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Lumen evolves from a traditional telco to a technology company

The 2022 Lumen Global Analyst and Consultant Forum showcased Lumen Technologies’ (NYSE: LUMN) ambition to transform from a traditional telco to a technology company. Lumen’s capabilities in hybrid networking, edge computing, connected security, unified communications and more will help support clients’ transition to a distributed workforce while bolstering Industry 4.0 initiatives across multiple verticals.

“The Platform for Amazing Things” was the central theme of the forum and highlighted Lumen’s strategy of leveraging its vast global network footprint (450,000 global route miles of fiber and over 60 planned global edge computing nodes) and robust enterprise portfolio to serve as an enabler of digital transformation for clients.

Lumen will continue to face challenges such as diminishing demand for its legacy solutions, competition from 5G wireless providers, Comcast Business’ (Nasdaq: CMCSA) growing footing in the midmarket and international markets via its recent Masergy acquisition, and disruption from hyperscalers’ growing pursuit of private network opportunities. However, the vendor will benefit from its willingness to collaborate with the broader technology industry, including with hyperscalers and other telecom operators such as T-Mobile (NasdaqGS: TMUS), as well as its strengthening capabilities in consulting, implementation and managed services as Lumen becomes better versed in supporting IT solutions from a broader array of providers.

Impact and opportunities

Divesting its ILEC and Latin America assets will enable Lumen to fund its Industry 4.0 initiatives

Lumen will transition into a leaner and more profitable company over the next several years as it divests nonstrategic assets, including its Latin America business and ILEC (incumbent local exchange carrier) operations in 20 states. The divestments will enable Lumen to increase focus on its Industry 4.0 initiatives. Additionally, they will allow the company to concentrate on its more viable remaining ILEC operations in 16 states, which have higher fiber penetration, population density and enterprise demand than the pending divested markets. The divestments will also enable Lumen to target investments toward growth areas including fiber and enterprise portfolio expansion.

Business services revenue, which is experiencing persistent declines due to lower demand for legacy solutions and elongated sales cycles amid the pandemic, will account for a higher proportion of Lumen’s total revenue following the divestment of the company’s ILEC assets. To improve business services revenue, Lumen will increase investment in strategic IT solutions such as edge computing, security and managed services as clients modernize infrastructure and implement advanced use cases to improve operational efficiency.

Returning to top-line growth is a priority for Lumen, though the company expects revenue will continue to decline in 2022 despite growth in certain strategic services, such as edge computing. Lumen is targeting a return to revenue growth within two years as Industry 4.0 initiatives begin to offset legacy solution declines and Lumen’s consumer segment benefits from the expansion of its residential Quantum Fiber services to reach a total addressable market of 12 million locations over the next several years.

2022 Lumen Global Industry Analyst and Consultant Forum: A select group of industry analysts and consultants were invited to hear from Lumen Technologies leadership about the company’s business, technology and go-to-market strategies and goals. The event included sessions focused on technologies such as edge computing, cloud, SD-WAN and SASE, unified communications, and cybersecurity as well as customer case studies in verticals including manufacturing, the public sector, retail, education, food service and sports.

Enterprise adoption of private cellular networks poses opportunities and threats for telecom industry

An overview of key findings from TBR’s upcoming Private Cellular Networks Market Landscape

Digitalization and Industry 4.0 have sparked an emerging trend whereby some enterprises are opting for private cellular networks that they buy, own and control. These enterprises will be looking to not only leverage these private networks for traditional communications but also institutionalize these technologies into their operational IT environments, which are business critical and highly sensitive from a data and security standpoint. This approach challenges the notion that communication service providers (CSPs) will supply a 5G network slice to enterprises and it could disintermediate the CSP from these enterprise opportunities altogether.

TBR’s Private Cellular Networks Market Landscape deep dives into the market for private cellular networks. This global report covers enterprises that are investing in private cellular networks as well as all of the major vendors and some nascent players that supply infrastructure in this space. The research includes key findings, key market developments, market sizing and forecast, regional trends, technology trends, vertical trends, use cases, and key customer deals that are occurring in the market. The report also provides profiles of each major vendor in the private cellular network market. Key vendors covered include Cisco, Ericsson, Huawei, Nokia and others.

Join Principal Analyst Chris Antlitz on March 18 for an in-depth and exclusive review of TBR’s upcoming Private Cellular Networks Market Landscape.

Don’t miss:

  • How the market for private cellular networks is evolving
  • Why some enterprises will opt for private cellular networks
  • How the prevalence of private cellular networks will impact the CSP 5G business-to-business opportunity

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].

