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NFV/SDN prepares operators to support 5G era use cases and helps drive network efficiencies

According to TBR’s 3Q18 NFV/SDN Telecom Market Landscape, operators will further adoption of virtualized network solutions by capitalizing on 5G use cases and strengthening security capabilities. Integrating NFV and SDN technologies will enable operators to more effectively support network technologies that will become prevalent in the 5G era, including network slicing and edge computing, which will play a pivotal role in supporting 5G use cases such as advanced Internet of Things (IoT).

Operators are under pressure to invest in NFV and SDN to reduce total capex and opex spend as well as introduce new services and stay competitive as they prepare to offer 5G services and search for new network use cases. The shift to software-defined network architectures is extremely disruptive to the vendor community.

Graph showing total NFV/SDN spend by capex and external opex for 2017 through 2022

Incumbent network vendors are under increasing pressure to move up the network value chain, from hardware to software and software-related services. They are increasingly disrupted by the adoption of white-box hardware and the utilization of ODMs as operators search for avenues to reduce network costs. Deploying white boxes provides significant cost savings for operators as well as greater flexibility by allowing carriers to deploy the most appropriate virtual network functions for their environments without being limited by the constraints of propriety hardware. Though the ODM threat has not manifested in the telecom operator customer segment to the extent it has in the webscale segment, incumbent vendors must remain on alert and attempt to mitigate this threat.

The NFV/SDN Telecom Market Landscape includes key findings, market size, customer adoption, operator positioning and strategies, geographic adoption, vendor positioning and strategies, and acquisition and alliance strategies and opportunities.

For additional information about this research or to arrange a one-on-one analyst briefing, please contact Dan Demers at +1 603.929.1166 or [email protected].

 

Crossing the chasm: Transforming from a CSP to a DSP

Communication service providers (CSPs) are embarking on transformation journeys to evolve into digital service providers (DSPs), leveraging nascent technologies such as software-mediated networking (NFV/SDN), cloud, 5G, analytics, automation and artificial intelligence. During the webinar, TBR will provide its definition of a DSP and characterize how a CSP can evolve into a DSP. Join Telecom Senior Analysts Chris Antlitz and Michael Soper for an in-depth review of service provider digital transformation.

Don’t miss:

  • The definition of a DSP
  • The attributes and characteristics of CSPs versus DSPs
  • The steps CSPs must take — and the technologies they must leverage — to transform into DSPs
  • Which operators are leading
  • Which vendors are successfully enabling transformation

 

TBR webinars are held typically on Wednesdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous webinars can be viewed anytime on TBR’s Webinar Portal.

For additional information or to arrange a briefing with our analysts, please contact TBR at [email protected].

Ready when you are: Nokia prepared to migrate customers to 5G

TBR perspective

At Nokia’s (NYSE: NOK) 2018 Analyst Conference, held in Tokyo in August, the company emphasized that its end-to-end portfolio, supported by a robust R&D program, is ready and able to take its customers into the 5G era. The vendor also stressed that 5G is much more than just a radio upgrade and that realizing the full potential of 5G requires a fundamental change to the architecture of the network.

Given how much disruption is facing the telecom industry, it was refreshing to see that Nokia is being proactive in aligning with where the market is trying to go, even if that means disrupting itself. Though a part of the company will remain focused on servicing the legacy platforms of the past, the other part of the company will focus on realizing the future. Given that most operators are stuck in between both worlds as well, it is fitting that Nokia will be able to support the migrations of its customers toward the network of the future.

Event overview

Nokia hosted a select group of industry analysts in a two-part event. The first part of the event was a two-day workshop about the company’s global Fixed Networks business, and the second part of the event was a two-day Asia Pacific and Japan (APJ) regional update to deep dive on specific trends occurring in those markets.

In addition to the usual market overview, strategy and portfolio updates, Nokia hosted several customers at the event, namely Infracapital, KDDI, NTT DOCOMO, SoftBank and Marubeni, to discuss their own businesses and share how Nokia is helping them achieve their goals. A representative from Japan’s Ministry of Internal Affairs and Communications was also present to provide an overview of Japan’s telecom industry and how policy is shaping that country as it transitions into the 5G era.

