SUBMARINE NETWORK NEEDS FOR THE NEXT GENERATION
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
SUBMARINE NETWORK NEEDS FOR THE NEXT GENERATION
Contents Introduction p 3 Analysys Mason’s top 10 predictions p 4 The submarine cable industry: new investment opportunities and key trends p 5 SDN in the WAN: the open programmable user plane could kickstart a new era p7 Partnering for digital transformation: a EUR15 billion opportunity for EMEA operators p9 Telecoms operators could benefit from the growth in cloud markets that is driven by global IT players p11 Analysys Mason’s submarine cable expertise p13 About Analysys Mason p14
Introduction
I am pleased to present this compilation of articles
from Analysys Mason covering some of the key topics
that are featuring at Submarine Networks Europe.
The telecommunications industry As a sector specialist in telecoms,
continues to evolve and change, media and technology Analysys Mason
presenting both challenges and is active advising clients across
opportunities for key stakeholders. Europe on the above topics. Our
In this series of articles we discuss: clients include operators, investors,
regulators and governments.
• how the growth and dominance of
content providers is influencing I hope you find these articles of
investment in the industry and interest. We welcome your feedback
where the next wave of investment and encourage you to contact the PATRICK KIDNEY
may come from authors directly if you would like to Principal, Consulting
patrick.kidney@analysysmason.com
discuss any of the points they have
• the influence of web-scale
raised, or if you would like to
companies as they set the software-
understand how a specific issue or
defined networking (SDN) agenda
trend might affect your organisation.
and where this is leading
• the impact of digital transformation
and the potential rewards for the
telecoms sector as a whole
• what operators are doing to take
advantage of the growth trend in the
cloud market.
3
Analysys Mason’s top 10
predictions for the telecoms
media and digital services
sectors in 2018
1. Specialist mobile virtual network operators (MVNOs) will continue to surprise the IoT market by signing major deals.
2. Revenue growth from new enterprise services will offset losses in traditional enterprise revenue.
3. Digital transformation will shift from offering new digital services to transforming labour costs in established networks.
4. Operators that provide digital methods for customer acquisition and support will win market share from those that lag.
5. Service-specific and unlimited data tariffs will win out over volume-based pricing as the foundation for consumer
mobile services.
6. Growth in consumer spending on OTT video services will outpace traditional pay-TV spending in 2018.
7. Operators will deploy Alexa-like AI techniques to engage customers in a more-digital manner.
8. A small number of 5G New Radio (NR) trials will start in 2018, but 90% of operators will wait until after 2020.
9. The mainstream telecoms market is embracing virtual networks. By 2018, more than USD6 billion in capex will have
shifted to virtualised and cloud-based networks; this shift will grow to more than USD50 billion in 2022.
10. Operators will begin to deploy NGPON-2 as a converged infrastructure to support 5G, FTTP and enterprise services.
For additional detail around each predication, download our free predictions paper at analysysmason.com/top-10-predictions-2018/
4
The submarine cable
industry: new investment
opportunities and key trends
“
PATRICK KIDNEY
The submarine cable industry has changed structurally
”
Principal, Consulting
and international bandwidth use continues to soar.
Changes in the submarine cable industry These content and cloud providers use
over the last 10 years the international cable infrastructure to
distribute their content via servers
Global international bandwidth
located in data centres closer to the
grew by over 40% per annum from 2012
After nearly a decade of limited investment consumers of the content, thereby
to 2016, according to TeleGeography.
in submarine cables, the last few years enhancing the experience of the Internet
Traditional industry players, including
have seen a marked increase in the user.
wholesale Internet and voice operators,
number of new cables all over the world.
have experienced an impressive The networks interconnecting data
Over 50 new systems have been completed
growth in traffic, but it is the entrance of centres are private content distribution
or are under construction, and another 35
the content and cloud providers that networks (CDNs); private (and to an
systems are planned for completion before
has had the biggest impact on the extent) open CDNs have been a driver of
2022. In parallel, the submarine cable
industry. Companies such as Amazon, structural change in the industry over the
industry has changed structurally and
Apple, Facebook, Google and Microsoft last 10 years. The data centres that form
international bandwidth use continues to
are responsible for approximately part of the CDNs are globally distributed
soar. This article considers the impact of
70% of this growth, according to Cisco, (see Figure 1 below).
these changes on global submarine cable
and it is these companies who are
developments and investment over the next
influencing much of the investment in
5 to 10 years.
new cables.
