Telco Cloud Deployment Tracker: 5G standalone and RAN

Telco cloud 2.0, fuelled by 5G standalone and RAN, is on the starting grid

This report accompanies the latest release and update of STL Partners ‘Telco Cloud Deployment Tracker’ database. This contains data on deployments of VNFs (Virtual Network Functions), CNFs (cloud-native network functions) and SDN (Software Defined Networking) in the networks of the leading telcos worldwide. It builds on an extensive body of analysis by STL Partners over the past nine years on NFV and SDN strategies, technology and market developments.

Access our Telco Cloud Tracker here

Download the additional file for the full dataset of Telco Cloud deployments

Scope and content of the Tracker

The data in the latest update of our interactive tool and database covers the period up to September 2021, although reference is made in the report to events and deployments after that date. The data is drawn predominantly from public-domain information contained in news releases from operators and vendors, along with reputable industry media.

We apply the term ‘deployment’ to refer to the total set of VNFs, CNFs or SDN technology, and their associated management software and infrastructure, deployed at an operator – or at one or more of an operator’s opcos or natcos – in order to achieve a defined objective or support particular services (in the spreadsheet, we designate these as the ‘primary purpose’ of the deployment). For example, this could be:

  • to deploy a 5G standalone core
  • to launch a software-defined WAN (SD-WAN) service
  • or to construct a ‘telco cloud’ or NFV infrastructure (NFVi): a cloud infrastructure platform on which virtualised network services can be introduced and operated.

The Tracker is provided as an interactive tool containing line-by-line analysis of over 900 individual deployments of VNFs, CNFs or SDN technology, which can be used to drill down by:

  • Region where deployed
  • Operator
  • Technology vendor
  • Primary purpose
  • Category of NFV/SDN technology deployed
  • …and more filters

Enter your details below to request an extract of the report


 

5G standalone (SA) will hit an inflection point in 2022

5G standalone (SA) core is beginning to take off, with 19 deployments so far expected to be completed in 2022. The eventual total will be higher still, as will that of NSA core, as NSA 5G networks continue to be launched. As non-standalone (NSA) cores are replaced by SA, this will result in another massive wave of core deployments – probably from 2023/4 onwards.

Standalone 5G vs non-standalone 5G core deployments

STL-5G-standalone-core-cloud-tracker-2021

Source: STL Partners

 

Previous telco cloud tracker releases

Each new release of the tracker is global, but is accompanied by an analytical report which focusses on trends in given regions from time to time:

Enter your details below to request an extract of the report


 

Telco Cloud: Why it hasn’t delivered, and what must change for 5G

Related Webinar – 5G Telco Clouds: Where we are and where we are headed

This research report will be expanded upon on our upcoming webinar 5G Telco Clouds: Where we are and where we are headed. In this webinar we will argue that 5G will only pay if telcos find a way to make telco clouds work. We will look to address the following key questions:

  • Why have telcos struggled to realise the telco cloud promise?
  • What do telcos need to do to unlock the key benefits?
  • Why is now the time for telcos to try again?

Join us on April 8th 16:00 – 17:00 GMT by using this registration link.

Telco cloud: big promises, undelivered

A network running in the cloud

Back in the early 2010s, the idea that a telecoms operator could run its network in the cloud was earth-shattering. Telecoms networks were complicated and highly-bespoke, and therefore expensive to build, and operate. What if we could find a way to run networks on common, shared resources – like the cloud computing companies do with IT applications? This would be beneficial in a whole host of ways, mostly related to flexibility and efficiency. The industry was sold.

In 2012, ETSI started the ball rolling when it unveiled the Network Functions Virtualisation (NFV) whitepaper, which borrowed the IT world’s concept of server-virtualisation and gave it a networking spin. Network functions would cease to be tied to dedicated pieces of equipment, and instead would run inside “virtual machines” (VMs) hosted on generic computing equipment. In essence, network functions would become software apps, known as virtual network functions (VNFs).

Because the software (the VNF) is not tied to hardware, operators would have much more flexibility over how their network is deployed. As long as we figure out a suitable way to control and configure the apps, we should be able to scale deployments up and down to meet requirements at a given time. And as long as we have enough high-volume servers, switches and storage devices connected together, it’s as simple as spinning up a new instance of the VNF – much simpler than before, when we needed to procure and deploy dedicated pieces of equipment with hefty price tags attached.

