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CSPs to face big revenue challenges

Dubai, December 4, 2013

The network equipment providers will be facing major challenges next year with regard to resource allocation but still be able to manage a low single-digit revenue growth through 2018, according to a report.

The growth of over-the-top players, changes in subscriber behaviours, and regulatory policies are all negatively impacting communications service providers' (CSPs) service revenues, said top analyst Ovum in its latest research into the $160 billion telecom network infrastructure market.

This will limit CapEx growth and restrain revenue growth for network infrastructure vendors. Investments in higher-growth revenue opportunities, for example Big Data-related infrastructure and services, LTE, 100G, and the like, will allow vendors to outpace the general market, it stated.

Ovum indicates five key trends to watch in 2014 as CSPs seek a better balance between cost and revenue: small cell adoption; data and customer experience management; 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, said the report.

The Network Infrastructure 2014 Trends-to-Watch:

*The big boom in small cells deployments won’t happen in 2014, but indications are clear that interest in small cells is growing. For 2014, small cell solutions for indoor spaces will be hot.
*Video analytics and optimization in particular will prove crucial. Improved customer experience and network asset management will increasingly require sophisticated, realtime policy-controlled traffic management and data analytics, especially for mobile networks.
*Telcos will gain confidence to expand software-defined networking (SDN), network virtualization, and network functions virtualization (NFV) trials and early deployments. In 2014, new and revised standards and specifications related to software-defined networking (SDN), network virtualization, and network functions virtualization (NFV) will bring the industry closer to consensus.
*Lower-cost coherent optical metro solutions will hit the market in 2014. Network value will increasingly be driven by software-tunable capabilities, allowing new possibilities for transport network optimization and monetization.
* In 2014, the equipment value chain will continue shifting to benefit application software and chips. For NEPs, the response is vertical integration to include more chip design. For merchant chip suppliers and innovative NEPs, over-the-top (OTT) operators tantalize with a shortened technology adoption cycle.

Commenting on the research, Dana Cooperson, the VP Network Infrastructure at Ovum, said: "The tight revenue climate facing most CSPs is not likely to reverse anytime soon. For NEPs 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," Cooperson added.-TradeArabia News Service




Tags: revenue growth | telecom network |

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