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Top vendors positioned to capitalize on TIS market trends

Communication service providers (CSPs) are in the middle of a robust investment cycle that requires significant spend on telecom infrastructure services (TIS). Current trends are expected to play out over the remainder of this decade. Spend is expected to peak in the next few years.

 

Join Senior Analyst Michael Soper for a deep dive into growth catalysts such as 5G deployments globally, network and IT application migration to the cloud, and an influx of government funds to close the digital divide. Michael will also look at geopolitics driving government spend and CSPs’ actions to rip and replace Huawei infrastructure over the next few years.

 

In this FREE webinar you’ll learn:

  • Key growth drivers and growth detractors expected in the TIS market through 2026, according to findings in TBR’s Telecom Infrastructure Services Global Market Forecast 2021-2026
  • How government spend and geopolitics will influence the TIS market
  • Which vendors are positioned to capitalize on trends in the TIS market

 

Mark your calendars for Thursday, June 23, 2022, at 1 p.m. EDT,
and REGISTER to reserve your space.

 

Related content:

  1. Free copy: Top 3 Predictions for Telecom in 2022

 

Click here to register for more TBR Webinars

WEBINAR FAQs

 

 

 

TBR launches semiannual U.S. Telecom Operator Public Sector Market Landscape

TBR launches five mission systems-specific reports: Boeing Mission Systems, L3Harris Mission Systems, Lockheed Mission Systems, Northrop Mission Systems and Raytheon Mission Systems.

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.

Hyperscalers are reimagining how networks are built, owned and operated

Hyperscalers are building end-to-end networks that embody all attributes and characteristics coveted by communication service providers as part of their digital transformations. Hyperscalers are starting from scratch, completely reimagining how networks should be built and operated. Their clouds, numerous network-related experiments over the past decade, and raft of new network-related technologies on the road map will enable hyperscalers to build asset-light, automated networks at a fraction of the cost of traditional networks.

Join Principal Analyst Chris Antlitz on Thursday, March 24, 2022, for an in-depth, exclusive review of TBR’s most recent Hyperscaler Digital Ecosystem Market Landscape, during which he will discuss hyperscalers’ disruption of the telecom industry, how and why hyperscalers are building networks, and the particular focus of these networks.

The Hyperscaler Digital Ecosystem Market Landscape tracks how and why the world’s largest hyperscalers are disrupting industries to unlock economic value in the digital era, with specific focus on the disruption of the telecom industry. The report focuses on Alphabet (Google), Amazon, Apple, Meta Platforms (Facebook), Microsoft and Rakuten.

Mark your calendars for Thursday, March 24, 2022, at 1 p.m. EDT,
and REGISTER to reserve your space.

Related content:

  1. Hyperscalers are reimaging how networks are built, owned and operated
  2. Top 3 Predictions for Telecom in 2022

Click here to register for more TBR Webinars

WEBINAR FAQs

Hyperscalers’ cloud-based modern network architecture provides strategic advantage over legacy network technologies

Hyperscaler-built networks will look very different from traditional networks

Hyperscalers are building end-to-end networks that embody all the attributes and characteristics coveted by communication service providers (CSPs) as part of their digital transformations. The most significant differences are in the software stack and the access layer, where new technologies enable hyperscalers to build dense mesh networks in unlicensed and/or shared spectrum bands and build out low Earth orbit (LEO) satellite overlays for access and backhaul. Mesh networks will likely be used to provide low-cost, wireless-fiber-like connectivity in urban and suburban environments, while satellites will primarily be leveraged to provide connectivity to rural and remote environments.

Hyperscalers are starting from scratch, completely reimagining how networks should be built and operated. Their clouds, numerous network-related experiments over the past decade, plus the raft of new network-related technologies on the road map will enable hyperscalers to build asset-light, automated networks at a fraction of the cost of traditional networks.

Hyperscaler networks will cost a fraction of traditional networks

TBR estimates hyperscaler networks cost 50% to 80% less to build than traditional networks (excludes the cost of spectrum, which would make the cost differential even more pronounced because hyperscalers will primarily leverage unlicensed and shared spectrum, which is free to use). Most of the cost savings stems from innovations, such as mesh networking, carrier aggregation, LEO satellites and integrated access-backhaul, that enable significantly less wired infrastructure to be deployed in the access layer for backhaul and last-mile connection purposes.

