AWS, Microsoft, Google Target Telecom’s NaaS Lead, ABI Finds

Telecom network operators remain positioned to tap into the increasingly lucrative network-as-a-service (NaaS) market but must act fast if they want to take advantage of that positioning and $75 billion market opportunity by 2030, according to a recent report from ABI Research. Telecom network operators remain positioned to tap into the increasingly lucrative network-as-a-service (NaaS) market but must act fast if they want to take advantage of that positioning and $75 billion market opportunity by 2030, according to a recent report from ABI Research. The report notes that telecom operators currently lack business models that allow them to build on their physical connectivity advantages and wrestle control of the NaaS market from interconnection providers like Megaport and Packet Fabric and cloud-focused giants like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP). That also doesn’t include equipment and software vendors like Cisco, Dell Technologies, and Hewlett Packard Enterprise (HPE), which have been bolstering their own NaaS stacks and have already established sales channels into most enterprises. “Telcos must seize the opportunity to dominate the NaaS market, as revenue generated from connectivity provision will continue to decline,” wrote Reece Hayden, distributed and edge computing analyst at ABI Research. “However, their investment strategy, business, operational, and ‘go-to-market’ models are not ready to deliver a competitive NaaS solution.” Hayden added that telecom operators need to “act now and transform technology, culture, and structure to better align with the requirements of the NaaS market.” The ABI Report remains positive on telecom operators making the most of their advantage, but does cite significant steps they must take in order to capitalize on that advantage. One is to virtualize their network infrastructure so they can deliver cloud-native services and tap into automation to deliver a broader range of services at lower costs. This includes the ability to offer network slicing that takes advantage of 5G network technology and edge computing features targeted at enterprise customers. Many larger operators are already moving down this path to varying degrees of success, but are quickly being challenged by swift moving vendor challengers. ABI also recommends that telecom operators restructure their business and operating models to take greater advantage of open source software and partnerships while at the same time attempt to reduce “internal fragmentation to drive cross-business service continuity.” This remains a big challenge for operators, highlighted most effectively by AT&T’s most recent switch from being a global multimedia, entertainment, and connectivity powerhouse to one that is focused on putting more fiber into the ground. Tied to this, ABI also suggests that telecom operators adopt a more agile “problem-solving culture,” realign their sales structures to better penetrate the enterprise market, and work to better educate their workforce to deal with these new opportunities. These are all big asks for traditionally slow-moving corporate entities. However, ABI notes the financial NaaS reward is there for those telecom operators that can execute. “Although it seems like an expensive and risky uphill battle, developing NaaS will be crucial to the long-term upside,” Hayden wrote. “But, if telcos miss this opportunity and drop the ball, interconnection providers and hyperscalers will be waiting and willing to catch it.”