Hosting the event in Japan was pertinent and timely given the country’s history as an early technology adopter and its upcoming adoption of 5G. With the 2020 Summer Olympics less than two years away, Japan will showcase for the world cutting-edge use cases of telecom networks leveraging 5G technology. The country also symbolizes the monumental changes occurring in the telecom industry, namely that domestic operators are challenged to evolve into digital service providers to better compete against digital-native competitors in their home market, such as Rakuten, as well as realize new business models from the 5G era to grow.

NFV/SDN will account for over one-quarter of CSP capex and external opex spend in 2022

HAMPTON, N.H. — According to Technology Business Research, Inc.’s (TBR) latest NFV/SDN Telecom Market Forecast, covering 2017 to 2022, mainstream adoption of NFV/SDN is now set for the early 2020s due to operators encountering challenges with migration.

“Despite challenges, operators will push forward with NFV/SDN and will scale their investments in these technologies,” said TBR Telecom Senior Analyst Chris Antlitz. “Operators must transform to stay relevant and competitive in the digital era, and NFV/SDN is a critical component of that transformation.”

During the forecast period, 5G will also serve as an underlying catalyst for increased NFV/SDN spend. 5G will push operators to adopt a new network architecture, and virtualization will be a critical aspect of networks.

TBR’s annual NFV/SDN Telecom Market Forecast projects spend on NFV, SDN and related services across key segments globally and by region.

Additional research on the NFV and SDN markets can be found in TBR’s NFV/SDN Telecom Market Landscape and Telecom Software Mediated Networks (NFV/SDN) Customer Adoption Study, which cover the operator and vendor landscapes and operator purchasing decisions regarding NFV and SDN, respectively.

For additional information about this research or to arrange a one-on-one analyst briefing, please contact Dan Demers at +1 603.929.1166 or [email protected].

 

ABOUT TBR

Technology Business Research, Inc. is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, professional services, and telecom vendors and operators. Serving a global clientele, TBR provides timely and actionable market research and business intelligence in a format that is uniquely tailored to clients’ needs. Our analysts are available to address client-specific issues further or information needs on an inquiry or proprietary consulting basis.

TBR has been empowering corporate decision makers since 1996. For more information please visit www.tbri.com.

Leading operators are accelerating their 5G timetables, justifying the investment due to the competitive advantage 5G technology provides

HAMPTON, N.H. — The efficiency gains offered by 5G are spurring operators to accelerate their deployment timeframes, according to TBR’s 3Q18 5G Telecom Market Landscape.

“5G is up to 10 times more efficient on a cost-per-gigabyte basis compared to LTE,” said TBR Telecom Senior Analyst Chris Antlitz. “This is the driving force behind most operator commitments to deploy the technology thus far. With data traffic continuing to scale globally, operators will need to invest in new technologies, such as 5G, that can help them more cost-effectively support that traffic while providing an overall better quality of experience for their customers.”

TBR estimates over 85% of 5G capex spend through 2020 will be driven by operators in four countries: the U.S., China, Japan and South Korea. Most Tier 1 operators in these countries have aggressive 5G rollout timetables and intend to leverage the technology for fixed wireless broadband and/or to support their mobile broadband densification initiatives. The seamless software upgradability of new RAN platforms to 5G will facilitate deployment at incremental cost, keeping overall spend scaling quickly but at a relatively low level compared to prior RAN generation upgrades.

TBR’s 5G Telecom Market Landscape tracks the 5G-related initiatives of leading operators and vendors worldwide. The report provides a comprehensive overview of the global 5G ecosystem and includes insights pertaining to market development, market sizing, use cases, adoption, regional trends, and operator and vendor positioning and strategies.

For additional information about this research or to arrange a one-on-one analyst briefing, please contact Dan Demers at +1 603.929.1166 or [email protected].

 

ABOUT TBR

Technology Business Research, Inc. is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, professional services, and telecom vendors and operators. Serving a global clientele, TBR provides timely and actionable market research and business intelligence in a format that is uniquely tailored to clients’ needs. Our analysts are available to address client-specific issues further or information needs on an inquiry or proprietary consulting basis.

TBR has been empowering corporate decision makers since 1996. For more information please visit www.tbri.com.

TIS margins declined in 2017 as vendors invested in service delivery evolution, including automation, tools and training

HAMPTON, N.H. — According to Technology Business Research Inc.’s (TBR) 2017 Telecom Infrastructure Services (TIS) Margin Benchmark, Tier 1 telecom vendor average TIS margins declined year-to-year in 2017 due mainly to restructuring at Ericsson, though growing investment in R&D, particularly for professional services, also had an impact.