For example, Meta’s Terragraph mesh access point can autonomously hop signals through multiple other access points before sending the data through the nearest available backhaul conduit. In the traditional architecture, some form of backhaul would need to connect to each access point to backhaul the traffic. Mesh signals could also be backhauled through LEO satellites, further limiting the need to deploy wired infrastructure in the access layer, which is one of the most significant costs of traditional networks.

Another key area of cost savings stems from cutting out certain aspects of the traditional value chain. By open-sourcing some innovations, such as hardware designs, hyperscalers can foster a vibrant ecosystem of ODMs to manufacture white boxes to compose the physical network. The white-boxing of ICT hardware can lead to cost savings of up to 50% compared to proprietary, purpose-built appliances.

Related Content:

Top 3 Predictions for Telecom in 2022

Webinar: 2022 Predictions: Telecom

Hyperscalers are reimagining how networks are built, owned and operated

Hyperscaler-built networks will look very different from traditional networks

Hyperscalers are building end-to-end networks that embody all the attributes and characteristics coveted by communication service providers (CSPs) as part of their digital transformations. The most significant differences are in the software stack and the access layer, where new technologies enable hyperscalers to build dense mesh networks in unlicensed and/or shared spectrum bands and build out low Earth orbit (LEO) satellite overlays for access and backhaul. Mesh networks will likely be used to provide low-cost, wireless-fiber-like connectivity in urban and suburban environments, while satellites will primarily be leveraged to provide connectivity to rural and remote environments.

Hyperscalers are starting from scratch, completely reimagining how networks should be built and operated. Their clouds, numerous network-related experiments over the past decade, plus the raft of new network-related technologies on the road map will enable hyperscalers to build asset-light, automated networks at a fraction of the cost of traditional networks.

Hyperscaler networks will cost a fraction of traditional networks

TBR estimates hyperscaler networks cost 50% to 80% less to build than traditional networks (excludes the cost of spectrum, which would make the cost differential even more pronounced because hyperscalers will primarily leverage unlicensed and shared spectrum, which is free to use). Most of the cost savings stems from innovations, such as mesh networking, carrier aggregation, LEO satellites and integrated access-backhaul, that enable significantly less wired infrastructure to be deployed in the access layer for backhaul and last-mile connection purposes.

For example, Meta’s Terragraph mesh access point can autonomously hop signals through multiple other access points before sending the data through the nearest available backhaul conduit. In the traditional architecture, some form of backhaul would need to connect to each access point to backhaul the traffic. Mesh signals could also be backhauled through LEO satellites, further limiting the need to deploy wired infrastructure in the access layer, which is one of the most significant costs of traditional networks.

Another key area of cost savings stems from cutting out certain aspects of the traditional value chain. By open-sourcing some innovations, such as hardware designs, hyperscalers can foster a vibrant ecosystem of ODMs to manufacture white boxes to compose the physical network. The white-boxing of ICT hardware can lead to cost savings of up to 50% compared to proprietary, purpose-built appliances.

Hyperscaler disruption portends structural changes to the telecom industry through this decade

The technological and business model disruption hyperscalers are bringing into the telecom industry portends significant challenges for incumbent vendors and CSPs. TBR sees the scope of disruption becoming acute in the second half of this decade, likely prompting waves of M&A that will reshape the global landscape. CSPs will engage in M&A to stay relevant and financially sound, while incumbent vendors scramble to evolve as their primary business model (selling proprietary hardware and/or software and attached services) is increasingly marginalized and eventually becomes obsolete as hyperscaler innovations spread through the industry.

Hyperscalers do not want to become telecom operators; they want to leverage networks to obtain data and drive their other digital businesses

Hyperscalers are in the data business; providing network connectivity is a means to that end

Hyperscalers are building large-scale networks to drive forward and support their big-picture strategies, which revolve around building out their respective metaverses and supporting a wide range of new digital business models that will be enabled by new technologies such as 5G, edge computing and AI.

