Juniper Research: CPaaS Gobal Market to Reach $29 Billion by 2025

A new study from Juniper Research has found the value of the CPaaS (Communications Platform-as-a-Service) [1.] market will reach $29 billion globally by 2025; rising from $16 billion in 2022. To capitalise on this substantial growth of 80% over the next three years, the report, CPaaS: Market Outlook, Emerging Opportunities & Forecasts 2023-2027, urges CPaaS vendors to focus on the development of managed services over their platforms. These services must enable the creation and management of rich media content over channels such as OTT business messaging, email and social media.

Note 1.  Communications Platform as a Service is a cloud-based delivery model that allows organizations to add real-time communications capabilities, such as voice, video and messaging, to business applications by deploying application program interfaces (APIs).

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As markets become increasingly saturated with CPaaS service provision, CPaaS vendors must expand deeper into the SME (Small-to-Medium Enterprise) sector. In addition, the report predicts CPaaS vendors will further focus on the provision of value-added features that enable platform users to fully maximise the benefits of rich media channels though the inclusion of tools, including workflow builders and AI-based chatbot solutions.

Research author Sam Barker commented: “CPaaS vendors now compete on the capabilities of managed services to attract SMEs. As many of these smaller enterprises lack in-house development facilities, they will choose the CPaaS platform that provides the most comprehensive managed services for rich media channels.”

Emerging Channels to Disrupt CPaaS in 2023

SMS has historically been the cornerstone of CPaaS revenue. The report predicts SMS traffic revenue will still account for over 50% of all CPaaS revenue by 2025; owing to its established reliability in termination for traffic such as MFA (Multi-factor Authentication).

However, the report forecasts that rich media channels, such as email and social media, will continue to expand, and account for over $10 billion of revenue by 2025; representing over 40% of the CPaaS market value. As a result, platforms that fail to include managed services for rich media services in their three-year plans risk missing out on the substantial growth predicted for the CPaaS market.

Resources:

View the CPaaS market research: https://www.juniperresearch.com/researchstore/operators-providers/cpaas-research-report

Download the whitepaper: https://www.juniperresearch.com/whitepapers/how-cpaas-will-evolve-in-2023

Juniper Research provides research and analytical services to the global hi-tech communications sector; providing consultancy, analyst reports and industry commentary.

Cybersecurity threats in telecoms require protection of network infrastructure and availability

Telecommunications companies have become an attractive target for attackers, as their networks can be used as a back door to other organizations, thereby making it attractive for cybercriminals to gain unauthorized access. These telecoms networks are also used to build, control and operate other critical infrastructure sectors, including energy, information technology, and transportation systems. Given the interconnected nature of telecom networks between critical infrastructure sectors, organizations need to focus on safeguarding network infrastructure and enabling network availability for critical infrastructure communication.

Telecoms face mounting threats due to various factors, such as the absence of technical knowledge, use of legacy systems, presence of sensitive information, inadequate password security, and increasing threat landscape. Operators are also transforming themselves from network infrastructure companies to cloud service companies to improve efficiencies in business operations, roll out new services and applications, and store and distribute content. As telcos are often a gateway into multiple businesses, threats can either target a specific telecom company, its third-party providers, or the subscribers of a telecom service. These attacks can come in various forms.

Trend Micro disclosed that telecoms have a larger cyber-attack surface than most enterprises, often stretching from their base station infrastructure to call centers and home workers’ laptops. The surface area provides ample opportunity for threat actors looking for customer or organizational data, trying to hijack customer accounts, or seeking to disrupt services via DDoS (distributed denial of service) and ransomware. Furthermore, supply chain providers, cloud services, IoT systems and new infrastructure needed to support 5G and network slicing create additional risk.

Industrial Cyber reached out to experts in the telecoms sector to examine the key factors that make the communications sector vulnerable to cyber attacks. They also weigh in on the unique challenges that the communications sector faces when it comes to securing and safeguarding its OT/ICS environments.

Teresa Cottam, the chief analyst at Omnisperience, told Industrial Cyber that in the past, where security was considered in telecoms the focus tended to be how it affected performance – such as minimizing DDoS traffic and attacks. “More recently, as everything has become more interconnected and the threat landscape has evolved, cyberattacks specifically against telecoms firms have increased,” she added.

