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Ovum predicts revenue growth, resource challenges

Ovum's research into the global US$160-billion (Bt5.13 trillion) telecom network infrastructure market indicates five key trends to watch next year as communications service providers (CSPs) seek a better balance between cost and revenue.

The five trends are: 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.

Highlights of the company's research are:

_ Ovum forecasts low single-digit revenue growth for CSPs through 2018. The growth of over-the-top players, changes in subscriber behaviours, and regulatory policies are all negatively impacting CSPs' service revenues. This will limit capital-expenditure growth and restrain revenue growth for network infrastructure vendors.

Investments in higher-growth revenue opportunities, for example big data-related infrastructure and services, LTE (long-term evolution), 100G and the like, will allow vendors to outpace the general market.

_ The big boom in small-cell deployments will not happen in 2014, but indications are clear that interest in small cells is growing. Next year, small-cell solutions for indoor spaces will be hot.

_ Video analytics and optimisation in particular will 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.

_ Telcos will gain confidence to expand software-defined networking (SDN), network virtualisation, and network functions virtualisation (NFV) trials and early deployments. In 2014, new and revised standards and specifications related to SDN, network virtualisation and NFV will bring the industry closer to consensus.

_ 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 optimisation and monetisation.

_ In 2014, the equipment value chain will continue shifting to benefit application software and chips. For network equipment providers (NEPs), the response is vertical integration to include more chip design. For merchant chip suppliers and innovative NEPs, over-the-top operators tantalise with a shortened technology adoption cycle.

Dana Cooperson, vice president for 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."

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