Leading CSPs and webscales implement new ICT architecture to fully capitalize on digital era

Insights from TBR’s 2020 Telecom Predictions

Key technologies, most notably cloud, virtualization, 5G, edge computing, AI and machine learning (ML), are coalescing to usher in a new era, commonly referred to as the digital era, but also referred to as the 5G era or the fourth industrial revolution (Industry 4.0). It is widely expected that during this era, industries will be fundamentally transformed, people’s lives will be greatly enhanced, and productivity will enter a new phase of sustained growth, all of which will contribute to an economic boom and improved standard of living. Communication service providers (CSPs) have a golden opportunity to play a critical role in the digital era by providing not only ubiquitous, intelligent connectivity but also value-added services that participate in and enable this economic development.

TBR’s research suggests 2020 will be a springboard year for the telecom industry’s development of the new architecture, with spend in the key markets of 5G, network virtualization and edge computing poised to ramp up significantly through the middle of the next decade. TBR also anticipates that systems integrators will play a much broader and key role in helping CSPs transform their businesses and networks and that webscales will increasingly encroach on CSP turf as they concurrently pursue new value created from the aforementioned technologies.

Join Principal Analyst Chris Antlitz on Feb. 12 as he provides leading-edge analysis on where the telecom industry is heading and how the digital era will impact stakeholders in the telecom ecosystem.

Don’t miss topics including:

  • Why webscales are building out the edge
  • How the open RAN and vRAN markets are developing
  • Why systems integrators will play a key role in CSP transformations

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].

TBR 2020 Telecom Predictions: Leading CSPs and webscales implement new ICT architecture to fully capitalize on digital era

Leading CSPs tackle business and network transformation to capture value created in the digital era

Key technologies, most notably cloud, virtualization, 5G, edge computing, AI and machine learning (ML), are coalescing to usher in a new era, commonly referred to as the digital era, but also referred to as the 5G era or the fourth industrial revolution (Industry 4.0). It is widely expected that during this era, industries will be fundamentally transformed, people’s lives will be greatly enhanced, and productivity will enter a new phase of sustained growth, all of which will contribute to an economic boom and improved standard of living. Communication service providers (CSPs) have a golden opportunity to play a critical role in the digital era by providing not only ubiquitous, intelligent connectivity but also value-added services that participate in and enable this economic development.

While the future looks bright for participants in the digital era, especially for CSPs, the reality is that CSPs’ traditional business models, established ways of working and current network systems are not relevant in this new era, meaning these companies must transform into digital service providers (DSPs) and become more webscale-like in nature. As part of this imperative to evolve, leading CSPs are transitioning their networks to a virtualized, container- and microservices-based, cloud-native architecture. This cloud-centric network architecture will enable CSPs to participate in new value creation stemming from new technologies, such as 5G and edge computing, and adopt next-generation network operations based on data as well as AI and ML for continuous automation. This new architecture will also enable CSPs to take advantage of network slicing and low latency to more effectively support use cases in areas such as autonomous transportation, video analytics, robotic process automation, AR/VR solutions, advanced healthcare applications and cloud-based gaming.

TBR’s research suggests 2020 will be a springboard year for telecom industry development toward the new architecture, with spend in the key markets of 5G, network virtualization and edge computing all poised to ramp up significantly through the middle of the next decade. TBR’s research also suggests that systems integrators will play a much broader and key role in helping CSPs transform their businesses and networks and that webscales will increasingly encroach on CSP turf as they concurrently pursue new value created from the abovementioned technologies.

2020 Predictions:

  • Webscales start building out the edge
  • Leading CSPs begin commercial deployments of open RAN and vRAN in 2020
  • Systems integrators will assume prime role in new architecture build

Register for TBR’s 2020 Telecom Predictions webinar, Leading CSPs and webscales implement new ICT architecture to fully capitalize on digital era, Feb. 12, 2020.

Technology Business Research 2020 Predictions is a special series examining market trends and business changes in key markets. Covered segments include telecom, cloud, devices & commercial IoT, data center, and services.

Operators are positioning to support a wide array of IoT use cases by targeting industry-specific solutions

Key telecom IoT findings

Industry 4.0 will drive a renaissance in new, commercially viable use cases for the network between 2022 and 2025, which will spur revenue generation opportunities for communication service providers (CSPs).

Providing IoT connectivity over multiple network types including LTE-M, NB-IoT, Wi-Fi- and 5G is essential for CSPs to accommodate the cost, device and performance requirements of clients.