Amazon Web Service (AWS) Google
Azure (Microsoft) Facebook
FIGURE 1: SAMPLE OF CONTENT PROVIDERS’ GLOBAL DATA CENTRES
[SOURCE: ANALYSYS MASON, AMAZON, FACEBOOK, GOOGLE AND MICROSOFT, 2018]
5
The requirement to interconnect these Submarine systems occasionally suffer
data centres means that content and disruption through accidental cable cuts
cloud providers are: and damage from, for example, anchors,
fishing or seismic activity. Content
• dictating the submarine cable routes;
providers and some other corporate
for example, the transatlantic MAREA
customers typically require at least three
cable connects two unique landing
different sea routes meaning that
station sites in Bilbao, Spain and
providing route diversity will remain a key
Virginia Beach, USA
driver for investment in new cables.
• underwriting project demand risks by
Commentators have highlighted the
committing to use dark-fibre pairs on
possible vulnerability of cable networks to
the system before construction, or by
sabotage with a consequent impact on
paying for the right of use in the early
national economies in recent months.
days of the project
These security concerns could result in
• becoming co-owners and investors in an increase in government funding or
new cables (such as the MAREA cable other support for further diversity.
system noted above and the Pacific
Where investment might materialise in
Light Cable Network (PLCN)).
the coming years
The availability requirements of the
There are over 35 announced plans for
content providers, cloud providers and
the completion of cable systems in the
traditional industry players in general
public domain, and others are in the
have led to expanding requirements for
pipeline (even if some will be cancelled or
diversity and redundancy, which have
delayed). Investment will be used in a
been a driver for some of the new
variety of schemes, including the Questions?
investment. The impact of outages on
following. Please feel free to contact
businesses, and the practical constraints
on rapid repair mean that alternative • Replacement of older cables, although Patrick Kidney, Principal, at
routes to interconnect the same locations the upgrade of these systems to 100G patrick.kidney@analysysmason.com
are required, which in turn has led to systems will keep them in service for
alternative cables being laid. longer.
The presence of terrestrial diverse dark • Diversification of cables for resilience
fibre from the landing point inland to data and security. Physically diverse routes
centres or Internet exchanges is another are a requirement for most users and
requirement that is partially driven by are especially important for CDNs.
content and cloud providers taking full
• Development of shorter routes and
dark-fibre pairs on the submarine cables.
more regional systems where markets
Factors that will impact investment over are under-served (thin routes). These
the next 5 to 10 years will help to increase the availability of
inter-data centre connectivity when
The requirements of content and cloud
combined with terrestrial networks.
providers will continue to shape the
industry over the coming years, • Generation of new trans-ocean routes,
particularly in larger trans-ocean which will largely be driven by the
projects. As illustrated in Figure 1, the CDNs of the Internet giants and their
global data centre footprints are strategies for those parts of the globe
extensive, though large parts of the world that they are not currently addressing.
are not yet served by these CDNs. As the
local geographical market evolves,
content providers may require further Analysys Mason has extensive experience
connectivity. Africa, for example, is largely advising investors, governments and
underserved by global CDNs, and as public bodies on the commercial and
Internet penetration and traffic per user technical aspects of submarine cables,
increase, the CDNs will need to expand. data centres and the Internet generally.