“Vendors invested in service delivery evolution to stay ahead of adverse TIS market trends, such as legacy decommissioning and growing SI complexity,” said TBR Telecom Senior Analyst Michael Soper. “Professional services in particular is a focus area for vendors as they invest in tools and training to cope with increasing network complexity.”

Ericsson’s restructuring impacted all facets of its services business, driving margins down across the board. The company’s contract exit and rescoping activity hurt margins in 2017, but will enable Ericsson to emerge on better footing by the end of restructuring in 2019.

Except for Ericsson, vendors grew their maintenance margins, offsetting the impact of legacy infrastructure decommissioning with an influx of support revenue for recently deployed gear in China. Vendors are investing in automation in this space to sustain high margins where the full impact of legacy decommissioning and software-mediated networking are felt.

TBR’s 2017 Telecom Infrastructure Services Margin Benchmark provides annual analysis of deployment services, maintenance services, professional services and managed services margins for Tier 1 telecom suppliers. Suppliers covered include Ericsson, Huawei, Nokia and ZTE.

For additional information about this research or to arrange a one-on-one analyst briefing, please contact Dan Demers at +1 603.929.1166 or [email protected].

 

ABOUT TBR

Technology Business Research, Inc. is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, professional services, and telecom vendors and operators. Serving a global clientele, TBR provides timely and actionable market research and business intelligence in a format that is uniquely tailored to clients’ needs. Our analysts are available to address client-specific issues further or information needs on an inquiry or proprietary consulting basis.

TBR has been empowering corporate decision makers since 1996. For more information please visit www.tbri.com.

 

 

Telecom vendors anticipate revenue from 5G in select countries as early as 2H18, but lower China capex drove market decline in 1Q18

HAMPTON, N.H. (June 29, 2018) According to Technology Business Research, Inc.’s (TBR) 1Q18 Telecom Vendor Benchmark, the conclusion of LTE coverage projects in China hampered revenue for the largest vendors. A reduction in demand from telecom operators for routing and switching products also caused revenue to decline for Cisco, Juniper and Nokia. In this market downturn, vendors are employing various strategies to maintain margins and mitigate revenue declines while eyeing initial commercial 5G rollouts, which are set to begin in the U.S. in 2H18.

“Suppliers are trying to sell into the IT environments of operators, engaging with the webscale customer segment, and expanding software portfolios to partially offset falling telecom operator capex,” said TBR Telecom Senior Analyst Michael Soper. “The shift in the revenue mix toward software is also helping vendors maintain operating margins in spite of lower hardware volume. Vendors are also growing their use of automation and artificial intelligence in service delivery to improve profitability by reducing their reliance on human resources.”

Western-based vendors are preparing their portfolios to build out 5G for U.S.-based operators in 2H18. Several operators have aggressive 5G rollout timetables and intend to leverage the technology for fixed wireless broadband and/or to support their mobile broadband densification initiatives. Vendors that have high exposure to the U.S. and are well aligned with market trends such as 5G, media convergence and digital transformation will likely increase market share over the next two years as operators in the region are expected to aggressively invest in these areas starting in 2H18.

The Telecom Vendor Benchmark details and compares the initiatives and tracks the revenue and performance of the largest telecom vendors in segments including infrastructure, services and applications and in geographies including the Americas, EMEA and APAC. The report includes information on market leaders, vendor positioning, vendor market share, key deals, acquisitions, alliances, go-to-market strategies and personnel developments.

For additional information about this research or to arrange a one-on-one analyst briefing, please contact Dan Demers at +1 603.929.1166 or [email protected].

 

ABOUT TBR

Technology Business Research, Inc. is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, professional services, and telecom vendors and operators. Serving a global clientele, TBR provides timely and actionable market research and business intelligence in a format that is uniquely tailored to clients’ needs. Our analysts are available to address client-specific issues further or information needs on an inquiry or proprietary consulting basis.

TBR has been empowering corporate decision makers since 1996. For more information please visit www.tbri.com.

