Telecom service providers (SPs) must continue to focus on cost control to offset relatively flat revenue growth over the next five years, according to Ovum. The research firm said it believes telcos have the potential to gain greater economies through their global vendors in terms of network rollout, network operations, network optimization, customer experience, and service quality management.
In a new report, Ovum forecasts just a 2% annual growth in telecom SP revenues between 2012 and 2018, as carriers struggle with increased over-the-top (OTT) competition, end users more interested in buying devices and apps than services, and limited customer appetite for usage-sensitive billing.
“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,” said Matt Walker, principal network infrastructure analyst at Ovum. “What’s changing is that operators are more smartly attacking their operating expense (opex) budgets, which opens new opportunities for vendors.”
Ovum’s newly created taxonomy of opex segments across all operators reveals network/IT operations account on average for 18% of telco operating costs, of which 60%(US$126 billion) is for spending internally, mostly using salaried staff.
“If you’re an operator, this is a huge cost that needs to be managed,” said Walker. “As operators look to lower operating risks and their cost bases, one option is additional services projects that involve the transfer of employees.”
However, to meet operators’ needs vendors will have to develop far more complex solutions for carriers than in the past. Carriers need help monetizing their networks and retaining customers, not just deploying the equipment, Ovum said.