& cplSiteName &

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.

ó 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        ADD A COMMENT
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
A dedicated cloud-hosted core is important to making the mobile network commercially attractive to Internet of Things (IoT) service providers.
Huawei has announced a new approach to measuring the quality of a user's gaming experience.
Heavy Reading has identified four use cases that are key to cable virtualization and that prove cable is ready to turn concepts into action.
The next iteration of cloud deployment will deliver considerable benefit, but also impose new requirements and create new challenges for even existing virtualized products.
Separating fact and fiction in the brave new world of NFV.
From The Founder
Light Reading today starts a new voyage as part of a larger Enterprise.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Interviews
ETSI's CTO Talks NFV, 5G & NGP

12|5|16   |   09:45   |   (0) comments


Adrian Scrase, CTO at standards body ETSI, talks about the various initiatives and specifications developments related to NFV, 5G and NGP (next-generation protocols) that will underpin next-gen networks.
Women in Comms Introduction Videos
Korn Ferry Consultant: How to Find, Cultivate & Be the Best Talent

11|30|16   |   4:10   |   (1) comment


Erin Callaghan, a managing consultant for Korn Ferry Futurestep, shares strategies for companies to improve how they recruit and for women to ensure they don't get lost in the pipeline.
LRTV Custom TV
We Can Make the World More Sustainable

11|29|16   |     |   (0) comments


GeSI is a global e-Sustainability Initiative organization bringing together 40 big multinational companies around the world. According to GeSI's report, information and communication technology can make the world more sustainable. Luis Neves, chairman of GeSI, shared with us his opinion at Ultra-broadband Forum (UBBF2016).
LRTV Custom TV
Finding a New Way to Engage Customers & Drive Revenue

11|29|16   |     |   (0) comments


Mobile revenues are declining. Digicel, a player in the Caribbean telecommunications/entertainment space, has found a new way to engage customers and drive revenue. John Quinn, CTO of Digicel, shared with us its story at Ultra-broadband Forum (UBBF2016)
LRTV Custom TV
Do You Really Need Gigabit Infrastructure?

11|29|16   |     |   (0) comments


Altibox is the biggest fiber-to-the-home (FTTH) player and the largest provider of video and TV in Norway. They started out with zero customers in 2002. Now they have close to half a million households and companies attached to their FTTH business. Nils Arne, CEO of Altibox shared with us their story and insight on 5G at Ultra-broadband Forum (UBBF2016).
LRTV Custom TV
BTís Openreach Strategy & Its Updates in 2016

11|29|16   |     |   (0) comments


A lot of developments at Openreach this year in terms of strategy and planned investments. Peter Bell, CIO of Openreach BT, shared with us the updates of Openreach at Ultra-broadband Forum (UBBF2016).
LRTV Custom TV
ITU: The Broadband Is Our Future

11|29|16   |     |   (0) comments


At Ultra-broadband Forum, Houlin Zhao, Secretary General of ITU, discussed how important it is for countries, companies and everybody to be working together to help to build the broadband and digital economies (UBBF2016).
LRTV Custom TV
Tackling 5G in Dallas

11|28|16   |     |   (0) comments


Here are our highlights of the 5G North America show in Dallas, Texas with Light Reading's Dan Jones.
LRTV Interviews
Cox Prepping for Virtualization Trials

11|14|16   |     |   (0) comments


In this video interview, Cox's Jeff Finkelstein discusses MSO's plans to test managed business services in early 2017 and tackle Distributed Access Architectures.
LRTV Custom TV
Drivers & Potential of NGP

11|11|16   |     |   (0) comments


ETSI has created an Industry Specification Group to work on Next Generation Protocols (NGP ISG), looking at evolving communications and networking protocols to provide the scale, security, mobility and ease of deployment required for the connected society of the 21st century. The NGP ISG will identify the requirements for next generation protocols and network ...
LRTV Custom TV
Huawei IP 2020 for Future Networks

11|11|16   |     |   (0) comments


Future Networks should satisfy many requirements such as high throughput, extremely low latency, flexible mobility, intrinsic security, networking automation, and so forth. The Chief Architect of Huawei Future Networks addresses a holistic solution, i.e., IP 2020, to achieve these requirements for various future life scenarios (e.g., autonomous driving, tactile ...
LRTV Custom TV
Digital Object Architecture

11|11|16   |     |   (0) comments


Digital Object Architecture provides a basic information infrastructure that can facilitate interoperability between or among different systems, processes, and other information resources, including different identity management systems. Digital objects are networked objects that are named by digital object identifiers and instantiated by an infrastructure service ...
Upcoming Live Events
December 6-8, 2016, The Westin Excelsior, Rome
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
Hot Topics
Cable Nodes Becoming a Choke Point
Brian Santo, Senior editor, Test & Measurement / Components, Light Reading, 12/5/2016
Apple Seeds 5G? Seeks 'Multi-Gigabit' Chip Designer
Dan Jones, Mobile Editor, 11/30/2016
Altice Plans FTTH for Entire US Footprint
Iain Morris, News Editor, 11/30/2016
Altice FTTH Bill Could Hit Almost $9.6B in US
Iain Morris, News Editor, 12/1/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Eyal Waldman, CEO of Mellanox Technologies, speaks to Steve Saunders, CEO of Light Reading, for an exclusive interview about the 100 GB cable challenge, cybersecurity and much more.
Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
Live Digital Audio

Even when there's a strong pipeline of female talent in the comms industry, it tends to leak all the way to the top. McKinsey & Company says women experience pipeline leakage at three primary points: being unable to enter, being stuck in the middle or being locked out of the top. Each pipeline pain point presents its own challenges, but also opportunities to stop the leak. Wireless operator Sprint is making a conscious effort to improve its own pipeline from new recruits to the C-suite, and it wants the rest of the industry to do the same. In this Women in Comms radio show, WiC Board Member and Sprint Vice President of Enterprise Sales Nelly Pitocco will give us her take on the industry's pipeline challenges. Pitocco, who joined Sprint in May and has spent 20 years in the comms industry, will also offer solutions, share how Sprint is tackling the challenge within its own organization and take your questions live on air.