CSPs are partnering with leading security vendors, integrating blockchain-based device authentication capabilities, and laughing business divisions dedicated to IoT security to ensure IoT devices are safeguarded.

3Q19 key telecom IoT findings

Industry 4.0 will bolster IoT connection growth for global CSPs

Industry 4.0 will contribute to a surge in IoT connection additions between 2022 and 2025

TBR expects Industry 4.0 to drive a renaissance in new, commercially viable use cases for the network between 2022 and 2025, which will spur revenue-generation opportunities for communication service providers (CSPs) that deliver the connectivity layer and value-added services to businesses. Industry 4.0 will bolster IoT connection growth for CSPs as they target large contract wins in areas including transportation, smart cities, smart factories and healthcare, which are expected to integrate a massive number of IoT devices to enhance operations.

Private 5G networks will play a pivotal role in advancing Industry 4.0 as these networks will provide the security and precision needed to support mission-critical workloads such as in manufacturing. The current, widespread availability of mid-band spectrum in EMEA and APAC markets will provide CSPs in those regions a time-to-market advantage in deploying private 5G networks as U.S. operators wait for the regulatory clearance of CBRS and C-Band spectrum over the next several years.

Enterprises will turn to private 5G networks due to their enhanced security and reduced latency

TBR believes private cellular networks will be a predominant initial 5G use case as enterprises will increasingly opt for 5G connectivity due to its ultra-low latency and enhanced security. Manufacturing plants will be an ideal environment for private 5G networks as the ultra-low latency and minimal jitter provided by 5G will enable connected devices such as robots and other manufacturing equipment to more effectively meet production quotas on the assembly line.

TBR’s Telecom IoT Market Landscape, takes a deep dive into the commercial cellular IoT-related initiatives of global stakeholders in the telecom market, including telecom operators, cable operators and vendors that supply the telecom market. The research includes key findings, market size, regional summaries, technology trends, use cases, verticals, operator and vendor positioning and strategies, acquisition and alliance strategies, and opportunities that are specific to the telecom industry.

5G-related investment fuels vendor growth; greenfield 5G and Industry 4.0 opportunities emerge

U.S. cable operators and Dish Network are exploring building out their own 5G networks

Rakuten’s mobile broadband network deployment demonstrates that vendors must be aware of new opportunities to deploy 5G networks for customers that do not currently own mobile broadband networks. In November Dish Network selected Ericsson to supply a radio access and core network for Dish’s Narrowband IoT (NB-IoT) network, which is expected to be completed in March 2020. Dish, which has been closely watching Rakuten’s build-out, is also contemplating a nationwide 5G network, on which it could spend up to $10 billion. Cable operators Comcast, Charter and Altice, which are currently mobile virtual network operators (MVNOs) of Tier 1 mobile operators, are contemplating greenfield 5G network builds as well.

Industry 4.0 will drive demand for cellular connectivity within the enterprise, but not for a few years

TBR’s research suggests that Industry 4.0, which includes mass 5G adoption globally, will not ramp up until between 2022 and 2025, at which point business cases will be proven, justifying an increase in market spend on ICT infrastructure. Cellular technologies, namely LTE and 5G, have better uplink and security capabilities, and lower latency than Wi-Fi, all of which are necessary as enterprises begin to use network technology for mission-critical workloads rather than “best effort” communications. Certain vendors, namely Nokia, Huawei and Cisco, are better positioned than others to capitalize on this trend as they sell both directly and indirectly into enterprises, as well as through communication service providers (CSPs). Ericsson, in contrast, plans to go to market almost exclusively through CSPs, which will place it at a disadvantage as many large enterprises will want private networks.

TBR’s 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 as well as 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.

CSPs focus on supporting advanced use cases and network technologies to maximize IoT revenue

Industry 4.0 will spark the adoption of advanced IoT use cases as well as the integration of network slicing and private 5G networks

TBR projects global CSP IoT revenue will increase at a CAGR of 24.9% through 2023 as the launch of mobile 5G services contributes to revenue growth acceleration starting in 2020, and operators, particularly in China, begin capitalizing on advanced use cases. As the 5G and digital ecosystems develop, advanced IoT use cases will emerge that can leverage the unique performance characteristics 5G offers, specifically high bandwidth and low latency. Connected transportation, AR/VR, and mission-critical IoT are all likely to be preliminary use cases for 5G technology, but the commercialization of these use cases will take a couple of years to unfold.