An additional benefit of moving to a software model is that operators have a far greater degree of control than before over where network functions physically reside. NFV infrastructure can directly replace old-school networking equipment in the operator’s central offices and points of presence, but the software can in theory run anywhere – in the operator’s private centralised data centre, in a datacentre managed by someone else, or even in a public hyperscale cloud. With a bit of re-engineering, it would be possible to distribute resources throughout a network, perhaps placing traffic-intensive user functions in a hub closer to the user, so that less traffic needs to go back and forth to the central control point. The key is that operators are free to choose, and shift workloads around, dependent on what they need to achieve.

The telco cloud promise

Somewhere along the way, we began talking about the telco cloud. This is a term that means many things to many people. At its most basic level, it refers specifically to the data centre resources supporting a carrier-grade telecoms network: hardware and software infrastructure, with NFV as the underlying technology. But over time, the term has started to also be associated with cloud business practices – that is to say, the innovation-focussed business model of successful cloud computing companies

Figure 2: Telco cloud defined: New technology and new ways of working

Telco cloud: Virtualised & programmable infrastructure together with cloud business practices

Source: STL Partners

In this model, telco infrastructure becomes a flexible technology platform which can be leveraged to enable new ways of working across an operator’s business. Operations become easier to automate. Product development and testing becomes more straightforward – and can happen more quickly than before. With less need for high capital spend on equipment, there is more potential for shorter, success-based funding cycles which promote innovation.

Much has been written about the vast potential of such a telco cloud, by analysts and marketers alike. Indeed, STL Partners has been partial to the same. For this reason, we will avoid a thorough investigation here. Instead, we will use a simplified framework which covers the four major buckets of value which telco cloud is supposed to help us unlock:

Figure 3: The telco cloud promise: Major buckets of value to be unlocked

Four buckets of value from telco cloud: Openness; Flexibility, visibility & control; Performance at scale; Agile service introduction

Source: STL Partners

These four buckets cover the most commonly-cited expectations of telcos moving to the cloud. Swallowed within them all, to some extent, is a fifth expectation: cost savings, which have been promised as a side-effect. These expectations have their origin in what the analyst and vendor community has promised – and so, in theory, they should be realistic and achievable.

The less-exciting reality

At STL Partners, we track the progress of telco cloud primarily through our NFV Deployment Tracker, a comprehensive database of live deployments of telco cloud technologies (NFV, SDN and beyond) in telecoms networks across the planet. The emphasis is on live rather than those running in testbeds or as proofs of concept, since we believe this is a fairer reflection of how mature the industry really is in this regard.

What we find is that, after a slow start, telcos have really taken to telco cloud since 2017, where we have seen a surge in deployments:

Figure 4: Total live deployments of telco cloud technology, 2015-2019
Includes NFVi, VNF, SDN deployments running in live production networks, globally

Telco cloud deployments have risen substantially over the past few years

Source: STL Partners NFV Deployment Tracker

All of the major operator groups around the world are now running telco clouds, as well as a significant long tail of smaller players. As we have explained previously, the primary driving force in that surge has been the move to virtualise mobile core networks in response to data traffic growth, and in preparation for roll-out of 5G networks. To date, most of it is based on NFV: taking existing physical core network functions (components of the Evolved Packet Core or the IP Multimedia Subsystem, in most cases) and running them in virtual machines. No operator has completely decommissioned legacy network infrastructure, but in many cases these deployments are already very ambitious, supporting 50% or more of a mobile operator’s total network traffic.

Yet, despite a surge in deployments, operators we work with are increasingly frustrated in the results. The technology works, but we are a long way from unlocking the value promised in Figure 2. Solutions to date are far from open and vendor-neutral. The ability to monitor, optimise and modify systems is far from ubiquitous. Performance is acceptable, but nothing to write home about, and not yet proven at mass scale. Examples of truly innovative services built on telco cloud platforms are few and far between.

We are continually asked: will telco cloud really deliver? And what needs to change for that to happen?

The problem: flawed approaches to deployment

Learning from those on the front line

The STL Partners hypothesis is that telco cloud, in and of itself, is not the problem. From a theoretical standpoint, there is no reason that virtualised and programmable network and IT infrastructure cannot be a platform for delivering the telco cloud promise. Instead, we believe that the reason it has not yet delivered is linked to how the technology has been deployed, both in terms of the technical architecture, and how the telco has organised itself to operate it.

To test this hypothesis, we conducted primary research with fifteen telecoms operators at different stages in their telco cloud journey. We asked them about their deployments to date, how they have been delivered, the challenges encountered, how successful they have been, and how they see things unfolding in the future.

Our sample includes individuals leading telco cloud deployment at a range of mobile, fixed and converged network operators of all shapes and sizes, and in all regions of the world. Titles vary widely, but include Chief Technology Officers, Heads of Technology Exploration and Chief Network Architects. Our criteria were that individuals needed to be knee-deep in their organisation’s NFV deployments, not just from a strategic standpoint, but also close to the operational complexities of making it happen.

