Communication Service Providers (CSPs) seek to automate and transform their network and telco cloud infrastructure to capture new growth. This transformation is being driven by growth in user data demand, an increasingly complex network, a need to lower cost of operations, and new B2B revenue growth tied to 5G adoption. Consequently, CSPs recognize that they need to think about telco cloud planning and design, construction, maintenance, and network provisioning very differently to optimize telco cloud value and address key pain points. According to global technology intelligence firm ABI Research, telco cloud revenue is expected to grow from US$8.7 billion in 2020 to US$29.3 billion in 2025, at a CAGR of 27%. Key markets are North America (US$10 billion), Europe, (US$8.2 billion), and Asia-Pacific (US$9.1 billion).
“There are, broadly speaking, several structural challenges and pain points that characterize today’s telco operations. First, the agile and cloud-centric 5G networks are still being managed with maintenance processes that date back to 1980s. A second challenge comes from over-the-top players. They use advanced technology characterised by high efficiency and low cost. A third and equally important challenge is that today’s networks are more complex (e.g., encompassing 3G, 4G, and 5G) and operations and maintenance is more diverse. That diversity increases the chances of human error, and it is exactly what CSPs seek to address with the deployment of a telco cloud,” explains Don Alusha, Senior Analyst, 5G & Mobile Network Infrastructure at ABI Research.
Essentially, are two types of telco cloud strategies: single vendor and multi-vendor. A single-vendor strategy is one that is largely predicated on vertically integrated product architectures. Single vendor deployment reduces complexity because all cloud components are integrated together prior to the platform being rolled out in live networks. Alternatively, there is a multi-vendor deployment strategy. The involvement of multiple vendors in may be better suited for new horizontal B2B value creation; it is unlikely that a single vendor offers a broad set of capabilities to support all lines of business for a CSP. “But, this strategy can potentially introduce overhead and mandates a high level of integration work,” Alusha notes.
The telco cloud market is very dynamic and rich with network equipment vendors (e.g., Ericsson, Huawei, Nokia and ZTE), pure-play software vendors (e.g., Affirmed Networks, Mavenir), and hyperscalers (Amazon, Google, Microsoft) are all expected to play a key role. A key element for the supply side is to understand that it is employing the right cloud deployment strategy in the right circumstances that makes a difference. “In other words, the critical unit of analysis must be existing operations and associated risks, not the customer,” Alusha emphasizes. CSPs can obtain commercial benefits from telco cloud stacks, but they need to balance the risks of deploying open and multi-vendor solutions.
The real question underlying the industry’s transformation lies in the importance that solutions work well together regardless of the vendor they come from. “Cohesiveness should be fueled to drive the industry’s digital transformation whether it is a single-vendor or multiple-vendor strategy CSPs pursue for their telco cloud and operations. As research from ABI Research highlights, a multi-vendor deployment, in particular, and software modularity, in general, may offer agility, but caution must be taken so that agility does not come at the expense of performance and scale. When we consider a single vendor vis-à-vis a multi-vendor cloud deployment strategy, either case present significant opportunities but also challenges,” Alusha concludes.
These findings are from ABI Research’s Telco Cloud Deployment Strategies application analysis report. This report is part of the company’s 5G Core & Edge Networks research service, which includes research, data, and analyst insights. Based on extensive primary interviews, Application Analysis reports present in-depth analysis on key market trends and factors for a specific technology.
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