Cottam pointed out that ultimately four challenges stand out – complexity, exposure, volume and variety, and cost.

On complexity, Cottam said that each individual ‘network’ actually comprises several generations of technology with some of it being decades old, and it might include fixed, mobile, and even satellite infrastructure. “Moving data from one side of the world to another requires multiple networks, each owned by a different company with a different risk profile. The move from 4G to 5G introduces even more complexity. In the 5G era, cloud, data, and IoT are combined – increasing security risks. Breaches now have a company-wide impact from production through supply chains and logistics to corporate systems,” she added.

Cottam also added that “when you consider how much equipment is in public places it’s actually surprising it’s not attacked more often. Malign actors don’t even need to mount a cyberattack, they can simply vandalise equipment to target specific regions or industries.”

Elaborating on volume and variety, Cottam said that the sheer volume of endpoints is staggering and continually increasing. “IoT has already massively increased the number of endpoints and will continue to do so. Many of these so-called smart objects aren’t very smart and are highly vulnerable. Many of the most vulnerable devices are in the home, but wherever they are, each device has the potential to inject malign traffic into the network,” she added.

On cost, Cottam said that the cost of securing a network end-to-end is significant and the reality is that telecoms firms and their customers are having to continually juggle risk versus security.

Turning the question around, Grant Lenahan, partner and principal analyst at Appledore Research, said that one of the huge transitions underway is from fundamentally private data centers and networks to outsourced or managed, secure networks that interconnect distributed enterprise to their digital partners, remote employees, public cloud, and SaaS facilities. Therefore, there is a blurring of public and private targets.

“We certainly can look at those who attack public networks because of the private data and traffic. We can also look at those who attack not an underlying enterprise target per se, but the network infrastructure itself,” Lenahan told Industrial Cyber. “These attacks, rather than going after specific data, or intended either to disrupt, for example, terrorism or to gain control that can later be used to target intellectual property the transit to the network. The very fact that public networks are public, complicates securing them.”

On the other hand, Lenahan added that there is scale and scope, allowing for concentrations of security expertise and automated protections, that might not be possible or affordable by individual enterprises. “We have spent hundreds of pages covering this seismic shift in our security research stream. Some readers might be interested in consulting it,” it added.

Andrei Elefant, CEO of EdgeHawk Security told Industrial Cyber that the key factors that make the communication sector vulnerable to cyber attacks are that the CSPs (communication service providers) face multiple and large attack surfaces. They also have a limited security budget and have to prioritize the security measures they take compared to the cost and priorities.

He also added that security expertise in CSPs is limited. “The various types of attack scenarios, attack methods, the type of data and systems that need to be protected are huge. CSPs cannot build expertise in all the required security domains and have to prioritize focus areas. The CSPs are defined as critical infrastructure and are frequently a target of Nation State Actors, which means higher expertise and more budget on the attackers’ side.”

Elefant added that these challenges are even more noticeable when it comes to protecting the OT/ICS environment. “Attack surfaces grow exponentially with the growth in the number and variety of the endpoints. Many of the OT endpoints have limited inherent protection capabilities (due to resources limitation, legacy devices, etc.,), which means they can be a perfect attack surface to harm CSPs or penetrate their networks. In many cases, these devices are being exploited for DDoS attacks, as they are available in masses with limited protection.”

Addressing ​​the essential components that make cybersecurity in telecoms a vital and fundamental part of protecting the telecommunications landscape, as it also serves much of/all the other critical infrastructure sectors, Cottam said that not having complete visibility of the complexity of the telecoms landscape is one of the biggest challenges. “For example, there could be vulnerabilities in equipment and devices – which is often the focus of analyst reports – but equally there can be vulnerabilities in core processes which were put in place decades ago and haven’t been updated,” she added.

Cottam identified that a typical attack occurs by a criminal convincing the telecoms firm they are the customer and want to move to a new provider. “The telecoms firm – often with only minimal checking – provides the ‘customer’ with the means to do so. In the UK the system is designed to make it as easy as possible for the customer to do this, which also makes it easy for criminals. Such an attack against employees is bad; now consider it targeted at IoT devices. This is a great example of how cybersecurity often focuses on securing equipment (endpoints) but ignores vulnerable processes,” she added.

