Light Reading
Operators and network equipment providers are facing uncertainty together, pooling their understanding of what the future might look like.

The New Resonant Relationship Between NEPs & Their Customers

Danny Dicks | Analyst
Heavy Lifting Analyst Notes
Danny Dicks | Analyst
2/27/2014
50%
50%

There has always been a close tie between telecom network operators and their infrastructure providers. After all, the scale of financial investment in networks, their complexity and the length of time over which commercial returns are made means that the lifecycle of the commercial relationship is generally many years -- and that's even without the multi-year managed service deals that operators often sign with their key equipment vendors.

Operators -- even the biggest, more technically well-resourced -- have long looked to network equipment providers (NEPs) for support that goes beyond the type of supply relationship found in most other industries. This support has often included ideas about network and IT architectures, about new services that could be developed on current or future infrastructure or about commercial models and operational structures.

Of course, NEPs have a compelling commercial need to be the source of service and business ideas for operators; without this, operators, particularly the well established former incumbents or market-leading wireless operators, may be tempted to prioritize investment opportunities that aren't based on network infrastructure -- perhaps instead on their property portfolios, developing content ownership, those that favor supply chain disruption, or for which an individual vendor's own equipment is not optimized.

Today, however, service revenues are under threat like never before, and the cleverest ideas about things that can be done using networks aren't all coming from vendors or operators, but from other service providers beyond the traditional telecom ecosystem. Simultaneously, network functionality is becoming more abstracted from underlying physical equipment, opening the door to startup software developers that could destabilize the operator/NEP relationship.

Yet paradoxically, this relationship seems to be tighter than ever. Yes, operators are establishing commercial relationships with content owners and "over-the-top" (OTT) service providers, but there's a suspicion that interests are not aligned. Certainly business models aren't aligned. On the supply side, operators seem to be consolidating the number of vendors they buy from and looking to pre-integrated solutions built for them by key suppliers -- rather than taking a chance on an untried vendor.

Faced with uncertainty, operators and NEPs are holding each other tight and pooling their understanding of what the future might look like. For NEPs, this has meant becoming even more responsive to the needs of their operator customers (responding to the network functions virtualization [NFV] challenge, for instance). For both parties it has meant working out how networks might be built and operated in such a way that revenue can be earned from the new services being created -- wherever the service ideas originate, and whatever business models emerge.

It's what Alcatel-Lucent CTO Marcus Weldon calls a "resonant relationship," which is a neat turn of phrase. I think it's an example of a new and necessary agility on behalf of operators and NEPs -- and it's certainly the future.

This Heavy Reading Insider report, "The Future for Telecom Network Equipment Providers", examines the driving forces behind the global market for telecom network equipment and related services, analyzing them for their scale of impact, and level of uncertainty. It builds three scenarios for the future of NEPs in the global market for telecom equipment, based around those driving forces with the greatest likely impact, but the least certainty about that nature of that impact. It then uses those scenarios to give some perspective on the question "what does the future look like for NEPs?". It also summarizes the strategies of twelve of the leading NEPs.

— Danny Dicks, Analyst, Heavy Reading Insider


The Future for Telecom Network Equipment Providers, a 27-page report, is available as part of an annual subscription (12 monthly issues) to Heavy Reading Insider, priced at $1,595. This report is available for $900. To subscribe, please visit: www.heavyreading.com/insider.

(2)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
MordyK
50%
50%
MordyK,
User Rank: Light Sabre
2/27/2014 | 4:06:50 PM
NEP Opportunity
With the recognition of this "resonant rlationship". I would posit that it represents an opportunity for NEP's to be proactive in the creation of developer and partner programs, that provide outside vendors an opportunity to pre-integrate and pre-certify their solutions, and creating a far easier path of selling into carriers.
DOShea
50%
50%
DOShea,
User Rank: Blogger
2/27/2014 | 1:57:25 PM
Vendor lock-in
This all sounds like bad news for alternative NEPs hoping to use SDN, NFV and open platforms as their foot in the door to carrier business, and good news for big vendors who strategically lock their customers into more custom or proprietary platforms.