What we found is that most telco cloud deployments to date fall into two categories, driven by the operator’s starting point in making the decision to proceed:

Figure 5: Two starting points for deploying telco cloud

Function-first "we need to virtualise XYZ" vs platform-first "we want to build a cloud platform"

Source: STL Partners

The operators we spoke to were split between these two camps. What we found is that the starting points greatly affect how the technology is deployed. In the coming pages, we will explain both in more detail.

Table of contents

  • Executive Summary
  • Telco cloud: big promises, undelivered
    • A network running in the cloud
    • The telco cloud promise
    • The less-exciting reality
  • The problem: flawed approaches to deployment
    • Learning from those on the front line
    • A function-first approach to telco cloud
    • A platform-first approach to telco cloud
  • The solution: change, collaboration and integration
    • Multi-vendor telco cloud is preferred
    • The internal transformation problem
    • The need to foster collaboration and integration
    • Standards versus blueprints
    • Insufficient management and orchestration solutions
    • Vendor partnerships and pre-integration
  • Conclusions: A better telco cloud is possible, and 5G makes it an urgent priority

NFV Deployment Tracker: Global review and update

Welcome to The NFV Deployment Tracker!

This report is the fourth analytical report in the ‘NFV Deployment Tracker’ series and is intended as an accompaniment to the third update of the Tracker Excel spreadsheet (to the end of June 2018).

The update extends the coverage of the Tracker worldwide: adding a comprehensive set of data on live, commercial deployments of NFV and SDN in the African, Latin American and Middle East markets to the existing data set on Asia-Pacific, Europe and North America. In addition, the spreadsheet contains updated and expanded data on deployments in the latter regions.

The expansion of the Tracker’s coverage worldwide presents an opportunity to gain an overview of global SDN and NFV development and deployment trends, and to assess the prospects for the technologies, and the services based on them, going forward.

Previous editions and other NFV / SDN research

Scope of information provided by the Tracker

The data in the NFV Deployment Tracker is sourced primarily from public-domain information such as telco and vendor press releases and reliable press reports regarding successfully completed deployments and the launch of live, commercial services based on virtualised network functions (VNFs) or SDN. We have also obtained some confidential information direct from operators, which we are unable to present in the detailed break-down of deployments by operator. However, this information has been added to an aggregated data set, which is also provided in the spreadsheet.

The data is therefore limited to verified deployments: production implementations of NFV and SDN powering live services, where we can be confident that the data on the VNFs and IT components involved is accurate and – as far as possible – up to date. We also include some information on deployments planned to be completed by the end of 2017 or by a date as yet unknown, where the information is in the public domain, and where the size and scope of the deployments merit their inclusion.

Contents:

  • Executive Summary
  • The volume and pace of SDN / NFV deployments continues to grow…
  • …but some fundamental challenges remain
  • The focus of deployments varies region by region
  • Operator trends
  • Vendor trends
  • Conclusion
  • Introduction
  • Welcome to the third update of the ‘NFV Deployment Tracker’
  • Scope, definitions and importance of the data
  • Analysis of the global data set
  • Constant growth – but SDN / NFV deployment is far from universal
  • Asia-Pacific ahead on number of deployments despite a slowdown in 2018
  • SD-WAN, SDN, core network functions and orchestration have driven the growth in 2018
  • Operator trends: Leading players rack up the deployments, leaving others lagging far behind
  • Vendor trends: a few major players dominate the scene – but telcos continue to look for alternatives
  • Conclusion 

Figures:

  • Figure 1: Growth in the number of SDN / NFV deployments per year, 2012 to June 2018
  • Figure 2: Breakdown of total deployments by region, 2012 to June 2018
  • Figure 3: Deployments by region, 2014 to 2018
  • Figure 4: Global deployments by higher-level category, 2014 to 2018
  • Figure 5: Deployments in Europe by leading category, 2014 to 2018
  • Figure 6: Asia-Pacific deployments by higher-level category, 2014 to 2018
  • Figure 7: Deployments in North America by leading categories, 2014 to 2018
  • Figure 8: Global deployments of leading VNFs and functional components, 2014 to 2018
  • Figure 9: Total deployments of leading VNFs and functional components, Middle East
  • Figure 10: Leading VNFs and functional components, Latin America
  • 1Figure 11: Leading operators by number of deployments, global
  • Figure 12:  Leading vendors by number of deployments, global
  • Figure 13: Leading vendors by deployment category 25

NFV Deployment Tracker: Asia takes the lead

Introduction

Welcome to the second update of the ‘NFV Deployment Tracker’

This report is the third analytical report in the ‘NFV Deployment Tracker’ series and is intended as an accompaniment to the second update of the Tracker Excel spreadsheet (dated March 2018).