“Many countries have acted to secure number portability and in this respect, the UK is particularly vulnerable as its current system is so old-fashioned and inefficient,” according to Cottam. “Another problem this causes for IIOT is that the UK system also struggles to port large volumes of numbers such as would need to happen with a large corporate or IoT customer. This has the potential of decreasing competition in the connectivity part of the market since it’s a blocker to switching operators.”

Lenahan said that he doesn’t “believe we need to emphasize how important telecom infrastructure is. Not only is it critical infrastructure and it’s all right, but it is often the control plane for other infrastructure such as water, gas, electricity, emergency services, and many other essential components of both private public, and industrial life. It is, what’s on call, a target rich environment. That said, let’s look at what success looks like,” he added.

Elefant said that the CSPs are becoming a part of the critical infrastructures in any state. “National defense strongly relies on communication availability on the state level, in addition to the fact that these networks provide essential communication infrastructure to many other critical infrastructure facilities,” he added.

The essential components needed to keep CSPs networks available and reliable focus on two main aspects, according to Elefant. “Protecting the network infrastructure from unauthorized access and malicious attacks. This includes implementing firewalls, intrusion detection and prevention systems, and other security measures to prevent unauthorized access.”

He also pointed to protecting network availability for critical infrastructure communication by identifying and blocking attempts to saturate the network and accessibility to specific applications/devices using DDoS attacks.

The telecoms industry has had to reconsider its cybersecurity protocols in light of the digitization and incorporation of Industrial Internet of Things (IIoT) technologies. The executives looked into the main threats posed by increased connectivity techniques and how this shift affects the cybersecurity posture of these communication companies.

Cottam said that often today’s IIoT devices use the same networks as other systems, which presents a double-edged risk. “If a criminal can compromise an IIoT device they could use this as an access point to corporate systems; if they compromise corporate systems or user devices they can hijack IIoT devices. Again, this speaks to the interconnectedness of networks and often the poor understanding of how criminals can utilise connections and access points to compromise industrial customers.”

“The main concerns from customers include exposure of their data, compromised network equipment, attacks on devices and network signaling, as well as creating a gateway for further attacks. Network segmentation is a useful technique to limit the scope of such attacks,” according to Cottam. “Reliable security frameworks are built into 3GPP standards to ensure 4G and 5G cellular connections are secure. But as we move to 5G a range of new exciting techniques are also delivered.”

Another technique is to utilize private networks – effectively campus networks within a factory or industrial complex with limited connections to the public network but complex connections within the private network, Cottam said. “Connectivity is only provided to authorised devices (more secure than WiFi, as it can be based on SIM authentication) and data is processed on-site,” she added.

“The simplest way to look at this is that complexity is increasing dramatically in enterprise networks. There will be an order of magnitude more endpoints; applications and data will reside in various clouds; and dynamically changing ecosystems of digital trading partners will continuously evolve,” Lenahan said. “This implies a complex network that crosses ownership boundaries, and is constantly changing.”

Lenahan noted that the only apparent constant throughout this ‘web’ is the telecom CSP that undertakes end-to-end connectivity, orchestration, and in our view, security. “This is a huge opportunity for our industry. However, it also means we need to think completely differently about security. It cannot be a separate island; it must be integrated into network automation. Furthermore, it must be automated, something tacos in security professionals have long been uncomfortable with,” he added.

Elefant identified some of the threats brought by these increased connectivity techniques, including increased attack surface, unsecured devices, protocol vulnerabilities, and DDoS attacks. With “the exponential increase in the number of connected devices, the attack surface of the network has increased, creating more opportunities for malicious actors to gain unauthorized access to the network. Many IoT devices are not designed with security in mind, and may have weak passwords, unpatched vulnerabilities, or lack encryption, making them easy targets for attackers.”

He also pointed out that IoT devices often use proprietary protocols, which may have vulnerabilities that are not well understood and are difficult to patch. IoT devices can be easily compromised and used to launch DDoS attacks, overwhelming the network with traffic and causing availability issues.