Though advanced IoT use cases that require the precision promised by 5G, such as remote surgery, are being explored, many of these services will not become commercially available until the mid-2020s at the earliest. Additionally, solutions such as remote surgery and V2X (vehicle-to-everything) automotive services will be burdened by significant regulatory and societal challenges.

TBR anticipates Industry 4.0, which includes mass 5G adoption globally, will ramp up around the 2022 to 2025 timeframe and result in heightened spend on ICT infrastructure as demand for new use cases, including advanced IoT solutions, increases. As Industry 4.0 progresses, leading enterprises in certain verticals such as manufacturing, logistics and warehousing will likely opt for private 5G networks that they buy, own and control. Private 5G networks will provide enterprises enhanced data security and the precision needed to support advanced IoT solutions. Private 5G networks will provide new revenue opportunities as customers will in many cases be purchasing these networks directly from telecom vendors rather than CSPs.

Though some larger enterprises will opt for private 5G networks, TBR expects most smaller companies will need to support advanced IoT solutions via a slice from a CSP. Though network slicing solutions will provide revenue opportunities for telecom vendors, adoption will be limited initially as most global operators will delay migrating to 5G core networks, which is essential to support network slicing, for another several years. Though many operators outside of China and South Korea will delay upgrading the 5G core because the system will be costly to install, early adopters will gain a time-to-market advantage capitalizing on advanced IoT use cases requiring the accelerated data speeds and ultra-low latency enabled by network slicing.

Ericsson’s turnaround is in process, but sustainability of business is in question

TBR perspective

Though Ericsson’s focused strategy has proved to be a viable approach to stabilize the company, return it to profitability and provide incremental organic growth, the key concern will be how sustainable that stability and growth will be over the long term.

Ericsson’s focus on the wireless access domain tethers the company to the whims of that market, which is undergoing significant disruption as 5G and virtualization take hold and as operators increasingly shift capex budgets from connectivity infrastructure to building digital businesses, limiting Ericsson’s growth potential. Though there is room for Ericsson to take market share, particularly from Nokia (NYSE: NOK), Huawei and ZTE by leveraging its software-upgradable Ericsson Radio System (ERS) RAN gear, Ericsson is not immune to adverse business trends impacting the broader RAN market, namely legacy decommissioning, virtualization, openness, cloud and white box.

Ericsson is betting its ERS will offset the impact of these adverse trends and hasten its shift to a more software-centric entity with a more recurring, license-based software model that carries relatively high, sustainable margins, but this shift will take years to unfold and there is significant legacy business at risk of disappearing in the interim.

With the architecture of the network fundamentally changing to be virtualized and cloudified and communication service providers (CSPs) focused on relentless cost efficiency and TCO reduction, Ericsson will have to carefully balance its shift from the old world to the new reality, whereby forklift RAN upgrades become lower scale and targeted, and innovation and value migrate to the software layer. This has significant implications for Ericsson’s hardware and close-to-the-box services businesses, both of which are optimized to operate at high scale for efficiency and profitability.

TBR notes Ericsson and its close rival Nokia are pursing different paths during the 5G era. While Ericsson focuses on its core business of selling RAN and mobile core directly to service providers, Nokia is taking an end-to-end infrastructure approach and is building out a dedicated business unit with a full suite of resources to directly sell to enterprises. Though Industry 4.0, 5G and digital transformation are underlying themes that find commonality between the two vendors, their divergent tracks are noteworthy.

 

 

Ericsson (Nasdaq: ERIC) hosted its annual Industry Analyst Forum in Boston, bringing along a range of executives to provide an update on the company’s corporate and business unit strategies, with a focus on Networks, Managed Services and North America. Key topic areas included 5G, Internet of Things (IoT), automation and artificial intelligence (AI). Following the main session, analysts could attend three tracks — Network Evolution to 5G, AI and Automated Operations, or 5G and IoT Industry Innovation — and then participate in one-on-one speed meetings. The tone of Ericsson’s 2018 analyst day was upbeat as the company sees early signs that its turnaround plan is yielding results, evidenced by its 3Q18 earnings results in which organic revenue growth returned and margins improved markedly. Ericsson remains committed to its transformational restructuring and focused strategy, which are key pillars of its turnaround plan.

Is 5G business growing beyond a marketing tool for telecoms?

TBR’s telecom predictions for 2019 indicate that 5G will enable Industry 4.0, which will spur revenue generation opportunities for service providers that provide the connectivity layer and value-added services to businesses — in the long run.