This report assesses the status of network transformation of the communications service providers (CSPs) against the backdrop of current market conditions.
The leading CSPs continue the search for revenue sources after a decade of near stagnant growth. This is why CSPs are pursuing network transformation. They see how the digitalization of industries and the world is opening new opportunities and while they are investing in their networks, they have yet to experience the return they seek on their investments.
CSPs’ core skill remains connectivity. Annual 30% traffic growth remains the catalyst for the industry requiring CSPs to invest in optical fiber and 5G wireless to meet capacity and coverage demands.
Connectivity is also becoming more complex and is forcing CSPs to engineer their networks differently, relying on software and software practices trail-blazed in the IT world but tailored to telecoms’ complex legacy systems alongside implementations meeting telecoms requirements. Greater network orchestration and automation are also a must.
This is LightCounting's sixth network transformation report, first published in 2017. At first glance, the changes of the last 12 months appear modest; yet another year has passed, and the CSPs continue to struggle. Moreover, the challenges and frustrations the CSPs cite could apply a year ago.
On the surface it's business as usual: CSPs focusing on their transformation journeys and rolling out technologies such as fiber, 5G, open RAN, and automation.
Less visible is the progress the CSPs are making, and that their transformation strategies are becoming clearer. CSPs know what they must do: not just transform their networks but their organizations. The CSPs also recognize they cannot do this alone, requiring partnerships with Internet Content Providers (ICPs) and others and the opening and scaling of their networks to address new industries. The term ‘customer’ is also increasingly being mentioned by CEOs.
Will the CSPs transform their organizations, building relationships with partners and achieving platforms that deliver the digital services needed in the coming decade? Will they manage to carve a bigger slice of an ever-growing digitalization pie? Or will the rigid telco mindset predominate causing the spoils of an increasingly digitalized world enabled by sophisticated connectivity and computing to go elsewhere? This is what is at stake: the very future of their businesses.
LightCounting notes that the progress of network transformation is proving to be a lengthy journey. We are also concerned that telecom continues to lag key developments – the latest and most significant being AI. LightCounting also believes that network transformation, whatever its degree of success, will spur a wave of market disruption.
Companies mentioned in this report include: Alphabet, Adtran, Alibaba, Amazon Web Services, Apple, AT&T, Broadcom, BT Group, China Mobile, China Telecom, China Unicom, Ciena, Cisco, Comcast, Deutsche Telekom, Dish Networks, Ericsson, Fujitsu, Google, Huawei, IBM, Infinera, Intel, Juniper Networks, KDDI, Meta, Microsoft, Nokia, NTT, NTT Docomo, Orange, Lumen Technologies, Rakuten Mobile, SK Square, SK Hynix, SK Telecom, Softbank, Telenor, Telecom Italia, Telefónica, T-Mobile, SpaceX, UfiSpace, Viasat, Vodafone, Verizon.
Roy is the publisher of the online magazine, Gazettabyte, and has been researching and writing about the telecom and semiconductor industries for 30 years. Between 2001 and 2009 he was an analyst covering optical transceivers, optical components and communication semiconductors. Roy was also a contributing editor for FibreSystems Europe between 2005 and 2009, and wrote monthly technology trend articles for six years for the London-based magazine, Total Telecom. He has also contributed articles for the UK New Electronics magazine, Financial World, and IEEE Spectrum. Roy is also the co-author of the book, Silicon Photonics: Fueling the Next Information Revolution, published by Elsevier in 2016.
He received a M.Sc. by Dissertation in computing architectures for digital signal processing and a Ph.D. in digital communications from the University of Manchester Institute of Science and Technology (UMIST).