Elefant highlighted that the new threats have led to a shift in the cybersecurity posture of CSPs. “Implementing more strict network segmentation, both on their infrastructure and also as a service to their customers. Specifically for the IIoT environment, access control services, delivered by the CSPs, are being applied on a larger scale. Protecting the network from DDoS attacks on the edge and access points became a mandatory consideration. Additionally, there is a need to continuously monitor and assess the security of the network edge and access as more attacks may come from exploited devices connected to the network.”

Like other critical infrastructure sectors, the communications sector has also faced mounting cybersecurity rules and regulations in recent times. The executives address how the communication sector responded to the increase in cybersecurity regulations for critical infrastructure owners and operators, as well as analyze the impact these initiatives have had in enhancing reporting procedures and improving the cybersecurity posture of the telecoms sector.

Cottam said that one of the biggest challenges stems from the ‘democratisation’ of IoT. “As it becomes the norm in manufacturing supply chains, smaller and newer industrial firms are drawn in or adopt IoT to increase their efficiency. These firms often don’t fully understand the importance or complexity of securing their IoT devices and lack the budget and expertise in-house,” she added.

Another challenge is that many enterprises deploy and secure IoT from an IT perspective, according to Cottam. “Traditional IT security largely focuses on end-point and perimeter security. But with hundreds of thousands of IoT endpoints and more permeable boundaries, the emphasis has to shift to securing and managing the network rather than trying to put security into every device – not all of which are designed to be secured,” she added.

“Likewise, while cellular IoT is reasonably secure – and that based on 5G even more so – it is not unhackable. IoT network security isn’t just about securing the network either, it’s about network-based security that can monitor all the connected objects, processes, and applications,” Cottam said. “Neither is it just about hackers anymore. Nation states, protestors, and terrorists are just as likely to want to attack critical infrastructure and their objectives are different and their budgets and expertise are huge. While there has been much talk of bringing together IT/OT/IoT into a single process to make it more manageable and auditable, the risk is that the complexity and volume become overwhelming.”

Lenahan said that details on how telcos are handling critical infrastructure security are hard to get, and in my opinion, rightly so. “That said, we can see many trends in the industry to prepare telecoms to not only be more secure on its own but to be in a good position to secure infrastructure for others. Some things are as simple as the collaborative work in the MEF, on secure transport services — or the transport service in security or considered as one. Similarly, the managed services, with security at their core, that many leading telcos are offering to their enterprise clients, can be applied to protecting public and shared infrastructure as well,” he added.

“One thing we believe they must change is that these ‘managed’ services, which, by definition, are semi-custom, must become more standardized products,” according to Lenahan. “We say this because that is the only way telcos can afford to invest in the level of automation that will truly illuminate errors and omissions and stay ahead of the bad actors. It’s simply a matter of operating a process at scale and concentrating one’s fire, so to speak.”

The CSPs responded in various methods to address the increase in cybersecurity regulations for critical infrastructure, Elefant said. “Increase in network segmentation to protect critical infrastructure, the CSPs designed their networks in a way they can segment their network based on the type of service they need to deliver. Applying more protection capabilities at the edge of the network to protect the network from threats that may come from the access side, in addition to more traditional protection methods they apply on the network core,” he added.

Elefant also suggested adding more secure communication channels, like segmentation and encryption for critical elements, such as the control plane, and adding more monitoring tools to identify security risks in real time. “These initiatives help CSPs to identify security threats in real-time and apply faster response and mitigation, leveraging the new control points, mainly at the edge of the network,” he concluded.

References:

https://industrialcyber.co/features/cybersecurity-issues-in-telecoms-sector-call-for-protection-of-network-infrastructure-and-availability/

https://industrialcyber.co/features/cybersecurity-issues-in-telecoms-sector-call-for-protection-of-network-infrastructure-and-availability/

https://www.trendmicro.com/en_se/research/22/b/the-telecoms-cyber-threat-landscape-in-2021.html

https://www.enisa.europa.eu/news/enisa-news/cyber-threat-warnings-the-ins-and-outs-of-consumer-outreach

Cybersecurity to be a top priority for telcos in 2023

IEEE/SCU SoE Virtual Event: May 26, 2022- Critical Cybersecurity Issues for Cellular Networks (3G/4G, 5G), IoT, and Cloud Resident Data Centers

 

