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 the 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 ABI Research, telco cloud revenue is expected to grow from US$8.7 billion in 2020 to US$29.3 billion in 2025, with Asia-Pacific accounting for US$9.1 billion or just over 31% of the total market.
Challenges
ABI Research cites 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 the 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,” said Don Alusha, senior analyst, 5G & Mobile Network Infrastructure at ABI Research.
Telco cloud strategies
ABI Research says there 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.
The involvement of multiple vendors 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.
Alusha noted that this strategy can potentially introduce overhead and mandates a high level of integration work.
Market players
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 make a difference.
Alusha emphasised that the critical unit of analysis must be existing operations and associated risks, not the customer. 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 fuelled to drive the industry’s digital transformation whether it is a single-vendor or multiple-vendor strategy CSPs pursue their telco cloud and operations.”
According to ABI Research, 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 presents significant opportunities but also challenges,” Alusha concluded.