The update provides a comprehensive set of data on live, commercial deployments of NFV and SDN in the Asia-Pacific market. Under ‘Asia-Pacific’, we include all of the countries of Central, Southern and South-East Asia, along with Oceania. In addition to the new set of data for Asia-Pacific, the spreadsheet contains updated and revised data on deployments in the European and North American regions.

In June 2018, the data set and analysis will be extended to all other regions worldwide, with the aim of providing the industry’s most comprehensive, authoritative source of information on live deployments of NFV and SDN.

Scope, definitions and importance of the data

Detailed explanation of the scope of the information provided in the Tracker, definitions of terms (including how we define a live ‘deployment’ and definitions of frequently used NFV / SDN acronyms) and an account of why we think it is important to track the progress of NFV / SDN are provided in the first analytical report of the series – so we will not repeat them here.

Analysis of the Asia-Pacific data set

Overall data and trends: Asia-Pacific is the largest global market for NFV

We have gathered data on 102 live, commercial deployments of NFV and SDN in Asia-Pacific between 2012 and 2018. These were completed by 33 telcos, including all of the major operators in China, Japan, South Korea and Australia. Deployments have been more limited in India: seven in total, including two global implementations by Tata Communications. Altogether, the data includes information on 203 known Virtual Network Functions (VNFs), functional sub-components and supporting infrastructure elements that have formed part of these deployments.

This means that Asia-Pacific is the largest market for NFV and SDN, measured purely in terms of number of deployments. The Asia-Pacific totals outstrip the updated numbers for both Europe (89 deployments and 182 VNFs / functional components) and North America (62 deployments and 126 VNFs / functional components). The number of operators that have completed deployments is also higher than that in Europe or North America.

Contents:

  • Executive Summary
  • Asia-Pacific is the leading global SDN / NFV market
  • Introduction
  • Welcome to the second update of the ‘NFV Deployment Tracker’
  • Scope, definitions and importance of the data
  • Analysis of the Asia-Pacific data set
  • Overall data and trends: Asia-Pacific is the largest global market for NFV
  • SDN, SD-WAN and core network functions have driven the growth
  • Operator trends: Innovators lead the way, closely followed by the Chinese giants
  • Vendor trends: SD-WAN and vCPE vendors lead the way
  • Conclusion

Figures:

  • Figure 1: Total NFV and SDN deployments in Asia-Pacific, 2012 to 2018
  • Figure 2: Asia-Pacific deployments by higher-level category, 2014 to 2018
  • Figure 3: European deployments by higher-level category, 2014 to 2018
  • Figure 4: North American deployments by higher-level category, 2014 to 2018
  • Figure 5: Leading VNFs and functional components deployed in Asia-Pacific
  • Figure 6: Leading Asia-Pacific operators by number of NFV / SDN deployments
  • Figure 7: Leading vendors by number of deployments

NFV Deployment Tracker – North America: SD-WAN tail wags NFV dog

Introduction

Welcome to the first update of the ‘NFV Deployment Tracker’

This report is the second analytical report in the ‘NFV Deployment Tracker’ series and is intended as an accompaniment to the first update of the Tracker Excel spreadsheet (to December 2017).

The update provides a comprehensive set of data on live, commercial deployments of NFV and SDN in the North American market (including the US, Canada and the Caribbean). In addition, the spreadsheet contains updated and revised data on deployments in the European region.

In March 2018, the data set and analysis will be extended to all other regions worldwide, with the aim of providing the industry’s most comprehensive, authoritative source of information on live deployments of NFV and SDN.

Scope, definitions and importance of the data

Detailed explanation of the scope of the information provided in the Tracker, definitions of terms (including how we define a live ‘deployment’ and definitions of frequently used NFV / SDN acronyms) and an account of why we think it is important to track the progress of NFV / SDN are provided in the first analytical report of the series – NFV Deployment Tracker: Europe (September 2017).

