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Telecoms network management key for vendors

Ovum highlights $126bn opportunity for vendors looking to manage IT and networks

Telecoms network management key for vendors
Ovum forecasts a 2% annual growth in operator revenues between 2012 and 2018.

Telecom vendors stand to benefit from a growing need for operators to outsource key parts of their network and IT management, according to research from Ovum.

Ovum forecasts a 2% annual growth in operator revenues between 2012 and 2018, as carriers struggle with increased over-the-top competition, end users more interested in buying devices and apps than services, and limited customer appetite for usage-sensitive billing.

This limited growth will force operators to increase the efficiency of their networks, and this is likely to lead to more telcos outsourcing parts of their network and IT management to vendors.

Indeed, network and IT operations account on average for 18% of telco operating costs, of which 60%, or $126bn, is for spending internally, mostly using salaried staff.

"If you're an operator, this is a huge cost that needs to be managed," says Matt Walker, principal network infrastructure analyst at Ovum. "As operators look to lower operating risks and their cost bases, one option is additional services projects that involve the transfer of employees."

Ovum believes telcos have the potential to gain greater economies through global vendors in terms of network roll-out, network operations, network optimisation, customer experience, and service quality management.

"Service providers will keep a tight rein on their capex budgets, but they do need to spend heavily on technology - both their customers and the competition demand this," Walker adds.

"What's changing is that operators are more smartly attacking their operating expense budgets, which opens new opportunities for vendors. However, to take full advantage of this growth opportunity, it's crucial that vendors have a true understanding of telco opex - something, which until now has been complicated by the lack of granularity and consistency in carrier financial reporting, amongst other barriers," he adds.

However, to meet operators' needs vendors will have to develop far more complex solutions for carriers than in the past. Carriers need help monetising their networks and retaining customers, not just deploying the equipment.

"While services projects don't come with guarantees of profitability, there is clearly some upside for vendors as carriers look to outsource more of their operations. As telcos explore this, vendors need to be creative and aggressive about winning the business - but should not forget to protect themselves," Walker adds.

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