All aspects of the telecoms market are in flux: industry structure; investment priorities; customer needs and expectations; competition; and underlying technologies. New tools for service monetization and efficiency improvements are available, but how best to tap them?
In this environment of rapid change, network intelligence and flexibility are vital, both to control costs and to support improved service monetization. Ovum’s Network Infrastructure (NI) practice focuses on how network assets can support more cost-effective and flexible business models. How can network operators use new tools, tactics, and technologies to improve business effectiveness as they move to IP-based “anywhere, any media, any device” services? Which infrastructure vendors are winning, which are not, and why? What are the implications of telco revenue and capex trends? Our approach is data-driven and supported by analysts with significant telecoms operations experience.
- Rise of the Chinese infrastructure vendors since 2006 has not been at the expense of their largest rivals
Signature Research
Quarterly market share reporting
Ovum’s NI practice gathers and analyzes revenue and market trend information from more than 30 service provider (SP) infrastructure vendors each quarter to produce over a dozen reports and data files. We go beyond the numbers to provide customers with insight based on in- depth analysis of competitive and market trends by segment and region/country. Our quarterly compilation of SP revenue and capex data provides additional context. Focus areas are: optical networking, switching/routing, fixed access, and ICT services. Our “Equipment market update” report completes our quarterly data analysis with a summary of all vendor share and SP results.
Key Themes
Telecoms industry health dynamics
The recent recession and ongoing shifts to broadband and video services have destabilized an already wobbly telecoms supply chain. Mobile device suppliers, content providers, and end users increasingly depend on high-capacity, resilient infrastructure, yet telcos and their vendors struggle to capture the full value of their investments.
NI’s quarterly tracking of vendor capabilities and finances, service provider capex and revenue, and financial deal flow provides critical information on telecoms’ progress towards business stabilization and, ultimately, transformation. We analyze quarterly vendor data to determine who is profiting from new revenue opportunities in higher-growth applications (e.g., mobile broadband, backhaul, and core; fiber- based fixed broadband; Ethernet-based business services; cloud-based services; video service delivery; high-capacity networking; and ICT services). We analyze telco capex and revenue trends to see which companies and regions are thriving and which are not. We dig into innovation investment financing trends. We note how competitive forces are narrowing vendors’ strategic options to those of full-service vendors/system integrators and specialized vendors as we head toward 2020.
The network’s role in enabling new revenues
Integration and capacity improvements at the chip, system, and architecture level have let telcos reduce the cost per bit of their networks exponentially over time. But intelligent networks are an asset that can also help improve telcos’ top lines. Networks can collect, store, and manage content; provide crucial information on users’ devices, locations, preferences, and privileges; and enforce rules to improve customers’ experience and operators’ ability to monetize their network investments.
NI’s coverage is expanding to include more focus on the network as an asset to enable new revenue opportunities by tracking presence, privilege, and location and managing terabits and transactions. Specific areas of research include content management; policy management and enforcement; and architectural shifts required to support cloud-based and M2M applications. SPs and vendors alike will need to adapt as they move along the road to 2020 and exploit growth in next- generation fixed and mobile access in a hyper-connected world and adopt cloud business models.
The network’s role in improving network efficiency
Because telco revenues are growing more slowly than traffic and fierce competition is the rule rather than the exception, operators are under constant pressure to lower their cost of doing business. Networks will continue to play a critical role in cost-containment. But what new technologies and approaches will vendors offer and operators require to improve cost efficiency? Meeting the “multi-terabit challenge” will require significant industry R&D and cooperation on standards.
NI’s coverage includes a wide range of technology and architecture research, including transport (e.g., 40G, 100G, and beyond); switching (ROADM, OTN, MPLS-TP, LSP, Ethernet); management and control plane; and mobile and fixed broadband access (LTE, WiMAX, 10G and WDM PON, DOCSIS, DSL). In addition, we cover service- and application-optimized IP/MPLS switches/routers, the integration of packet and optical gear, and improvements in network power consumption.
Distinctions between emerging and developed markets
Focusing on global trends in infrastructure obscures important distinctions at the country and regional levels: infrastructure markets are following vastly different growth patterns based on macroeconomics, regulation, competition, investment cycles, and customer requirements.
NI’s coverage compares and contrasts infrastructure markets around the world, focusing on differences in market size and growth, technology cycles, and product requirements. We tie those differences to infrastructure vendor results. We pay particular attention to Asia- Pacific and EMEA sub-regions and the BRIC countries (Brazil, Russia, India, China), and how one-time events like the World Cup, the Olympics, and government broadband and economic stimulus programs affect spending patterns and levels.