IMT Vision – Framework and overall objectives of the future development of IMT for 2030 and beyond

This ITU-R recommendation in progress will be the main focus of next week’s ITU-R WP5D meeting #43 in Geneva.  It defines the framework and overall objectives for the development of International Mobile Telecommunications (IMT) for 2030 and beyond.  There are contributions related to this recommendation from: Apple, Nokia, Ericsson, Wireless World Research Forum, Motorola Mobility, Orange, United Kingdom of Great Britain and Northern Ireland , Finland, Germany, GSOA, China, Qualcomm, Electronics and Telecommunications Research Institute (ETRI), Brazil, Samsung, ZTE, Huawei, InterDigital, Intel and India, with several being multi-company contributions.

IMT will continue to better serve the needs of the networked society, for both developed and developing countries in the future and this Recommendation outlines how that will be accomplished. This Recommendation also intends to drive the industries and administrations for encouraging further development of IMT for 2030 and beyond.

The framework of the development of IMT for 2030 and beyond, including a broad variety of capabilities associated with envisaged usage scenarios, is described in detail in this Recommendation.

Capabilities:

The Recommendation also addresses the objectives for the development of IMT for 2030 and beyond, which includes further enhancement and evolution of existing IMT and the development of IMT-[2030].

It should be noted that this Recommendation is defined considering the development of IMT to date based on Recommendation ITU-R M.2083 (approved in September 2015).

References:

Summary of ITU-R Workshop on “IMT for 2030 and beyond” (aka “6G”)

https://www.itu.int/en/ITU-R/study-groups/rsg5/rwp5d/Pages/wsp-imt-vision-2030-and-beyond.aspx

Excerpts of ITU-R preliminary draft new Report: FUTURE TECHNOLOGY TRENDS OF TERRESTRIAL IMT SYSTEMS TOWARDS 2030 AND BEYOND

Development of “IMT Vision for 2030 and beyond” from ITU-R WP 5D

ITU-R: Future Technology Trends for the evolution of IMT towards 2030 and beyond (including 6G)

China’s MIIT to prioritize 6G project, accelerate 5G and gigabit optical network deployments in 2023

ITU-R WP5D: Studies on technical feasibility of IMT in bands above 100 GHz

https://www.itu.int/rec/R-REC-M.2083 (Sept 2015)

 

 

Canalys: Cloud marketplace sales to be > $45 billion by 2025

Canalys now expects that by 2025, cloud marketplaces will grow to more than $45 billion, representing an 84% CAGR.  That was one of the market research firm’s predictions for 2023 and beyond (see chart below).

Cloud marketplaces [1.] are accelerating as a route to market for technology, led by hyperscale cloud vendors such as Alibaba, Amazon Web Services, Microsoft, Google and Salesforce, which are pouring billions of development dollars into the sector.

Note 1.  A cloud marketplace is an online storefront operated by a cloud service provider. A cloud marketplace provides customers with access to software applications and services that are built on, integrate with or complement the cloud service provider’s offerings.  A marketplace typically provides customers with native cloud applications and approved apps created by third-party developers. Applications from third-party developers not only help the cloud provider fill niche gaps in its portfolio and meet the needs of more customers, but they also provide the customer with peace of mind by knowing that all purchases from the vendor’s marketplace will integrate with each other smoothly.

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“The marketplace route to market is on fire and cannot be ignored by any channel leader,” said Canalys Chief Analyst, Jay McBain.  “Marketplaces grew more in the first three months of the pandemic than in the previous decade and have just kept growing,” he added.

“We under-called it,” explained Steven Kiernan, vice president at Canalys. “Cloud marketplaces are accelerating at such a dizzying speed that we’ve doubled our pre-pandemic forecast.

Some software vendors that are active on marketplaces, in particular cybersecurity vendors, are publicly reporting as much as 600% year-on-year growth via this channel, according to McBain.

In addition, the hyperscalers are now reporting growing numbers of billion-dollar customer commitments through enterprise cloud consumption credits, which cover more than just software.

The large cloud marketplaces have lowered fees from upwards of 20% down to 3%, enabling vendors to fund multi-partner offers inside the transaction.