I know that's a "Captain Obvious" comment, but it's starting to feel like the outlook for incumbent NEPs vs. alternative NEPs is changing back and forth by the hour.
More Blogs from Heavy Lifting Analyst Notes
Enterprises increasingly realize that in order to run their businesses economically they need to fundamentally change ways in which they operate their businesses in the connected IP world.
There's plenty of activity in the emerging G.fast broadband technology sector, but will it come to anything?
Here are some steps that service providers could take to boost the reach, awareness and success of their multiscreen video ventures.
Telecom operators are deploying new technologies in their data center environments to reduce costs and increase revenues.
The cloud debate has moved on to the network capabilities needed to meet customers' demands, with SDN and NFV at the heart of discussions.
Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Huawei Video Resource Center
Huawei Highlights at BBWF 2014

11|20|14   |   3:40   |   (1) comment


Broadband World Forum is one of the world's largest telecoms, media and technology events with over 7,800 senior executives from across the globe converging on Amsterdam every year to identify the Next Big Thing. BBWF is an exciting place to meet the entire industry under one roof and identify the latest in network innovation, service optimization and customer ...
LRTV Huawei Video Resource Center
How Will BCMS Stimulate Margin for Broadband Operators?

11|19|14   |   6:52   |   (0) comments


In BBWF 2014, Liu Shuqing emphasizes the value of FMC 2.0 based full service experience by throwing light on the BCMS solution. The underlying principle of this innovative technique is to create network robustness and driving network from connection oriented to ACE – BAND oriented infrastructure, in which applications, cloud, and user experiences will be an asset ...
LRTV Huawei Video Resource Center
SingleFAN3.0: Better Connected Experience

11|19|14   |   3:06   |   (1) comment


At the BBWF 2014, David Hu, the VP of Huawei Access Network Product Line, talked about the future of access networks – SingleFAN3.0: faster broadband, wider coverage, and smarter connection.
LRTV Interviews
Basil Alwan Interview: The Road to Cloud

11|19|14   |   09:09   |   (0) comments


Alcatel-Lucent's head of IP and Transport talks about the migration towards a web-like networking environment, the impact of the cloud, SDN and NFV, and the yet-to-be-announced FP4 chip.
LRTV Documentaries
FairPoint Makes a Fair Point About Analytics

11|19|14   |   1:56   |   (1) comment


The US-based communication service provider gets to grips with advanced analytics, tackling data and breaking down the silos within its own business.
LRTV Documentaries
Analytics Lets C Spire Get to Know Subs

11|19|14   |   3:01   |   (2) comments


It's all about the data for US operator C Spire as it uses analytics to personalize its customer service down to individual subscribers.
LRTV Interviews
Nuage Branches Out With SDN: CEO Interview

11|17|14   |   9:32   |   (0) comments


Sunil Khandekar, CEO of Alcatel-Lucent's SDN-focused unit Nuage Networks, talks about the opportunities and challenges of breaking out of the data center into wide-area networks.
Light Reedy
Telecom Analytics Grows Up

11|14|14   |   1:15   |   (4) comments


The big data analytics debate has moved on from a year ago, with some experts suggesting it's no longer a technology challenge.
LRTV Huawei Video Resource Center
Huawei Compass

11|14|14   |   3:17   |   (1) comment


At OpenStack Summit 2014, Shuo Yang, Huawei Principal Cloud Infrastructure Architect introduced Huawei Compass, the software tool for solving customers' problems on the journey of OpenStack Cloud.
LRTV Huawei Video Resource Center
Huawei's Cloud Strategy in European Region

11|14|14   |   2:56   |   (1) comment


At OpenStack Summit 2014, Dr. Gotz, CTO of Huawei IT in European Region introduced Huawei's cloud strategy in European region.
LRTV Huawei Video Resource Center
Huawei's Contribution on OpenStack

11|14|14   |   5:58   |   (0) comments


At OpenStack Summit 2014, Dennis Gu, Huawei Chief Architect of Cloud Computing introduced the relationship between OpenStack and cloud computing, and Huawei's contribution on OpenStack.
LRTV Huawei Video Resource Center
Caroline Chappell on Open Cloud Trends

11|14|14   |   2:00   |   (0) comments


At OpenStack Summit 2014, Caroline Chappell from Heavy Reading shared her perspective of open cloud trends. She believes it's really important to all work as a community and establish stable core to OpenStack.
Upcoming Live Events
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
February 10, 2015, Atlanta, GA
April 14, 2015, New York City, NY
May 6, 2015, McCormick Convention Center, Chicago, IL
May 30, 2015, The Westin Peachtree, Atlanta, GA
June 9-10, 2015, Chicago, IL
Infographics
Irish Telecom outlines the rise of VoIP technology, including its adoption within businesses and their perception of its quality.
Hot Topics
Bell Labs Chief Slams 'Toy' Networks
Robert Clark, 11/19/2014
'Job Security' Biggest SDN Security Challenge
Mitch Wagner, West Coast Bureau Chief, Light Reading, 11/14/2014
$38.3M: Ain't That a Kik in the SMS
Sarah Reedy, Senior Editor, 11/20/2014
Subsea Market Lures New Cast of Characters
Dan O'Shea, Managing Editor, 11/14/2014
Like Us on Facebook
Twitter Feed