Converging trends enable software and IT services firms to continue to grow despite lower operator capex

HAMPTON, N.H. (June 27, 2018) — According to Technology Business Research, Inc.’s (TBR) 1Q18 Telecom Infrastructure Services Benchmark, post-peak RAN spend drove down telecom infrastructure services (TIS) revenue in local currency terms at some of the largest vendors including Ericsson, Huawei and Nokia. Meanwhile, software- and services-centric firms grew revenue as they capitalized on digitalization trends and/or provided outsourcing and C&SI to operators and webscales alike.

“Operators’ push toward ICT convergence and digitalization sets IT services firms up for continued growth,” said TBR Telecom Senior Analyst Michael Soper. “IT services firms are able to help telecom and webscale customers migrate to new technologies and implement new business models, both of which are in high demand as these companies pursue digital transformation.”

Webscale spend remains robust, but TIS work is confined to certain segments of vendors. Webscales seek out cutting-edge technology and typically contract with the OEM for product-attached services. Companies benefitting from this process include Ciena, which is providing optical equipment to webscales, and Nokia, which has many opportunities to sell into webscales with its end-to-end optical portfolio, premium IP routing and switching products. IT services firms, particularly Accenture, are providing back-office outsourcing and software SI.

Vendors with high exposure to the U.S. market and those that are well-aligned with market trends such as 5G, media convergence and digital transformation will likely increase their share of the TIS market over the next two years, as TBR expects operators in the region to aggressively invest in these areas starting in 2H18.

TBR’s Telecom Infrastructure Services Benchmark provides quarterly analysis of the deployment, maintenance, professional services and managed services markets for network and IT suppliers. Suppliers covered include Accenture, Amdocs, Atos, Capgemini, CGI, China Communications Services, Ciena, Cisco, CommScope, CSG International, Ericsson, Fujitsu, Hewlett Packard Enterprise, Huawei, IBM, Infosys, Juniper Networks, NEC, Nokia, Oracle, Samsung, SAP, Tata Consultancy Services, Tech Mahindra, Wipro and ZTE.

For additional information about this research or to arrange a one-on-one analyst briefing, please contact Dan Demers at +1 603.929.1166 or [email protected].

 

ABOUT TBR

Technology Business Research, Inc. is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, professional services, and telecom vendors and operators. Serving a global clientele, TBR provides timely and actionable market research and business intelligence in a format that is uniquely tailored to clients’ needs. Our analysts are available to address client-specific issues further or information needs on an inquiry or proprietary consulting basis.

TBR has been empowering corporate decision makers since 1996. For more information please visit www.tbri.com.

Competition will intensify in the U.S. telecom market heading into 2020 due to the launch of 5G services and the potential T-Mobile/Sprint merger

HAMPTON, N.H. (June 8, 2018) — Wireless revenue rose 3.1% year-to-year to $58.4 billion among U.S. carriers covered in Technology Business Research Inc.’s (TBR) 1Q18 U.S. & Canada Mobile Operator Benchmark as higher equipment revenue spurred by the adoption of premium devices offset continuing service revenue declines. Increased adoption of premium devices is benefiting equipment revenue as devices such as the iPhone X have pushed the acceptable average selling price for smartphones to over $1,000. Verizon, AT&T and Sprint expect service revenue declines will gradually moderate in 2018 as the bulk of customers are now on unsubsidized service plans. However, service revenue will be negatively impacted by the new ASC 606 industry accounting standard as well as lower overage revenue stemming from the growing adoption of unlimited data plans.

The report examines how the recently announced T-Mobile and Sprint merger would disrupt the wireless and cable industries should it gain regulatory approval. “The proposed T-Mobile merger would serve as a lifeboat for Sprint, alleviating the company’s long-term financial challenges, including its high debt load and struggles to generate positive net income,” said TBR Telecom Analyst Steve Vachon. “The scale gained from Sprint’s operations would also enable T-Mobile to compete more aggressively in the 5G era and strengthen its margins, which historically have trailed those of Verizon and AT&T.”

The proposed T-Mobile and Sprint merger would also disrupt the cable and pay-TV industries, as the combined company would have a base of over 125 million wireless subscribers to which it could cross-sell T-Mobile’s upcoming Layer3 TV video platform. The combined company’s 5G services may also serve as a replacement for traditional wireline broadband connectivity as the combination of T-Mobile’s and Sprint’s spectrum would yield estimated speeds of 450Mbps on a national average.

