Light Reading

The New Resonant Relationship Between NEPs & Their Customers

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

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
The success of NFV and SDN will depend on service assurance, big data, end-to-end orchestration, and a centralized catalog.
The move to 100G in long-haul networks is driving the integration of DWDM transport and OTN switching, finds Heavy Reading.
Service providers are being challenged to enable a digital lifestyle for their corporate clients as well as residential customers.
Big data analytics is creating a multi-billion-dollar revenue opportunity for service providers.
The Evolved Packet Core (EPC) has emerged as one of the leading candidates for network functions virtualization (NFV).
Flash Poll
LRTV Custom TV
Optimizing SDN & NFV Architectures Through Application Awareness

4|23|14   |   6:24   |   (0) comments


Jerome Tollet, CTO at Qosmos, explains how network equipment vendors and operators deploying SDN and NFV can take advantage of network intelligence delivered by DPI to strengthen products and services.
LRTV Custom TV
Wind River Demonstrates Carrier-Grade Software for NFV

4|22|14   |   5:00   |   (0) comments


Wind River VP of Product Management, Glenn Seiler, takes a look the industry's first and only complete NFV software platform designed specifically for the unique carrier-grade and high-performance needs of telecom networks.
LRTV Documentaries
Cable Eyes Big Technology Shifts

4|16|14   |   03:02   |   (4) comments


US cable engineers are facing a lot of heavy lifting in the coming years, notes Light Reading Cable/Video Practice Leader Alan Breznick.
LRTV Custom TV
Maximizing Customer Experience & Assuring Service Delivery in an IP World

4|15|14   |   4:57   |   (0) comments


Steven Shalita, VP of Marketing, NetScout Systems, Inc., discusses the challenges cable/MSO operators face in assuring the delivery of new IP-based services. Key points include the value of proactively managing performance, and using rich analytics and operational intelligence to better understand service and usage trends, make smarter business decisions and ...
LRTV Documentaries
Bye-Bye DVD: Consumers Embrace Digital Video

4|10|14   |   04:17   |   (7) comments


Veteran video analyst Colin Dixon, founder and principal analyst of nScreenMedia, says research shows 56% are using digital video already.
LRTV Documentaries
Video: TW Cable Puts Multicast Gateways to the Test

4|8|14   |   04:13   |   (1) comment


Tom Gonder, a chief architect at Time Warner Cable, explains how its trial of multicast gateways is impacting IP-based video plans.
LRTV Custom TV
Managing & Monetizing Big Data in Operator Environments

4|7|14   |     |   (1) comment


At Mobile World Congress, Gigamon's Director of Service Provider Solutions, Andy Huckridge, and Heavy Reading Analyst Sarah Wallace discuss the 'big data' issues facing carriers and operators today.
LRTV Huawei Video Resource Center
Data Center Energy – Build Your Data Center in a Modular Way

4|7|14   |   2:13   |   (0) comments


Dr. Fang Liangzhou, VP Network Energy Product Line, shared his thoughts about the challenges for data centers during CeBIT 2014.
LRTV Huawei Video Resource Center
Agile Network Solution – An Overview of Huawei's Agile Network Solution

4|7|14   |   2:31   |   (0) comments


Ajay Gupta, Director of Product Marketing, Networking Product Line, gives an overview of the Agile Network Solutions during CeBIT 2014.
LRTV Huawei Video Resource Center
Huawei’s eLTE Voice Trunking, Video and Data Applied for Railways

4|7|14   |   1:38   |   (0) comments


Gottfried Winter is the Sales Director at Funkwerk, a German specialist in GSM-r terminals and a long-time partner of Huawei. At CeBIT 2014, Winter talks to Light Reading about this partnership and the integration of enhanced voice trunking, video and data functions.
LRTV Huawei Video Resource Center
LeaseWeb Speaks Highly of Huawei's Datacenter Products

4|7|14   |   1:37   |   (0) comments


Rene Olde Olthof, Operations Director LeaseWeb, talks about the next data center transformation during CeBIT 2014.
LRTV Documentaries
Comcast: Reshaping the Cable Network Architecture

4|3|14   |   07:11   |   (8) comments


Shamim Akhtar, Comcast's architect and senior director of network strategy, explains why the cable company is moving to a more distributed network architecture.
Hot Topics
WhatsApp Threatens Carrier VoLTE
Sarah Reedy, Senior Editor, 4/18/2014
The Hungry, Hungry Cloud
Dan Jones, Mobile Editor, 4/22/2014
Who's Ready to Play Broadband?
Carol Wilson, Editor-at-large, 4/21/2014
What's the Magic of Private Equity?
Carolyn Mathas, 4/22/2014
AT&T Turns Up Gig Heat in 21 New Metros
Dan Jones, Mobile Editor, 4/21/2014
Like Us on Facebook
Twitter Feed