6
SDN in the WAN: the open
programmable user plane
could kickstart a new era
“
2018 promises to be a disruptive year for SDN
technologies. Web-scale companies are increasing their
”
CAROLINE CHAPPELL-
influence in both WANs and data centre networking. Principal Analyst, Research
Established router players need to boost The FANGs, and particularly Google, are
innovation to beat off competition from an influencing network protocols too.
expanding open-source SDN ecosystem, Between 15% and 20% of worldwide
now taking programmability to the user network traffic is now estimated to use
plane. It is early days for this ecosystem, user datagram protocol (UDP). UDP,
but operators and vendors risk losing Google-developed QUIC and HTTP/2 are
influence in another key area of the being promoted as a key protocol stack
network if they leave the development of for 5G and a possible replacement for
an open programmable forwarding plane deeply flawed TCP/IP. Whichever set of
entirely to web-scale companies. IETF transport protocols wins, the
Internet will carry an increasing share of
Web-scale companies strengthen their
enterprise traffic. In operator networks,
influence on the future network
there are early signs that MPLS is in
The FANG and BAT companies are driving retreat, threatened not only by SD-WANs
the pace of change in networking but also by enthusiastic operator adoption
technologies.1 At Nokia’s analyst event in of segment routing. Deutsche Telekom’s
Helsinki in December 2017, Basil Alwan, radical IPv6-based pan-European
president of Nokia’s IP and Optical network (Pan-Net) stripped MPLS out
Networks division, pronounced that the entirely, while other operators implement
“Internet is changing owners” as segment routing as a centralised and
web-scale companies invest in improved traffic engineering capability in
augmenting it to support the massive tandem with MPLS. Nevertheless, the
volumes of cloud and content traffic that migration path to pure IPv6 segment
they generate. Alwan pointed out that routing (SR6) is increasingly well-trodden.
Nokia is seeing less traffic on operator It remains to be seen how far this shift to
backbones than on web-scale networks. the Internet will favour the FANGs and
As a result, the web-scalers are putting BATs as future suppliers of enterprise
new demands on Nokia to provide connectivity, especially if they control
SDN-based automation, equipment more Internet infrastructure.
telemetry data, open APIs, analytics and
unprecedented core router performance.
The subtext to Alwan’s presentation was
that unless Nokia meets these demands,
the web-scalers will build next-
generation, SDN-based networking
equipment for themselves, a capability
that many in the telecoms industry
believe such companies could master if
they decide it is worth their while.
7
The FANGs and BATs have had the largest AT&T has implemented Tofino in its data
impact on data centre networking, centres; Google and Tencent are Barefoot Questions?
adopting open-source technologies and investors. Sharp-eyed conference-goers Please feel free to contact
championing white boxes with merchant will have spotted that the Telstra Caroline Chappell, Principal Analyst,
silicon for data centre switching. Data Programmable Network3 uses Noviflow’s Research, at
centre switching and WAN routing remain network operating system (NOS), which caroline.chappell@analysysmason.com
separate domains today, but cloud, NFV Noviflow touts as the first carrier-grade
and emerging 5G use cases increasingly NOS to run on Tofino-based switches. But
demand seamless connectivity across most operators are not ready for the
both. Alwan hinted that routers and programmable user plane revolution.
switches may ‘blend’ in the future, driven Web-scale companies are pushing for
by new chipset designs and the future software-based disaggregation of the
architecture of the 5G network. Carrier networking value chain to drive out cost
5G networks will increasingly resemble and accelerate innovation, but many
the web-scalers’ in their dependence on operators argue that vendor-based
cloud data centres, although operators aggregation is the more cost-efficient
will probably run many more cloud data path based on extensive experience. A
centres, massively distributed across the programmable user plane may introduce
network edge, whereas web-scalers rely more performance and security issues
on massively centralised DCs. than it solves and there is little evidence
that customers would be better served by
An open programmable user plane is the
an ability to rapidly introduce new
latest challenge to the WAN status quo
network protocols.
White box routing – or native SDN as we
Established network equipment vendors
call it2 – has not caught on in the WAN
should nevertheless respond to this latest
due to operator antipathy to OpenFlow
SDN development. The forwarding plane
and existing investment in router
will become a key SDN battleground in
infrastructure. As operators invest in a
2018 and a focus for 5G end-to-end
new, edge-based cloud network, this
network architecture. Vendors should tell
could change. Operators could choose to
a strong story to justify their chipset, NOS
build such a network based, for example,
and aggregation strategies. Operators
on switches powered by new generations
should assess the benefits, impact and
of powerful ASICs from the likes of
challenges of the programmable
Barefoot Networks or Broadcom, rather
forwarding plane as they plan new
than on traditional routers with
edge-based cloud networks that will
proprietary network processors.
affect the future architecture of the WAN.