Private equity is funding billions more into marketplace development firms such as AppDirect, Mirakl, Vendasta and CloudBlue to enable hundreds of niche marketplaces across different buyers, industries, geographies, customer segments, product areas and business models.

Canalys Chief Analyst, Alastair Edwards:

“The rise of this route to market represents a threat to both resellers and two-tier distribution. But as more complex technologies are consumed via marketplaces, end customers are also turning to trusted partners to help them discover, procure and manage marketplace purchases. The hyperscalers are increasingly recognizing the value of channel partners, allowing them to create customized vendor offers for end-customers, and supporting the flow of channel margins through their marketplaces. Hyperscalers’ cloud marketplaces are becoming a growing force in global IT distribution as a result.”

By 2025, Canalys conservatively forecasts that almost a third of marketplace procurement will be done via channel partners on behalf of their end customers.

Canalys key predictions for 2023 and beyond:

About Canalys:

Canalys is an independent analyst company that strives to guide clients on the future of the technology industry and to think beyond the business models of the past. We deliver smart market insights to IT, channel and service provider professionals around the world. We stake our reputation on the quality of our data, our innovative use of technology and our high level of customer service.

References:

https://canalys.com/newsroom/cloud-marketplace-forecast-2023

https://www.canalys.com/resources/Canalys-outlook-2023-predictions-for-the-technology-industry

https://www.techtarget.com/searchitchannel/definition/cloud-marketplace

Canalys: Global cloud services spending +33% in Q2 2022 to $62.3B

AWS, Microsoft Azure, Google Cloud account for 62% – 66% of cloud spending in 1Q-2022

IDC: Cloud Infrastructure Spending +13.5% YoY in 4Q-2021 to $21.1 billion; Forecast CAGR of 12.6% from 2021-2026

 

Synergy Research: Growth in Hyperscale and Enterprise IT Infrastructure Spending; Telcos Remain in the Doldrums

Hyperscale cloud companies are spending more and more money on Capex IT infrastructure compared with the largest telecommunication companies as overall IT infrastructure spending in 2022 reached $700 billion.  In 2022, hyperscale operators spent roughly $200 billion on Capex IT infrastructure such as network switches and data center hardware and software, representing a 9 percent increase annually and led by Amazon, Google and Microsoft, according to new data from IT market research firm Synergy Research Group.

Comparatively, telecom spending on IT infrastructure by companies like Verizon, AT&T and China Mobile dropped 4 percent in 2022 to approximately $290 billion, Synergy Research Group reported.

Hyperscale operator share of total spending has continued to rise steadily over the last few years, as continued growth in cloud and other digital services drive ever-higher spending levels. Telco spending remains heavily crimped by lack of meaningful growth in their revenue streams. Enterprise spending has also bounced back in the last two years after a soft spell in 2019 and 2020. The main drivers in the enterprise have been the continued long-term growth of hosted and cloud collaboration solutions, increased spending on network security, and a post-pandemic bounce back for both enterprise data centers and switches. In some segments, higher ASPs have also contributed, as cost increases due to supply chain issues are passed on to the customers of tech vendors.

Telcos remain locked in a low-to-no-growth world and their Capex reflects that. For hyperscale operators, the boom in cloud services and continued growth in other digital services is driving ongoing growth in spending.  Telecom companies’ share of Capex IT infrastructure spending was 42 percent in 2022, down from 58 percent share in 2016.  The largest telco spenders on technology infrastructure last year were China Mobile, Deutsche Telekom, Verizon, AT&T, NTT and China Telecom.

In 2022, hyperscale operators accounted for 29 percent share of the total Capex infrastructure spending market, up significantly from 13 percent share in 2016.  Some of the biggest spenders in 2022 were Amazon, Apple, Google, Microsoft and Alibaba.

Overall spending by  both fixed and mobile telco operators has been relatively flat over the past eight years, with annual spending levels for infrastructure hovering around $290 billion each year.  Synergy market data covers total capital expenditure for telco and hyperscale operators mostly around networking and data center hardware and software.

The final market segment covered in Synergy’s new data is enterprise spending on IT infrastructure, which grew 9 percent year over year in 2022 to roughly $210 billion.  The enterprise spend accounted for 29 percent of the total Capex infrastructure market in 2022.