Contents:

  • Executive Summary
  • Conclusion: strong growth in 2018 will be delivered by the continuing rise of SD-WAN and new consumer use cases
  • Introduction
  • Welcome to the first update of the ‘NFV Deployment Tracker’
  • Scope, definitions and importance of the data
  • Analysis of the North American data set
  • Overall data and trends
  • ‘Service-led Innovation’ has driven the deployments
  • ‘Technology Evolution’ deployments are less in evidence
  • Operator trends: AT&T and Verizon dispute first place, while other players focus on differentiated offers
  • Vendor trends: SD-WAN and vCPE vendors lead the way
  • Conclusion: A dynamic enterprise market – but consumer use cases still outstanding

Figures:

  • Figure 1: Total NFV and SDN deployments in North America, 2011 to 2017
  • Figure 2: North American deployments by higher-level category, 2014 to 2017
  • Figure 3: European deployments by higher-level category, 2014 to 2017
  • Figure 4: Leading North American operators by number of NFV / SDN deployments
  • Figure 5: Leading vendors by number of deployments (North America)

NFV Deployment Tracker: Europe (September 2017)

This report is discussed in our free webinar recording: Keeping NFV on track – Assessing operator strategies and progress

Introduction

Welcome to The NFV Deployment Tracker!

This report is the first of a new series of statistical and analytical reports tracking the progress of NFV and SDN: ‘The NFV Deployment Tracker’. The ‘Tracker’ builds on an extensive body of analysis by STL Partners over the past two years on NFV and SDN strategies, technology and market developments.

This service will be updated on a quarterly basis and will provide a steadily growing database on live deployments of NFV and SDN by telcos worldwide. The data is presented in an Excel spreadsheet, accompanied by an analytical report presenting the key statistics and trends observed during the quarter.

At launch, the Tracker provides data on the European market; December’s update will also include comprehensive data from the North American market; and in March 2018, we will extend the coverage to Asia and the Rest of the World – while up-to-date information on the markets already included will be added on a continuous basis.

Scope of information provided by the Tracker

The data in the NFV Deployment Tracker is sourced primarily from public-domain information such as telco and vendor press releases and reliable press reports regarding successfully completed deployments and the launch of live, commercial services based on virtualised network functions (VNFs) or SDN. We have also obtained some confidential information direct from operators, which we are unable to present in the detailed break-down of deployments by operator. However, this information has been added to an aggregated data set, which is also provided in the spreadsheet.

The data is therefore limited to verified deployments: production implementations of NFV and SDN powering live services, where we can be confident that the data on the VNFs and IT components involved is accurate and – as far as possible – up to date. We also include some information on deployments planned to be completed by the end of 2017 or by a date as yet unknown, where the information is in the public domain, and where the size and scope of the deployments merit their inclusion.

In terms of size, the research has focused on Tier-One carriers, including the incumbent or former incumbent operators of every European state, along with leading competitive operators in major markets, Pan-European players and the leading cablecos. We have not included smaller local and regional players, Tier-Three providers and all but the largest Tier-Two carriers. We include all deployments within Europe, even if the parent company involved is headquartered outside of Europe (e.g. US-based Liberty Global, which owns cable assets across Europe). But we do not include deployments at non-European subsidiaries of Europe-based operator groups.

We have also not included activity around proofs of concept (PoCs), live tests or demonstrations of NFV and SDN. This is partly because a lot of this work never comes to fruition in terms of commercial deployments – at least not in quite the same combination of elements as the pre-commercial tests – and partly because the aim of the Tracker is to provide a reliable, comprehensive source of information on actual, commercial implementations of NFV and SDN, from which vendor and telco hype about the technologies has been eliminated.

Contents:

  • Executive Summary: NFV still on the roadmap, but horizons of deployment stretch out
  • Welcome to the NFV Deployment Tracker
  • Scope and importance of the Tracker
  • European data: Steady but unspectacular growth in deployments
  • Conclusion: NFV still squarely on the roadmap, but navigating the landscape is taking longer than scheduled
  • Introduction
  • Welcome to The NFV Deployment Tracker!
  • Scope of information provided by the Tracker
  • Definitions
  • What counts as a deployment?
  • Why is this information important?
  • Analysis of the initial European data set
  • Overall data and trends
  • Winners, losers and low-hanging fruit
  • Vendor trends
  • Operator trends
  • Conclusion
  • NFV is still very much on the roadmap, but the horizon of deployment is stretching out further than anticipated

Figures:

  • Figure 1: Definition of main abbreviations used in this report
  • Figure 2: Total NFV and SDN deployments in Europe, 2009 to 2017
  • Figure 3: Deployments from 2009 to 2017 broken down by higher-level categories
  • Figure 4: Deployments by leading network function and infrastructure category, 2014 to 2017
  • Figure 5: Number of deployments by lead vendor
  • Figure 6: Leading operators in terms of number of deployments

Innovation Leaders: A Surprisingly Successful Telco API Programme

Introduction

The value of APIs

Application programming interfaces (APIs) are a central part of the mobile and cloud-based app economy. On the web, APIs serve to connect back-end and front-end applications (and their data) to one another. While often treated as a technical topic, APIs also have tremendous economic value. This was illustrated very recently when Oracle sued Google for copyright infringement over the use of Oracle-owned Java APIs during the development of Google’s Android operating system. Even though Google won the case, Oracle’s quest for around $9 billion showed the huge potential value associated with widely-adopted APIs.