Barefoot’s Tofino chip supports the P4 They should also evaluate AT&T’s
programming language for packet end-of-2017 proposal to bridge
processing. The P4 runtime, regarded as fragmented SDN approaches in the data
a successor to OpenFlow, gives users centre/WAN with an open-source
unprecedented software-based control disaggregated network operating system
over the data plane, enabling them to (dNOS) that works with multiple
match the flexibility that SDN vendors protocols, chipsets and SDN controllers.
have been building into their control It is early days for a P4-based user plane
planes. Tofino’s price/performance raises ecosystem, but operators and vendors
the prospect of an affordable, risk losing influence in another key area
programmable forwarding plane, which of the network if they leave its
could revolutionise networking, reducing development entirely to the FANGs
the power of vendors that base their gear and BATs.
on fixed-function network processors and
encouraging the ecosystem-based
development of new value-added network
capabilities in the areas of security,
telemetry and middlebox replacement.
8
1
FANG: Facebook, Amazon, Netflix, Google; BAT: Baidu, Alibaba, Tencent.
2
For more information, see Analysys Mason’s Software-defined networking in the WAN: Solution options and vendor opportunities.
3
For more information, see Analysys Mason’s Telstra Enterprise demonstrates the impact of investing in digital transformation on revenue growth.
Partnering for digital
transformation: a EUR15
billion opportunity for
EMEA operators
“
DAVID ABECASSIS -
Digital transformation is happening fast, and could add Partner, Consulting
EUR15 billion to operators’ cash flow in EMEA by 2021.
Where do we go next? After nearly a
decade of disruption, telecoms operators
”
it means entering new markets, thanks to
lower barriers to entry made possible by
success in launching increasingly
high-quality broadband services: voice
in most developed and many developing the Internet. For all, however, digital and messaging services are now add-ons
markets, in Europe and elsewhere, can transformation also means working to broadband access, and superfast
think again about growth. Now is the differently, investing differently, to make broadband (30Mbit/s or 50Mbit/s and
time, therefore, for operators to define the most of the rapid pace of change in more) is available through both fixed and
how they will grow during the next software and networking that is taking mobile networks in many countries, so
business cycle. place, driven by the largest Internet most people can get entry-level
players. broadband that is ‘good enough’ for their
It is clear that part, if not all, of the
use. How can operators convince them to
answer to this question lies with digital Operators that are trying to protect their
upgrade to better, but more-expensive
and the Internet. Telecoms operators will core business will find that
products (including fibre-based access)?
thrive or struggle depending on their differentiation is a challenge
ability to adapt or transform their strategy There is no single answer, but many
For operators that are focused on shoring
and operations to make the most out of operators are now effectively using online
up their core business, a key challenge is
the content, services and technology content and applications as drivers of
differentiation. On the one hand, they face
enabled by the Internet. demand for connectivity, through
competition, which in Europe remains as
advertising (for example, Virgin Media is
This ‘digital transformation’ takes many intense as ever in both mobile and fixed
promoting 200Mbit/s fibre broadband by
guises (see Figure 1). For some markets. How can they convince end
emphasising low-latency gaming),
operators, it means focusing on their core users that they are worthy of their loyalty,
bundling (for example, many operators
business, providing best-in-class rather than ‘me-too’ providers that can be
are bundling Netflix with broadband and
connectivity for their customers to access joined and left every 12 to 24 months
offering differentiated promotions with
online content and services with the best purely based on prices? On the other
different tiers of broadband) and digital
possible quality of experience. For others, hand, they are also victims of their
marketing.