“Enterprise spending has also bounced back a bit in the last two years after a soft spell in 2019 and 2020,” said Dinsdale.  ince 2016, enterprise IT spending has grown by an average of over 6 percent annually. Synergy said to make the market data numbers more comparable, enterprise spending covers data center hardware and software, networking and collaboration tools. It excludes enterprise spending on communication and IT services, devices and business software.

“There has also been something of a post-pandemic bounce back for both enterprise data centers and switches, the former being helped by higher costs due to supply chain issues that are being passed on in the form of higher ASPs [average selling price],” said Dinsdale.  “For equipment and software vendors, the good news is that overall IT infrastructure spending will continue to grow steadily over the next five years,” he added.

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About Synergy Research Group:

Synergy provides quarterly market tracking and segmentation data on IT and Cloud related markets, including vendor revenues by segment and by region. Market shares and forecasts are provided via Synergy’s uniquely designed online database SIA ™, which enables easy access to complex data sets. Synergy’s Competitive Matrix ™ and CustomView ™ take this research capability one step further, enabling our clients to receive on-going quantitative market research that matches their internal, executive view of the market segments they compete in.

Synergy Research Group helps marketing and strategic decision makers around the world via its syndicated market research programs and custom consulting projects. For nearly two decades, Synergy has been a trusted source for quantitative research and market intelligence.

To speak to an analyst or to find out how to receive a copy of a Synergy report, please contact [email protected] or 775-852-3330 extension 101.

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References:

https://www.srgresearch.com/articles/2022-capex-analysis-growth-in-hyperscale-and-enterprise-spending-telco-remains-in-the-doldrums

https://www.crn.com/news/cloud/cloud-provider-spend-on-it-capex-climbs-as-telecom-falls

Synergy Research: public cloud service and infrastructure market hit $126B in 1Q-2022

Synergy Research: Microsoft and Amazon (AWS) Dominate IT Vendor Revenue & Growth; Popularity of Multi-cloud in 2021

Synergy Research: Hyperscale Operator Capex at New Record in Q3-2020

Synergy Research: Strong demand for Colocation with Equinix, Digital Realty and NTT top providers

 

AT&T Highlights: 5G mid-band spectrum, AT&T Fiber, Gigapower joint venture with BlackRock/disaggregation traffic milestone

On AT&T’s earnings call this week, CEO John Stankey provided these highlights:

  1. AT&T network teams have also consistently outpaced our mid-band 5G spectrum rollout objective. In fact, we now reach 150 million mid-band 5G POPs, more than double our initial 2022 year-end target. Our goal remains to deploy our spectrum efficiently and in a manner that supports traffic growth.  In the markets where we have broadly deployed mid-band 5G, 25% of our traffic in these areas already takes advantage of our mid-band spectrum.
  2. We also expect to continue our 5G expansion, reaching more than 200 million people with mid-band 5G by the end of 2023.
  3. AT&T had more than 1.2 million AT&T Fiber net adds last year. The fifth straight year we’ve totaled more than 1 million AT&T Fiber net adds. And after 2.9 million AT&T Fiber net adds over the last 2.5 years, we’ve now reached an inflection point where our fiber subscribers outnumber are non-fiber DSL subscribers. The financial benefits of our fiber focus are also becoming increasingly apparent as full year fiber revenue growth of nearly 29% has led to sustainable revenue and profit growth in our Consumer Wireline business. As we scale our fiber footprint, we also expect to drive margin expansion.
  4. AT&T has the nation’s largest and fastest-growing fiber Internet, and we expect continued healthy subscriber growth as we grow our fiber footprint. As we keep expanding our subscriber base will drive efficiencies in everything we do.  AT&T considers fiber a multiyear opportunity that will transform the way consumers’ and businesses’ growing connectivity needs are met in the ensuing decade and beyond.
  5. AT&T Fiber will be passing 30 million-plus consumer and business locations within our existing wireline footprint by the end of 2025. We finished last year with approximately 24 million fiber locations passed, including businesses, of which more than 22 million locations are sellable, which we define as our ability to serve. We remain on track to reach our target of 30 million plus passed locations by the end of 2025. The simple math would suggest 2 million to 2.5 million consumer and business locations passed annually moving forward. As we previously shared, build targets will vary quarter-to-quarter in any given year based on how the market is evolving.
  6. AT&T’s Gigapower joint venture announcement with a BlackRock infrastructure fund has not yet closed, we’re very excited about the expected benefit. Through this endeavor, Gigapower plans to use a best-in-class operating team to deploy fiber to an initial 1.5 million locations, and I would expect that number to grow over time. This innovative risk-sharing collaboration will allow us to prove out the viability of a different investment thesis that expanding our fiber reach not only benefits our fiber business, but also our mobile penetration rates. But what makes me most enthusiastic about this endeavor is that we believe Gigapower provides us long-term financial flexibility and strategic optionality and what we believe is the definitive access technology for decades to come, all while sustaining near-term financial and shareholder commitments.
  7. AT&T sees huge opportunities to connect people who previously did not have access to best-in-class technologies through broadband stimulus and Broadband Equity, Access, and Deployment (BEAD) funding. As I shared before, we truly believe that connectivity is a bridge to possibility in helping close the digital divide by focusing on access to affordable high-speed Internet is a top priority of AT&T. The intent of these government programs is to provide the necessary funding and support to allow both AT&T and the broader service provider community that means to invest alongside the government at the levels needed to achieve the end state of a better connected America.
  8. Our commitment to fiber is at the core of our strategy. In footprint, we’re on track to deliver our 30 million plus location commitment and we’re building the strategic and financial capabilities to take advantage of further opportunities as they emerge.

