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Tuesday, May 28, 2024

Prioritize Core Network Strength for Telecom Success

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Telecom giants ditch chasing shiny things, focus on core networks & partnerships for real money.

Telecommunication operators desperate to derive revenues from their significant network investments should focus on their core strengths of network control and management and not attempt to chase more diverse architectures championed by hyperscalers and system integrators (SIs), analyst firm Omdia recommends.

Andreas Olah, senior analyst for digital enterprise services at Omdia, said telecom operators need to limit their scope when chasing new opportunities, explaining that “it is too easy to get lost in many different scenarios that all require specific expertise and are difficult to monetize.”

This is made more difficult by competition from hyperscalers and SIs, which have an established focus on more divergent scenarios. Olah recommends that telecom operators should instead use their position of trust as network operators as a fulcrum point toward new opportunities, but warned they need to be selective about partnerships.

“Building a strong partner ecosystem is crucial for long-term success beyond network services, however telcos should be selective when committing to any joint go-to-market initiatives with hyperscalers and other partners,” Olah wrote.

Telecom disaggregation helps

Some operators have taken this stance to heart.

Chris Sambar, EVP for technology at AT&T, during a keynote speech at last year’s Brooklyn 6G Summit noted that the carrier’s decade-long “Domain 2.0” program has resulted in a powerful platform.

“I would actually argue that the next killer app is the network itself,” Sambar said, touting the carrier’s push to disaggregate its network resources and drive monetization of network investments.

“To date in the wireless industry, and surely in the telecom industry, the connectivity networks have really been closed boxes where partners would provide to us a system that worked great. It was all integrated hardware, software and applications in that system and if you needed help with it you generally had to call the partner: ‘hey, Cisco; hey, Nokia, Ericsson, can you help me with this?’” Sambar said. “We’re really working on breaking that up into open disaggregated networks.”

AT&T hit a long-standing goal in 2020 to virtualize 75% of its network functions with SDN, and more recently hit another disaggregated goal for its core network backbone.

This has positioned AT&T’s network as the “killer app” that Sambar said can now be accessed via APIs that can be the basis for innovative new applications. He specifically cited the ability for customers to now be able to turn up security firewalls running on its network in an instant, which can help drive much-needed monetization efforts.

Omdia’s Olah added that operators need to keep this network control in mind as they plan out their long-term roadmap. This includes decisions around selling off assets that could result in a short-term gain at the expense of longer-term opportunities.

“Telcos need to be cautious not to lose their core network advantage, which is a key differentiator against hyperscalers and other players,” Olah said, though he did add that revenue from those types of deals can be used to acquire more forward-leaning assets like artificial intelligence (AI), IoT and specialized consulting firms. These could be important as operators increase their focus on enterprise customers.

“Edge computing and IoT capabilities are further enablers for future enterprise workloads, and telcos are keen to capitalize on them by offering managed solutions that can be integrated with network and cloud management,” Olah wrote.

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