Ovum predicts revenue growth into $160 billion Telecom network market next year

December 13, 2013

Research firm Ovum has released its latest findings into the global US$160-billion telecom network infrastructure market where the communications service providers are seeking equilibrium between revenue and expenses. Ovum forecasts low single-digit revenue growth for Communication Service Providers through 2018. The research claims that there are five main trends to watch in 2014 namely data and customer experience management, small-cell adoption, the move to software centric networks, increased optical network capacity in the metro and changes in the infrastructure value chain. Vendors that stay in front of these trends should beat average market growth projections. The growth of over the top players, changes in subscriber behaviors, and regulatory policies are all negatively impacting Communication Service Providers’ service revenues. According to Ovum, this will limit capital expenditure growth and restrain revenue growth for network infrastructure vendors. Investments in higher growth revenue opportunities like big data-related infrastructure and services, Long Term Evolution among others will allow vendors to outpace the general market.  Big boom in small cell deployments will not happen next year, but indications are clear that interest in small cells is growing. However in 2014, small cell solutions for indoor spaces will be hot with video analytics and optimization in particular could prove crucial.

Improved customer experience and network asset management will increasingly require sophisticated, real-time policy-controlled traffic management and data analytics, especially for mobile networks according to Ovum research outfits.  Telecoms are expected to gain confidence to expand software-defined networking, network virtualization, and network functions virtualization trials and early deployments. Next year, new and revised standards and specifications related to software-defined networks, network virtualization and NFV could bring the industry closer to agreement. Lower cost coherent optical metro solutions will hit the market next year. Network value will increasingly be driven by software-tunable capabilities, allowing new possibilities for transport network optimization and monetization. Next year, the equipment value chain will continue shifting to benefit application software and chips. For network equipment providers, the response is vertical integration to include more chip design while merchant chip suppliers and innovative NEPs, over-the-top operators tantalize with a shortened technology adoption cycle. Ovum also says that the tight revenue climate facing most Communication Service Providers is not likely to reverse anytime soon. For Network Equipment Providers following these trends, one of the challenges will be of resource allocation. While new trends in network infrastructure cannot be ignored, there must be a balance between putting corporate resources into staying on top of new trends that may take several years to turn a profit versus putting resources into existing, profitable network solutions that have a limited life expectancy.

Contador Harrison