Digital ads
Core High-end Bundled
and sales ȼ Low-cost
business broadband content
channels
smartphones
Enhanced Infrastructure Omnichannel
Network Productivity
technology paid for by customer
transformation improvements
and ops OSPs interactions
New Entirely new
New New consumer
enterprise sectors (e.g.
business products
products banking)
FIGURE 1: SELECTED ONGOING DIGITAL TRANSFORMATION INITIATIVES [SOURCE: ANALYSYS MASON, 2017]
9Some operators are entering new consumers. Consumer surveys regularly
markets and have many assets to help value telecoms brands highly, often in the
them do so top three in many countries.1 This is
despite the fact that the telecoms
Operators that are entering new markets
industry only represents 1–3% of GDP in
are experimenting in a wide range of
most developed markets.
ways. In the USA, Verizon and to a lesser
extent AT&T are making large bets on Operators are engaged in network and This feels like a long and hard journey,
new markets: digital advertising (Yahoo!, operations transformations in order to but make no mistake: the digital
AOL), pay-TV (DirecTV) and many other reduce cost and improve performance transformation is happening fast, and the
acquisitions, which must be large scale to rewards for the telecoms sector as a
Finally, every operator is now engaged in whole are significant. We estimate that
make a difference in hundred-billion-
a deep transformation of their networks successful transformation, through
dollar businesses. In Europe, Orange has
and operations, to make the most of judicious investment and partnerships,
entered the retail banking market in
technology pioneered online by ‘web- could add up to EUR15 billion to
Poland, and is preparing to launch in
scale’ online service providers. This operators’ cashflow in Europe, the Middle
France. Partly this is a portfolio strategy:
involves making more extensive use of East and Africa (EMEA) by 2021, a 50%
make a lot of bets and see what sticks.
software and cloud platforms to increase increase on current levels (see Figure 2).
However, the market entry strategy of the agility of networks and platforms.
most operators relies on assets that they Where it once took months and millions Analysys Mason recently published a
have had all along but did not previously of Euros in investment to launch a new report on the value of partnering for
exploit outside telecoms: customer service, dedicated hardware, digital transformation: Operators’ digital
relationships, including billing, which virtualisation and software-defined transformation: unlocking EUR15 billion
make it possible to act as a payment networking (SDN) now enable operators through partnerships with OSPs.2 Other
channel for small transactions (for to reallocate resources and launch new recent research on digital services and
example, app stores); a physical presence services in weeks, if not days. They are transformation includes Telecoms
in tens of thousands of neighbourhoods, also investing in customer care platforms operator growth strategies: case studies
which are fast becoming expensive that enable them to interact with and analysis.3
advertising billboards but can also act as customers whenever, wherever and
points of contact and service centres for however these customers want, Questions?
many new services; and trust – although improving satisfaction and retention. Please feel free to contact
operators complain that they are being Ultimately, the goal is to reduce costs and David Abecassis, Partner, Consulting at
held to higher standards of data improve productivity – to the benefit of david.abecassis@analysysmason.com
protection and privacy than other operators themselves, their investors and or Stephen Sale, Research Director,
businesses, in practice this has helped their customers. Research, at
them become trusted and liked by stephen.sale@analysysmason.com
2.0
0.9
4.9
2.3
EUR7 EUR14.7
billion billion
3.8
7.8
Core business development
Enhanced technology and operations
New business development
FIGURE 2: ESTIMATES OF THE CASHFLOW IMPACT OF DIGITAL TRANSFORMATION THROUGH
PARTNERSHIPS, EMEA, 2021 [SOURCE: ANALYSYS MASON, 2017]
10
1
For example, BrandZ ranks Vodafone as the most valuable UK brand and BT is at number four.
For more information, see www.research-live.com/article/news/vodafone-uks-most-valuable-brand/id/5023372.
2
See Analysys Mason’s Operators’ digital transformation: unlocking EUR15 billion through partnerships with OSPs. Sponsored by Google.
3
See Analysys Mason’s Telecoms operator growth strategies: case studies and analysis.Telecoms operators could
benefit from the growth in
cloud markets that is driven
by global IT players
“ Operators are well positioned for a role in delivering
managed data, security and private cloud services, as
well as services targeted at key industry verticals where ´
”
IGOR BABIC
Research Analyst, Research
they can differentiate themselves.
The market for cloud-related services Revenue is shifting from legacy IT infrastructure-as-a-service (IaaS)
continues to increase rapidly, as offerings to cloud-based services. For market, followed by Microsoft Azure,
evidenced by the double-digit revenue example, IBM Cloud’s revenue (which Alibaba Cloud and Google Cloud, which
growth rates enjoyed by many global IT includes Bluemix) grew by 14.7% between are behind, but closing the gap.
market players. This presents both an 2Q 2016 and 2Q 2017 while the overall • Microsoft Azure and Alibaba Cloud have
opportunity and a challenge for telecoms revenue for IBM Technology Services and outperformed their competitors by a
operators that are seeking to capture a Cloud Platforms (which includes large margin when it comes to cloud
share of this growing market and its infrastructure services, technical support revenue year-on-year growth rates.
associated connectivity revenue. services and integration software) fell by However, this growth comes from a low
5.1% in the same period. base compared to that of AWS, for
This article compares the financial
performances of cloud services from The cloud market positions of the instance. In fact, AWS’s revenue grew
well-established global IT players with companies represented in Figure 1 can be by USD1.21 billion in 2Q 2017 while the
those of telecoms operators and summarised as follows. combined revenue growth of Azure,
discusses what operators are doing to Alibaba Cloud and Google Cloud was
• AWS is a strong leader in the USD1.33 billion in the same period.
take advantage of the growth trend in the
cloud market. The reporting of cloud
revenue is opaque – it is not always clear +10.8%
what is or is not included and exact 8
comparisons are impossible. However,
7
the reported figures give us a reasonable
sense of how the different cloud divisions,
Revenue (USD billion)
6
broadly defined, are performing.
5 +42.1% +14.7%
Alphabet, Amazon, IBM and Microsoft
4
dominate the rapidly growing cloud
+25.6%
market 3
+58.4% +58.5%
Global IT players continue to report huge 2 +97.0% +29.4%
increases in year-on-year revenue for +95.6%
1
their cloud services (see Figure 1).
Microsoft Azure and Alibaba Cloud are 0
particularly notable, with growth rates of AWS Microsoft Alibaba Microsoft IBM Salesforce Oracle Google SAP
above 90%, but many others including Azure Cloud
AWS, Google Cloud and Oracle Cloud are
KEY: AWS = Amazon Web Services; Alibaba = Alibaba Cloud; IBM = IBM Cloud; Salesforce = Salesforce
also growing at more than 40% year-on-
Cloud Subscription and Support; Oracle = Oracle Cloud; Google = Google Cloud; SAP = SAP Cloud
year.
Subscriptions and Support.
FIGURE 1: CLOUD REVENUE AND YEAR-ON-YEAR GROWTH, BY GLOBAL IT PLAYER, 2Q 20171
[SOURCE: ANALYSYS MASON, 2017]
11• Alphabet reported that its cloud unit Some of the telecoms operators that
accounted for more of the company’s provide details of cloud revenue are also
headcount additions than any other experiencing significant revenue growth
areas of the business in 2Q 2017 and rates, albeit smaller than those of the
that the unit is one of Alphabet’s fastest global IT players. Deutsche Telekom and
growing businesses. Further inclusion NTT are the most successful in achieving
of artificial intelligence services in year-on-year growth of over 10% from a
Google Cloud is its potential key reasonably sizeable base (see Figure 2).
differentiator in the cloud market in the Orange does not report revenue figures popular with the German financial sector,
future. for its enterprise cloud services, but local government and SMEs (which form
stated that this revenue grew by 15% a significant proportion of the country’s
• Alibaba Cloud’s biggest market is
year-on-year in 2Q 2017 and 37% in 3Q economy) because the data is stored
China, where the market for cloud
2017, although its IT & Integration exclusively in Germany, which has
computing services is still a few years
Services revenue as a whole increased at rigorous data protection regulations.
behind the USA and Western Europe.
the lower rate of 3.3%. NTT’s cloud revenue growth has lifted the
This, along with other less developed
company’s profits since 2Q 2016, thanks
cloud markets, such as India and The increased competitive pressure in to the company’s focus on medium-to-
Indonesia, is where the company sees Spain and Latin America meant that large enterprises – a market segment
its chance to capture further revenue Telefónica’s revenue declined in this area that has not yet been locked up by the
growth and gradually catch up with its in 2Q 2017 compared to a year earlier largest cloud providers.
competitors in IaaS. Alibaba Cloud is (see Figure 2). However, a positive
one of the conglomerate’s fastest performance in IaaS and SaaS in Spain Telecoms operators do not generally
growing units and it is focusing on and the launch of new projects in Brazil in disclose revenue from their cloud
growth and international expansion, 3Q 2017 translated into a year-on-year offerings, suggesting that these typically
rather than profitability. revenue growth of 25.0% between 3Q form a small proportion of overall
• IBM is not within the top-five 2016 and 3Q 2017. Pricing pressures in revenue. However, operators need not be
companies by revenue in the IaaS the USA prompted AT&T and Verizon to marginalised in the cloud market. They
market – it makes most of its cloud sell off some of their data centres, need to play on their strengths of local
revenue from software-as-a-service because they could not compete on a cost presence, existing relationships and
(SaaS) and platform-as-a-service basis in the economy-of-scale public having a good understanding of customer
(PaaS) offerings. The same is true for cloud business. requirements, as well as connectivity
Oracle, Salesforce and SAP. provision, to innovate and partner with IT
Deutsche Telekom is the market leader specialists rather than try to imitate their
Some telecoms operators also report among telecoms operators that compete service offerings.
significant growth in cloud revenue in the cloud space. Its IaaS services are
The public IaaS, SaaS and PaaS cloud
markets require large scale and it is
therefore unlikely that telcos will be able
to compete directly with Alphabet,
1,000 +11.4% Amazon or Microsoft. However, telcos are
+15.8%
well positioned to play a significant role in
delivering managed data, security and
800
private cloud services, as well as services
Revenue (USD billion)
targeted at key industry verticals where
600 they can differentiate themselves.
400
-19.4%
200 +16.7% Questions?
Please feel free to contact
´ Research Analyst, at
Igor Babic,
0 igor.babic@analysysmason.com
Deutsche NTT Telefonica Cloud Rostelecom
Telekom Cloud Communications VAS and Cloud
Group Cloud
FIGURE 2: CLOUD REVENUE AND YEAR-ON-YEAR GROWTH, BY SELECTED OPERATOR, 2Q 2017
[SOURCE: ANALYSYS MASON, 2017]
1
Information taken from the companies’ financial reports and
12
press releases. Cloud revenue for Microsoft Azure and Google
Cloud and the revenue growth for Google Cloud are estimates
based on third-party reports.Analysys Mason’s submarine
cable expertise
ANALYSYS MASON HAS WORKED WITH COMPANIES IN ALL PARTS OF THE SUBMARINE CABLE VALUE CHAIN
Equipment suppliers
Cable Cable Cable Terrestrial Data Centre End Users
manufacturer Installation Operators Operators
Submarine cable systems finance
including Government intervention
SELECTED RECENT WORLDWIDE PROJECTS INCLUDE
• Supported a sovereign investment fund in its evaluation of the supply, interviews with major carriers and content providers, a
Aqua Comms transatlantic submarine cable investment reworking of the business plan, a validation of the opex and
opportunity. capex requirements, and a 15 year projection of market share
• Assisted a EUR29.5 million collaborative initiative by two and revenue, taking into account upgrades of existing systems
governments to provide improved international connectivity for and multiple potential new systems besides that of our client.