To that end, hyperscalers have a vested interest in ensuring the entire world is blanketed with high-speed, unencumbered, intelligent, low-cost connectivity. The economic justification to build the network is driven by the need for hyperscalers to gather and process new types of data to drive these new digital business initiatives. TBR notes that this business case is completely different from CSPs’ business case, which monetizes the network access rather than the data that comes over the network. The hyperscaler model emphasizes giving away low-cost or free connectivity and monetizing the data that comes through the network. The hyperscaler model is far more valuable than the traditional connectivity model and will likely ultimately become the predominant business model for connectivity.

CSPs sit on vast data lakes and have for many years. These data lakes contain valuable information about subscribers, endpoint devices, real-time location and tracking, and other metrics that are of critical importance for some of the digital business ideas hyperscalers want to commercialize, such as drone package delivery and autonomous vehicles. Owning more of the physical network infrastructure and the core software stack puts hyperscalers in a prime position to capture and monetize this data.

TBR notes that this strategy is already in use in the telecom industry in various places in the world. For example, Reliance Jio and Rakuten are using this strategy in India and Japan, respectively. In both cases, connectivity is given away for free or at a significantly lower cost compared to rival offers, and the data generated by the connections indirectly feeds and monetizes each company’s respective digital businesses, such as advertising, financial services and e-commerce. There is significant evidence suggesting that Alphabet, Amazon, Apple, Meta Platforms and Microsoft all have strategies that are similar but of a far greater magnitude.

Hyperscalers already own and operate the largest networks in the world; the next build-out phase is the mobile core, far edge and access domains

Over two-thirds of global internet traffic traverses hyperscaler-owned network infrastructure at some point in the data’s journey. The vast majority of that traffic travels over hyperscalers’ backbone networks, which primarily comprise optical transmission systems (submarine and terrestrial long-haul optical cables), content delivery networks, and cloud (including central, regional and metro) data centers.

The domains of the network where hyperscalers have yet to dominate at scale are the mobile core, far edge and access layers, but there is mounting evidence to suggest this is changing, thanks to technological advancement and regulatory breakthroughs (e.g., the democratization of spectrum).

TBR’s Hyperscaler Digital Ecosystem Market Landscape focuses on the five primary hyperscalers in the Western world that TBR believes will own the largest, most comprehensive end-to-end digital ecosystems in the digital era. Specifically, the five hyperscalers covered in this report are Microsoft, Alphabet, Meta Platforms, Amazon and Apple. Collectively, TBR refers to these five hyperscalers under the acronym MAMAA. TBR covers the totality of the largest hyperscalers’ businesses, with an emphasis on how they are disrupting the ICT sector. Gain access to this full report, as well as our entire Telecom research, with a 60-day free trial of TBR Insight Center™.

2022 Predictions: Telecom

Join Principal Analyst Chris Antlitz Thursday, Feb. 10, 2022, for an in-depth, exclusive review of Top 3 Predictions for Telecom in 2022, part of TBR’s Predictions special series examining market trends and business changes in key markets, such as cloud, IT services, digital transformation and telecom. 

Don’t miss:

  • How supply-demand imbalances could impact the pace of 5G market development
  • Why hyperscalers are shifting focus from central cloud to edge cloud
  • Which vertical is expected to spend the most on private cellular networks over the next few years

Mark your calendars for Thursday, Feb. 10, 2022, at 1 p.m. EST,
and REGISTER to reserve your space.

Related content:

Top 3 Predictions for Telecom

Click here to access more TBR webinars.

WEBINAR FAQS

Hyperscalers are poised to disrupt the private cellular networks market over the next few years

Hyperscalers are poised to disrupt the private cellular networks market through their ecosystems, platforms and marketplaces

Hyperscalers (especially Amazon, Google and Microsoft) intend to standardize, modularize and verticalize private cellular networks (PCN)-related solutions inside their ecosystems, platforms and marketplaces, especially as it pertains to 5G and edge computing. Hyperscalers are focused on hiding the complexity of private networks and edge computing, enabling end users to more easily procure and consume these resources and unlock the value of data.

