."

In just the past few days, a number of companies, network-monitoring firms and trade associations have stepped forward to disclose their latest COVID-19 traffic figures:

Importantly, some of the biggest traffic spikes are being reported by the companies that directly service the WFH industry. Cisco's Webex collaboration service, for example, said its traffic volumes are up 24 times above its normal range. And Microsoft's Azure cloud computing service, which powers communication platforms like Microsoft Teams, reported a 775% increase in usage in regions "that have enforced social distancing or shelter in place orders."

Interestingly, the FCC has been working to encourage traffic to such communications platforms by waiving some of the regulatory fees involved in their traffic.

This is all important considering companies, including Netflix, Akamai and YouTube, have all announced efforts to reduce the amount of traffic their services generate over the Internet.

The financial ramifications
As the first quarter of 2020 comes to a close, it's clear that the coronavirus will have an immediate and profound effect on the financials of companies in the retail, restaurant and travel industries.

And some analysts are warning that the telecom industry won't emerge unscathed.

"We expect the COVID crisis to have a sustained impact on mobile operator financials," wrote the Wall Street analysts at Nomura's Instinet, pointing to the fact that thousands of operator retail stores have been closed nationwide.

Further, a broader financial recession sparked by the virus could have a significant impact on the entire economy, which would undoubtedly drag down telecom companies that count on revenues from the business sector. "We are standing on the precipice of a potentially dramatic decline in macroeconomic growth and business activity," Craig Moffett, analyst with MoffettNathanson, warned in a new report.

But other analysts are looking for bright spots amid the general upheaval.

"Wireless is the most resilient of all the businesses that our companies compete in, and T-Mobile is 100% wireless," wrote the analysts at New Street Research. "We believe they stand to gain share during a recession because they sell the same or better product than Verizon and AT&T at a 20% discount."

"ISPs have been reporting notable increases in Internet traffic based on shelter in place conditions around the world. This is a positive driver for Cogent," wrote the Wall Street analysts at LightShed Partners in a recent post. "The increased usage by consumers working or sheltering in home is on applications like Netflix and YouTube, but also Zoom and Webex, all of which are Cogent customers. Once again, not all the bit growth at these companies benefits Cogent, but these are positive indicators."

And the analysts at MKM Partners upgraded their opinion of Adtran's stock because "there has been a typical year's worth of service provider network traffic growth globally in March alone, and we believe there has been a rush of orders for Adtran's copper-based broadband access line cards."

Looking beyond the immediate situation, some Wall Street analysts predicted that broadband connections will continue to be important in the months and years to come. "We believe a strong case may be made that BOTH enterprise and consumer oriented broadband providers will see more pricing power at the other side of this crisis," wrote the Wall Street analysts at Wells Fargo in a note to investors. "We do not see broadband data consumption lessening in a meaningful way post COVID. On the consumer side, we see further OTT [over the top] offerings continuing to drive more usage. On the enterprise side, we expect corporations will have to accommodate life after COVID."

Indeed, the analysts at MKM Partners said that 19% of consumers in a recent survey said they plan to spend more on their telecom services, and just 3% said they plan to spend less.

Finally, telecom vendor Ericsson argued that the COVID-19 crisis could ultimately reward operators that have invested in the quality of their networks. "Where network quality is highest, we found that the lead service provider enjoys a higher average ARPU (+31%) and lower average churn (-27%)," the firm said of its findings. "Put simply, investing in network quality keeps subscribers happy."

The long-term implications
While the effects of the coronavirus on telecom networks and the wider economy are coming into focus, a bigger question is whether the pandemic will lead to broad changes in the way the industry is viewed and regulated.

For instance, the American educational system has essentially been forced online in the span of a few weeks. Will that put network connections in the same category as water and heat in the minds of US policy makers?

Some public-interest associations aren't hopeful. For instance, advocacy group Free Press wrote that the US government's latest coronavirus economic stimulus package doesn't allocate any money toward crossing the digital divide. "Members of Congress like to make speeches about the lack of broadband back home. But when given a chance to spend some money and improve Internet access and affordability during this critical moment, they've failed spectacularly," wrote the association's general counsel, Matt Wood.

But the analysts at New Street Research wrote that lawmakers and others will undoubtedly take a hard look at America's telecom networks, including those in rural areas, after the pandemic subsides.

"We think the massive and widespread dependence on broadband during the crisis will lead regulators to believe that their two highest priorities, post the crisis, will be to accelerate efforts to complete universal broadband coverage and to examine and assure adequate capacity," they wrote to investors.

And if that happens, the analysts argued, the next logical step for policy makers may involve a closer look at telecom operators' pricing. After all, if Internet connections are as important as water and electricity, should Internet providers face the same scrutiny over their pricing plans as utility providers do today?

"If, as we see likely, there is a paradigm shift in how people use the network to work, study, obtain entertainment, and in other ways replace physical with virtual presence, the companies themselves may decide they need to reprice their offerings," the New Street analysts wrote. "In a world in which all agreed competitive forces constrain pricing behavior, that would be non-controversial. But that is not the world we are living in. So while we see the prospects of price regulation as very low, another part of the reckoning [after the coronavirus] will be political constraints on the flexibility to reprice in light of massive and sustained increases in demand."

— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano