How Important Are Vendor Ecosystems in Network Services Deployment, and How Are They Evolving?

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For prime contractors, managing an ecosystem of subcontractors is a constant challenge. These challenges are prompting vendors to reevaluate their subcontractor ecosystem strategies, driving change in the makeup of subcontractor ecosystems as well as the approaches used to manage partners.

 
The Fiber Optic Association (FOA) predicts that the number of homes in the U.S. passed by fiber networks will increase from 68 million in 2022 to 137 million by 2026. The cost and timeline of fiber network rollouts are largely predicated on the labor associated with network construction and deployment; 60% to 80% of the costs of a fiber network stem from labor activities.
 
Fiber network rollouts are large, complex and long projects. They are often nationwide in scope and require a diversity of technical skills at different times and for different durations. Telecommunications operators often hire prime contractors such as Tier 1 engineering, procurement and construction (EPC) firms or telecom OEMs to build their fiber network. However, given the scope and scale of these projects, even the largest EPC firms and OEMs must rely on an integrated and orchestrated ecosystem of subcontractors, product providers and other partners to successfully execute projects. For example, it has been reported that AT&T works with 700-plus contractors, while Google Fiber used approximately 50 subcontractors to build its network in San Antonio and Austin, Texas.
 
For prime contractors, managing an ecosystem of subcontractors is a constant challenge. Some of the pain points prime contractors face include:

  • Finding qualified subcontractors amid labor shortages and a declining telecom workforce
  • Competing with peers for subcontractors
  • Managing subcontractors on projects (e.g., coordinating delivery timelines, reporting, enforcing quality assurance procedures, handling payments)
  • Addressing subcontractor issues in the field with the client and/or local municipalities
  • Building a supplier management function

 
These challenges are prompting vendors to reevaluate their subcontractor ecosystem strategies, driving change in the makeup of subcontractor ecosystems as well as the approaches used to manage partners. Some of these changes we’re tracking for 2023 and beyond include:

  • Emergence of new commercial models to appeal to subcontractors
  • Fluctuation in subcontractor rates and unit pricing to overcome supply shortages
  • Increased emphasis on technology adoption to help manage and orchestrate suppliers
  • Emergence of new sourcing models such as crowdsourcing
  • Innovation, including automation of service delivery tasks across the program life cycle to reduce overall dependence on subcontractors and other laborers
  • Vertical integration of suppliers

 

To learn more about how vendor ecosystems in network service deployment are evolving, watch our recent webinar “Optimizing for Telecom Network Deployment Services Opportunity in 2023 and Beyond” for free now