The API challenge facing telcos…

For telcos, APIs represent an opportunity to monetise their unique network and IT assets by making them available to third-parties. This is particularly important in the context of declining ‘core’ revenues caused by cloud and content providers bypassing telco services. This so-called “over the top” (OTT) threat forces telcos to both partner with third-parties as well as create their own competing offerings in order to dampen the decline in revenues and profits. With mobile app ecosystems maturing and, increasingly, extending beyond smartphones into wearables, cars, TVs, virtual reality, productivity devices and so forth, telcos need to embrace these developments to avoid being a ‘plain vanilla’ connectivity provider – a low-margin low-growth business.

However, thriving in this co-opetitive environment is challenging for telcos because major digital players such as Google, Amazon, Netflix and Baidu, and a raft of smaller developers have an operating model and culture of agility and fast innovation. Telcos need to become easier to collaborate with and a systematic approach to API management and API exposure should be central to any telco partnership strategy and wider ‘transformation programme’.

…and Dialog’s best-practice approach

In this report, we will analyse how Dialog, Sri Lanka’s largest operator, has adopted a two-pronged API implementation strategy. Dialog has systematically exposed APIs:

  1. Externally in order to monetise in partnership with third-parties;
  2. Internally in order to foster agile service creation and reduce operational costs.

STL Partners believes that this two-pronged strategy has been instrumental in Dialog’s API success and that other operators should explore a similar strategy when seeking to launch or expand their API activities.

Dialog Axiata has steadily increased the number of API calls (indexed)

Source: Dialog Axiata

In this report, we will first cover the core lessons that can be drawn from Dialog’s approach and success and then we will outline in detail how Dialog’s Group CIO and Axiata Digital’s CTO, Anthony Rodrigo, and his team implemented APIs within the company and, subsequently, the wider Axiata Group.

 

  • Executive summary
  • Introduction
  • The value of APIs
  • The API challenge facing telcos…
  • …and Dialog’s best-practice approach
  • 5 key ‘telco API programme’ lessons
  • Background: What are APIs and why are they relevant to telcos?
  • API basics
  • API growth
  • The telecoms industry’s API track record is underwhelming
  • The Dialog API Programme (DAP)
  • Overview
  • Ideamart: A flexible approach to long-tail developer engagement
  • Axiata MIFE – building a multipurpose API platform
  • Drinking your own champagne : Dialog’s use of APIs internally
  • Expanding MIFE across Axiata opcos and beyond
  • Conclusion and outlook

 

  • Figure 1: APIs link backend infrastructure with applications
  • Figure 2: The explosive growth of open APIs
  • Figure 3: How a REST API works its magic
  • Figure 4: DAP service layers
  • Figure 5: Five APIs are available for Idea Pro apps
  • Figure 6: Idea Apps – pre-configured API templates
  • Figure 7: Ideadroid/Apptizer allows restaurants to specify food items they want to offer through the app
  • Figure 8: Ideamart’s developer engagement stats compare favourably to AT&T, Orange, and Vodafone
  • Figure 9: Steady increase in the number of API calls (indexed)
  • Figure 10: Dialog Allapps on Android
  • Figure 11: Ideabiz API platform for enterprise third-parties
  • Figure 12: Dialog Selfcare app user interface
  • Figure 13: Dialog Selfcare app functions – share in total number of hits
  • Figure 14: Apple App Store – Dialog Selfcare app ratings
  • Figure 15: Google Play Store – Dialog Selfcare app ratings
  • Figure 16: MIFE enables the creation of a variety of digital services – both internally and externally

Cloud 2.0: don’t blow it, telcos

Summary: enterprise cloud computing services need great connectivity to work, but there are opportunities for telcos to participate beyond the connectivity. What are the opportunities, how are telcos approaching them, and what are the key strategies? Includes forecasts for telcos’ shares of VPC, IaaS, PaaS and SaaS. (September 2011, Executive Briefing Service, Cloud & Enterprise ICT Stream) Apps & Telco APIs Figure 1 Drivers of the App Market Telco 2.0 Sept 2011
  Read in Full (Members only)    To Subscribe

Below is an extract from this 28 page Telco 2.0 Report that can be downloaded in full in PDF format by members of the Telco 2.0 Executive Briefing service and the Cloud and Enterprise ICT Stream here. Non-members can subscribe here, buy a Single User license for this report online here for £795 (+VAT), or for multi-user licenses or other enquiries, please email contact@telco2.net / call +44 (0) 207 247 5003.