the north west of Ireland. Acted as technical advisor during the • Provided assessment and financial valuation of the opportunity
construction of the submarine and terrestrial elements of for the national landing party of the GBI submarine cable
Project Kelvin in the north west of Ireland and provided ongoing system in a Gulf country, on behalf of an investor. We reviewed
support during the operational phase which will continue until the current national market situation regarding demand and
to the end of December 2018. supply for international connectivity, and used benchmarks to
• Carried out a feasibility study for a new submarine cable and assess the current status and to inform forecast scenarios for
gave recommendations on how to improve international the market. These scenarios were developed in the form of
connectivity for a Mediterranean country. future international traffic and pricing scenarios as well as
market share scenarios for the cable system. We estimated
• Reviewed the business plan for a planned submarine cable
opex and capex requirements in order to calculate the NPV of
running between the USA and Brazil. The review included an
the opportunity.
analysis of the existing and expected competition along the
route in question, as well as a bottom-up, long-term traffic • Developed a model to determine the likely pricing and impact
demand forecast. Revenue from the expected long-term sales, of new regional submarine cables (Seacom, EASSy and WACS).
as well as that from a sales pipeline we reviewed, was • Reviewed the investment opportunity in the ACE and Main One
compared to capital and operational cost estimates in order to submarine cable systems in West Africa.
evaluate the ability of the cable to recover financing costs. • Performed due diligence for the Bahamas Telecommunications
• Performed due diligence on a new cable from the USA to a Company (BTC) including the submarine cable facilities and
specific country in South America for a debt financing company. international business.
Relevant activities included an initial review of the venture’s • Provided assistance in developing a business case to connect a
business plan, an independent forecast of demand to the target fibre link between Lerwick and an existing landing station on
country and five neighbouring countries, an assessment of the SHEFA2 cable system in the Shetland Islands.
13Analysys Mason’s consulting and research
are uniquely positioned
Analysys Mason is a global consulting and research firm, specialising in telecoms, media and technology (TMT). Since 1985, Analysys
Mason has played an influential role in key industry milestones and has helped clients through major shifts in the market. We
continue to be at the forefront of developments in the digital economy and are advising clients on new business strategies to address
disruptive technologies.
See what clients have to say about working with us: www.analysysmason.com/client-testimonials
ABOUT OUR SERVICES
At Analysys Mason, we understand that clients in the TMT industry operate in dynamic markets where change is constant. Our
consulting and research has helped shape clients’ understanding of the future so that they can thrive in these demanding conditions.
CONSULTING
• We deliver tangible benefits to clients transformation
ital IoT
across the telecoms industry, including Dig
communications and digital service
B
providers, vendors, financial and ud CO
NS
ro
o
strategic investors, private equity and
Cl
ad
infrastructure funds, governments,
ba
Consumer Regulation
UL
nd
regulators, broadcasters and service services and policy
TI
on
NG
and content providers.
sati
Enterprise
• Our sector specialists understand the and IoT
Tower
Virtuali
distinct local challenges facing clients,
in addition to the wider effects of global
Digital Transaction
s
forces. economy support
• We are future-focused and help clients
understand the challenges and Regional orks
S m ar
Data
opportunities that new technology brings. markets
etw
RE
t cit
c
Telecoms Strategy and
sn ente
SE
ie s
software and planning
le s
AR
rs
RESEARCH networks
H
ire
ru
C
W
• Our dedicated analyst team tracks and ta
ct
Da
C
on
ce
e
forecasts the fixed and mobile services Sp ne
n tre 5G
cti
accessed by consumers and enterprises. s nd vity
edia
dba
• We offer detailed insight into the Broa S p e ctr Content
M
um
software, infrastructure and technology
that deliver those services.
“
• Clients benefit from regular and timely
intelligence, and direct access to Analysys Mason is a global consulting and research firm, specialising in
analysts. telecoms, media and technology (TMT). Since 1985, Analysys Mason has
played an influential role in key industry milestones and has helped clients
through major shifts in the market. We continue to be at the forefront of
developments in the digital economy and are advising clients on new business
”
strategies to address disruptive technologies.
14Stay connected
You can stay connected by following Analysys Mason
via Twitter, LinkedIn, YouTube or RSS feed.
@AnalysysMason
linkedin.com/company/analysys-mason
youtube.com/AnalysysMason
analysysmason.com/RSS/
analysysmason.podbean.comYou can also read
