Next-generation 5G to triple telco cloud revenue by 2025 - ABI Research
Next-generation 5G-orientated core networks are driving the evolution of telco cloud-native technology.
According to ABI Research, telco cloud revenue is expected to grow from $8.7 billion in 2020 to $29.3 billion in 2025, at a CAGR of 27%. Key markets for this growth are North America (US$10 billion), Europe (US$8.2 billion), and Asia-Pacific (US$9.1 billion).
ABI Research says Communication Service Providers (CSPs) are looking to automate and transform networks and their telco cloud infrastructure to capture new growth. This is generally being driven by an increase in user data demand, an increasingly complex network, the cost of operations, and new B2B revenue growth tied to 5G adoption.
Because of this, CSPs recognise they need to start thinking differently about telco cloud planning and design, construction, maintenance, and network provisioning if they're going to optimise telco cloud value and address key pain points.
"There are, broadly speaking, several structural challenges and pain points that characterise today's telco operations," says ABI Research senior analyst of 5G & Mobile Network Infrastructure, Don Alusha.
"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, encompassing 3G, 4G, and 5G, and operations and maintenance are more diverse.
"That diversity increases the chances of human error, and it's what CSPs seek to address with the deployment of a telco cloud," he says.
ABI Research says there are essentially two types of telco cloud strategies, single vendor and multivendor. A single-vendor approach is one primarily predicated on vertically integrated product architectures. Single vendor deployment reduces complexity because all cloud components are integrated before rolling out the platform in live networks.
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. There is a potential problem with this strategy in that it can potentially introduce overhead and mandate a high level of integration work.
The telco cloud market has several network equipment vendors, including Ericsson, Huawei, Nokia and ZTE. And pure-play software vendors (Affirmed Networks, Mavenir) and hyperscalers (Amazon, Google, Microsoft) are all expected to play a vital role.
"Understanding that deploying the right cloud strategy in the right circumstances is a key element for the supply side," says Alusha.
The critical unit of analysis must be existing operations and associated risks, not the customer. The real question underlying the industry's transformation lies in the importance of solutions working well together, regardless of the vendor.
"Cohesiveness should be fuelled to drive the industry's digital transformation, whether it's a single-vendor or multiple-vendor strategy. As research from ABI Research highlights, a multivendor deployment, in particular, and software modularity, in general, may offer agility. Still, caution must be taken, so agility does not come at the expense of performance and scale."
He says when it comes to a single vendor versus multivendor cloud deployment strategy, both cases present significant opportunities and challenges.