To share this article easily, please click:



Introduction

In our previous analyses Cloud 2.0: What are the Telco Opportunities? and Cloud 2.0: Telcos to grow Revenues 900% by 2014 we’ve looked broadly at the growing cloud market opportunity for telcos. This new report takes this analysis forward, looking in detail at the service definitions, market forecasts and the industry’s confidence in them, and actual and potential strategies for telcos.

We’ll also be looking in depth at the opportunities in cloud services in the Cloud 2.0: Transforming technology, media and telecoms at the EMEA Executive Brainstorm in London on Thursday 10th November 2011.

The Cloud Market

Cloud computing represents the next wave of IT. Almost all organisations are saying that they will adopt cloud computing to a greater or lesser extent, across all segments and sizes. Consequently, we believe that there exists a large opportunity for telcos if they move quickly enough to take advantage of it.

Total market cloud forecasts – variation and uncertainty

In order to understand where the best opportunities are and how telcos can best take use their particular strengths to advantage of them, we need to examine the size of that opportunity and to understand which areas of cloud computing are most likely to offer the best returns.

Predictions for the size and growth of the cloud computing market are very diverse:

  • Merrill Lynch has previously offered the most optimistic estimate: $160 billion by the end of 2011 (The Cloud Wars: $100+ billion at stake, May 2008)
  • Gartner predicted expenditure of $150.1 billion by 2013 (Gartner forecast, March 2009)
  • IDC predicts annual cloud services revenues of $55.5 billion in by 2014 (IDC report, June 2010)
  • Cisco has estimated the cloud market at $43 billion by 2013 (STL Partners video, October 2010)
  • Bain expects spending to grow �?vefold from $30 billion in 2011 to $150 billion by 2020 (The Five Faces of the Cloud, 2011)
  • IBM’s Market Insights Cloud Phase 2 assessment of September 2011 sizes the cloud market at $88.5bn by 2015
  • Of that total, research by AMI Partners suggests that SMBs’ share of that spend will approach $100 billion by 2014 – over 60 % of the total (World Wide Cloud Services Study, December 2010)

Figure 1 – Cloud services market forecast comparisons

Cloud 2.0 Industry Forecast Comparisons Bain, Gartner, IDC, Cisco Sept 2011 Telco 2.0

Source: Bain, Cap Gemini, Cisco, Gartner, IBM, IDC, Merrill Lynch

Whichever way you look at it, the volume of spending on cloud computing is high and growing. But why are there such large variations in the estimates of that growth?

There is a clear correlation between the report dates and the market forecast sizes. Two of the forecasts – from Merrill Lynch and Gartner – are well over two years old, and are likely to have drawn conclusions from data gathered before the 2008 recession started to bite. Both are almost certainly over-optimistic as a result, and are included as an indication of the historic uncertainty in Cloud forecasts rather than criticism of the forecasters.

More generally, while each forecaster will be using different assumptions and extrapolation techniques, the variation is also likely to reflect a lack of maturity of the cloud services market: there exists little historical data from which to extrapolate the future, and little experience of what kinds of growth rates the market will experience. For example, well-known inhibitors to the adoption of cloud, such security and control, have yet to be resolved by cloud service providers to the point where enterprise customers are willing to commit a substantial volume of their IT spending.

Additionally, the larger the organisation, the slower the adoption of cloud computing is likely to be; it takes a long time for large enterprises to move to a new computing model that involves changing fundamental IT architectures and will be a process undertaken over time. It is hard to be precise about the degree to which they will inhibit the growth of cloud acceptance.

As a result, in a world where economic uncertainty seems unlikely to disappear in the short to medium term, it would be unwise to assume a high level of accuracy for market sizing predictions, although the general upward trend is very clear.

Cloud service types

Cloud computing services fall into three broad categories: infrastructure as a service (IaaS), platform as a service (PaaS) and software as a service (SaaS).

Figure 2 – Cloud service layer definitions

Cloud 2.0 Service Types vs. layers Telco 2.0 Sept 2011

Source: STL Partners/Telco 2.0

Of the forecasts available, we prefer Bain’s near term forecast because: 1) it is based on their independent Cloud ‘Center of Excellence’ work; 2) it is relatively recent, and 3) it has clear and meaningful categories and definitions.
The following figure summarises Bain’s current market forecast, split by cloud service type.