Combined wireless revenue among Tier 1 Canadian carriers rose 8.8% year-to-year to $6 billion due to continued postpaid additions spurred by shared data programs and higher data usage arising from the accelerated speeds offered by LTE-Advanced services. Despite steady increases in smartphone penetration in Canada, the postpaid market continues to flourish as Rogers and Bell Mobility reported their highest first quarter postpaid net additions in 1Q18 since 2009 and 2011, respectively. Subscriber growth will remain strong throughout 2018 as prepaid customers transition to postpaid plans with higher average revenue per user (ARPU) and as connected device adoption increases in Canada. Carriers will also have the opportunity to target first-time wireless customers in Canada, including youths and young adults as well as immigrants entering the country.

The U.S. & Canada Mobile Operator Benchmark details and compares the activities of the largest U.S. and Canadian operators, including financial performance, go-to-market initiatives and resource management strategies. Covered companies include AT&T, Verizon, Sprint, T-Mobile, U.S. Cellular, Rogers, Telus and Bell Mobility.

For additional information about this research or to arrange a one-on-one analyst briefing, please contact Dan Demers at +1 603.929.1166 or [email protected].

 

ABOUT TBR

Technology Business Research, Inc. is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, professional services, and telecom vendors and operators. Serving a global clientele, TBR provides timely and actionable market research and business intelligence in a format that is uniquely tailored to clients’ needs. Our analysts are available to address client-specific issues further or information needs on an inquiry or proprietary consulting basis.

TBR has been empowering corporate decision makers since 1996. For more information, please visit www.tbri.com.

5G will support growth in the deployment and professional services markets, while slowing the decline of maintenance spend due to decommissioning and NFV/SDN

HAMPTON, N.H. (May 31, 2018) — According to Technology Business Research, Inc.’s (TBR) Telecom Infrastructure Services North America Market Forecast 2017-2022, the North America telecom infrastructure services (TIS) market will grow through the forecast period for three key reasons: Tax reform will stimulate capex investment; digital transformation initiatives will drive spend; and 5G investment will be pulled forward and accelerated by the big four operators in the U.S. to obtain or retain a competitive advantage. Spend pertaining to these overarching trends will be partly offset by cost savings from legacy infrastructure decommissioning, cloud, and NFV/SDN as well as synergies that are realized from M&A. TBR estimates the market will grow at a CAGR of 0.6% from 2017 to 2022.

“The big four operators in the U.S. intend to commercially deploy 5G as soon as late 2018, with deployments set to ramp up in 2019 and through the remainder of the forecast period,” said TBR Telecom Senior Analyst Michael Soper. “5G requires significant investments in fiber and upgrades in the network backbone and access layer, all of which will drive spend on TIS. 5G will slow the pace of decline in the maintenance market in the later years of the forecast period, but will not return the maintenance market to growth due to the aforementioned decommissioning and NFV/SDN.”

Vendors largely showed growth in North America in 2017. Although vendors with hardware exposure had flat or declining TIS revenue, suppliers grew sales if they had services and software portfolios aligned to operator transformation needs. Ericsson’s revenue declined predominantly due to the rescoped Sprint managed services contract. Cloud service provider spend remains robust in the U.S., helping Accenture and Nokia post growth in the region despite ongoing weak spend by telecom operators. Other vendors, particularly Juniper, are also obtaining a greater portion of TIS revenue from cloud service providers. Looking toward 2018 and beyond, IT services firms and software-centric companies, particularly Accenture, Amdocs, Tech Mahindra and Tata Consultancy Services (TCS), are best positioned to help operators capitalize on the digital economy.

TBR’s Telecom Infrastructure Services North America Market Forecast provides annual analysis and forecasting of the deployment, maintenance, professional services and managed services markets for network and IT suppliers.

For additional information about this research or to arrange a one-on-one analyst briefing, please contact Dan Demers at +1 603.929.1166 or [email protected].

 

ABOUT TBR

Technology Business Research, Inc. is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, professional services, and telecom vendors and operators. Serving a global clientele, TBR provides timely and actionable market research and business intelligence in a format that is uniquely tailored to clients’ needs. Our analysts are available to address client-specific issues further or information needs on an inquiry or proprietary consulting basis.

TBR has been empowering corporate decision makers since 1996. For more information please visit www.tbri.com.