This Industry Viewpoint was authored by David W Wang
As we approach Q4 of 2020, what does the landscape of major growth drivers for the CSPs (communication service provider) look like? The following are 5 top ones worth some review.
Driver #1: Covid-19 related Internet bandwidth boom
From telecom, networking and IT perspectives, Covid-19 has boosted the network bandwidth use and enterprise digital transformation process, mostly due to high demand for remote work and learning. For example, Comcast just reported that in the second quarter, the company added 323,000 high-speed internet customers, which was its best Q2 in 13 years. Google Fiber has started off a trial of 2-Gig Internet service offers in the southern region. This may have two major implications: first, all Internet related bandwidth, connections, applications, and support will continue to leap forward. Second, enterprise cloud migration and digital transformation are accelerating, which becomes a “must have” now rather than “nice to have” prior to the start of the pandemic for many organizations. Cloud migration will bring about more network needs for certain.
Driver #2: More Fiber optic capacity and throughput
Regardless it’s for Covid-19 work and learning alternatives, cloud adoption and data center interconnect (DCI), or 5G/IoT deployment, bottom line is the requirement for more network capacity, speed, availability, and security. Hence, we keep seeing news like Ciena and Telus breaking 800G distance record at 970 kilometers between Toronto and Quebec City, Windstream and Infinera transmit 800G over long-haul network, etc. Recently when naming the company’s top-priorities, AT&T claimed adding more fiber topped the list, “because fiber fuels both the consumer and business segments”. The fiber optic network infrastructure will continue to thrive.
Driver #3: Open source software platform for cloud native network transition and automation
CSPs are transitioning their legacy hardware centric network to software defined cloud native network, for the purpose of fulfilling new service and applications, and also internal network cost saving, efficiency and management evolution. During this strategic transition and transformation, when the CSPs engage with more cloud-based operations, they need some pivotal, holistic and carrier custom software stack or platform to “piece everything together”, run the network transition and convergence, in the innovative SDN/NFV and AI/ML format. A good example is recently Telefónica Deutschland has picked Ciena’s Blue Planet software stack, in order to better support its 5G, AI and cloud services via automation.
Driver #4: Edge computing and SASE
Without edge computing, 5G powered IoT solutions are simply impossible. For instance, a driverless car would need instant data access and cloud support vs. any delays from remote central cloud, which might bear fatal consequences. That would mean more partnership between major telcos and webscale/cloud providers like AWS, Azure, Google who own globally deployed in all tiers data centers that can play a key role for the telco’s need for edge computing. Enterprise branches need more edge cloud services as well for support like uCPE deployment with network function virtualization (NFV). SD-WAN typically centralizes the WAN network management, cost effectively providing enterprise services and intelligently running application driven connections. But SD-WAN is not particularly designed for a distributed architecture for the uCPEs to access the cloud service edge where all the NFVs sit. Now SASE (Secure Access Service Edge) can do a better job in this regard.
Driver #5: 5G Deployment and Huawei Ban
We’ve been talking about 5G deployment for a while. Sometimes things seem to be tepid. But when it comes, it hits big. Recently Verizon picks Samsung as 5G network supplier in a $6.6 billion contract. The deal will see Samsung as the sole provider of 5G solutions to Verizon until December 2025. Also, China’s Huawei and ZTE see their network infrastructure revenues rose 16% and 11%, respectively from 2Q19. Apparently, the major state-owned carriers’ spending on 5G base stations in China has stimulated the growth. On the other hand, Huawei and ZTE’s equipment ban in the US and other countries will bring up many replacement and alternative supply opportunities. Take the US case alone, based on FCC’s estimate, it may cost up to $1.8 billion to replace those Huawei and ZTE made equipment from US rural telecom market sector. All these drivers discussed above are expected to stay strong momentum all the way over to 2021. What seems to be missing? I think some “killer application” to 5G like iPhone to 4G LTE, i.e. the first iPhone came out in 2007 which became a strong boost to the launch of 4G LTE by 2009. We still owe a major application driver to 5G growth today.
David W Wang is a next-gen network/cloud business development principal and senior consultant with ITCom Global, LLC. Mr. Wang is also the author of the Nov 2018 publishing “Software Defined-WAN for the Digital Age” , and the Mar 2015 publishing “Cash In On Cloud Computing”. He is based in Washington DC metro and can be contacted at ITComG18@gmail.com
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