Figure 3 – Cloud services: market forecast and current players

Cloud 2.0 Forecast growth by service type Sep 2011 Telco 2.0

Currently, telcos have around a 5% share of the c.$20 billion annual cloud services revenue, with 25 % CAGR forecast to 2013.

At the May 2011 EMEA Telco 2.0 Executive Brainstorm, we used these forecasts as a base to explore market views on the various cloud markets. There were c.200 senior executives at the brainstorm from industries across Telecoms, Media and Technology (TMT) and, following detailed presentations on Cloud Services, they were asked highly structured questions to ascertain their views on the likelihood of telco success in addressing each service.

Infrastructure as a Service (IaaS)

IaaS consists of cloud-based, usually virtualised servers, networking, and storage, which the customer is free to manage as they need. Billing is typically on a utility computing model: the more of each that you use, the more you pay. The largest of the three main segments, Bain forecasts IaaS to be worth around $3.5 billion in 2011, with 45 % CAGR forecast. The market leader is Amazon with about 18 % share. Other players include IBM and Rackspace. Telcos currently have about 20 % of this market – Qwest/Savvis/Equinix, and Verizon/Terremark.

Respondents at the EMEA Telco 2.0 Brainstorm estimated that telcos could take an average share of 25% of this market. The distribution was reasonably broad, with the vast majority in the 11-40% range.

Figure 4 – IaaS – Telco market share forecasts

Cloud 2.0 IaaS Telco Forecasts Sept 2011 Telco 2.0

Source: EMEA Telco 2.0 Executive Brainstorm delegate vote, May 2011

To read the note in full, including the following additional analysis…

  • Virtual Private Cloud (VPC)
  • Software as a Service (SaaS)
  • Platform as a Service (PaaS)
  • Hybrid Cloud
  • Cloud Service Brokerage
  • Overall telco cloud market projections by type, including forecast uncertainties
  • Challenges for telcos
  • Which areas should telcos target?
  • Telcos’ advantages
  • IaaS, PaaS, or SaaS?
  • Developing other segments
  • What needs to change?
  • How can telcos deliver?
  • Telcos’ key strengths
  • Key strategy variables
  • Next Steps

…and the following charts…

  • Figure 1 – Cloud services market forecast comparisons
  • Figure 2 – Cloud service layer definitions
  • Figure 3 – Cloud services: market forecast and current players
  • Figure 4 – IaaS – Telco market share forecasts
  • Figure 5 – VPC – Telco market share forecasts
  • Figure 6 – SaaS – Telco market share forecasts
  • Figure 7 – PaaS – Telco market share forecasts
  • Figure 8 – Total telco cloud market size and share estimates – 2014
  • Figure 9 – Uncertainty in forecast by service
  • Figure 10 – Telco cloud strengths
  • Figure 11 – Cloud services timeline vs. profitability schematic
  • Figure 12 – Telcos’ financial stability

Members of the Telco 2.0 Executive Briefing Subscription Service and the Cloud and Enterprice ICT Stream can download the full 28 page report in PDF format here. Non-Members, please subscribe here, buy a Single User license for this report online here for £795 (+VAT), or for multi-user licenses or other enquiries, please email contact@telco2.net / call +44 (0) 207 247 5003.

Organisations, people and products referenced: Aepona, Amazon, AMI Partners, Bain, BT, CenturyLink, CENX, Cisco, CloudStack, Deutsche Telekom, EC2, Elastic Compute Cloud (EC2), EMC, Equinix, Flexible 4 Business, Force.com, Forrester, France Telecom, Gartner, Google App Engine, Google Docs, IBM, IDC, Intuit, Java, Merrill Lynch, Microsoft, Microsoft Office 365, MySQL, Neustar, NTT, OneVoice, OpenStack, Oracle, Orange, Peartree, Qwest, Rackspace, Red Hat, Renub Research, Sage, Salesforce.com, Savvis, Telstra, Terremark, T-Systems, Verizon, VMware, Vodafone, Webex.

Technologies and industry terms referenced: Azure, Carrier Ethernet, Cloud computing, cloud service providers, Cloud Services, Communications as a Service, compliance, Connectivity, control, forecast, Global reach, Hybrid Cloud, Infrastructure as a Service (IaaS), IT, Mobile Cloud, network, online, Platform as a Service (PaaS), Reliability, resellers, security, SMB, Software as a Service (SaaS), storage, telcos, telecoms, strategy, innovation, transformation, unified communications, video, virtualisation, Virtual Private Cloud (VPC), VPN.