Enterprise and government consumption of networking resources will ultimately come to resemble how IT resources are consumed via the cloud, and solutions will be outcome-based. Early manifestations of this trend can be seen with Microsoft’s packaging of its 5G core with Azure Private Multi-Access Edge Compute (MEC) to enable and drive enterprise digital transformation with on-premises private 5G MEC. Microsoft is also building a range of vertical-specific use case solutions spanning smart factory, defense, retail transformation, and healthcare. Amazon and Google are following Microsoft’s lead in this domain.

Ultimately, TBR believes a large portion of activity in the private cellular networks and edge computing markets will be conducted inside hyperscalers’ ecosystems. CSPs and vendors will increasingly have to play inside hyperscalers’ ecosystems in some way to stay relevant in the market as it evolves.

Private 5G Network Revenue by Provider Type 2020-2025E

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. TBR’s Private Cellular Networks Market Forecast, which is global in scope, details private cellular network spending trends among enterprises and governments, particularly as it pertains to 5G. This research includes current-year market sizing and a five-year forecast of several private cellular networks market segments and geographies.

Hyperscalers are poised to disrupt the private cellular networks market over the next few years

Key insights

Hyperscalers (especially Amazon, Google and Microsoft) intend to standardize, modularize and verticalize [private cellular networks (PCN)-related solutions inside their ecosystems, platforms and marketplaces, especially as it pertains to 5G and edge computing.

Enterprise and government consumption of networking resources will ultimately come to resemble how IT resources are consumed via the cloud, and solutions will increasingly be outcome-based.

Hyperscalers are focused on hiding the complexity of private networks and edge computing, enabling end users to more easily procure and consume these resources and unlock the value of data.

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. TBR’s Private Cellular Networks Market Forecast, which is global in scope, details private cellular network spending trends among enterprises and governments, particularly as it pertains to 5G. This research includes current-year market sizing and a five-year forecast of several private cellular networks market segments and geographies.

Top 3 Predictions for Telecom in 2022

Telecom industry faces new challenges in the post-pandemic era

2022 will be a transition year for the telecom industry

After emerging from the COVID-19 pandemic relatively unscathed, the telecom industry is entering a new phase and faces a new set of challenges. These challenges include navigating a supply chain left in shambles due to the impact of the pandemic and, representing a separate concern, the inexorable rise and encroachment of hyperscalers in the telecom domain, which threatens to completely disrupt the status quo in the industry.​

Incumbent communication service providers (CSPs) and their vendors are navigating these issues, but there is an increased urgency to digitally transform and align with structural changes occurring in the industry, such as the pressure to work with hyperscalers on network transformation and business model co-creation in the cloud.​

2022 is poised to be a unique transition year for the telecom industry. While unprecedented government stimulus that originated in the wake of the COVID-19 outbreak continues to be pumped into the global economy, lifting all players in some way across the market landscape, CSPs and their vendors must transition to the fundamentally new network architecture, which is software-based, fully virtualized and cloud-centric. CSPs must also determine where they will play in the new value chains that are being created in the digital economy, most notably in hyperscalers’ marketplaces, and in conjunction with new players that are entering the scene in domains such as private networks and satellites.​

Meanwhile, supply chain challenges are expected to persist through 2022, with continuing semiconductor and component shortages as well as ongoing skilled labor deficiencies and shipping delays, all of which threaten to delay market development and hinder vendors’ ability to recognize revenue and pursue new growth opportunities. Inflation (potentially stagflation) and rising interest rates also pose risks, portending margin pressure and debt refinancing challenges.​

Taken together, these circumstances indicate 2022 will be an unusual year for the telecom industry. While government-induced stimulus will provide various benefits to players across the industry, giving off a sense that the industry is functioning normally and is healthy, an acceleration in competitive and technological changes poses a risk to the long-term performance of incumbents. Amid the uncertainty 2022 will bring, one thing is certain: Major changes are coming to the telecom industry in the post-pandemic world, and fast.

2022 telecom predictions

  • Supply-demand imbalance delays pace of 5G market development
  • Hyperscalers scale out edge cloud
  • Government becomes leader in 5G spend among nontelecom verticals

Send me a free copy of TBR’s Top 3 Predictions for Telecom in 2022

Telecom Business Research’s 2022 Predictions is a special series examining market trends and business changes in key markets. Covered segments include cloud, telecom, devices, data center, and services & digital.