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AT&T’s open disaggregated core routing platform was carrying 52% of the network operators traffic at the end of 2022, according to Mike Satterlee, VP of AT&T’s Network Core Infrastructure Services in an interview with SDxCentral.  Satterlee described this platform as the carrier’s “common” or “core backbone,” which supports about 594 petabytes of data traffic per day.  This core backbone is a multi-part architecture spanning from AT&T’s nationwide network switch and cloud provider connections to its consumer- and enterprise-facing broadband and mobility services.

AT&T’s core platform uses Broadcom’s Jericho2 hardware design and Ramon switching chips, the carrier’s distributed disaggregated chassis (DCC) white box router architecture, and Israel based DriveNets Network Cloud (DNOS) software.  It’s fed by AT&T’s edge router platform that sits in regional connection points. It uses the Broadcom silicon, Cisco software platform, and hardware from UfiSpace.

Satterlee said AT&T is running a nearly identical architecture in its core and edge environments, though the edge system runs Cisco’s disaggregates software. Cisco and DriveNets have been active parts of AT&T’s disaggregation process, though DriveNets’ earlier push provided it with more maturity compared to Cisco.

“DriveNets really came in as a disruptor in the space,” Satterlee said. “They don’t sell hardware platforms. They are a software-based company and they were really the first to do this right.”

AT&T began running some of its network backbone on DriveNets core routing software beginning in September 2020. The vendor at that time said it expected to be supporting all of AT&T’s traffic through its system by the end of 2022.

“It’s completely open in the sense that either vendor software could run in either places of the network,” Satterlee explained, adding that this was very helpful during the COVID-19 pandemic. “By having a common platform it’s just a matter of switching out the [network operating system] so we were able to very quickly redirect equipment for different use cases within AT&T and it was just a simple software change controlled by SDN.”

AT&T is targeting 65% of its traffic running on the disaggregated architecture by the end of this year. This will be important to support AT&T’s fiber and 5G push, which was enhanced late last year through a deal the carrier struck with BlackRock to expand its fiber footprint.

John Gibbons, assistant VP for AT&T’s Network Infrastructure Services, added that this also paves the way for the carrier to roll out 800-gigabit support for its backbone.  “We don’t have to swap out the core router to get to 800-gig,” Gibbons said. “We can actually add to the current chassis. … We can add the new box to start growing it out from there. That’s the flexibility. It’s like the building-block model.

“Pretty much everything we spoke about supports our two biggest initiatives, which is growing the AT&T fiber broadband as well as 5G, and it’s all the underpinnings of those services,” Gibbons said.

References:

https://investors.att.com/~/media/Files/A/ATT-IR-V2/financial-reports/quarterly-earnings/2022/4Q22/4q22-earnings-t-usq-transcript-2023-01-25.pdf

https://investors.att.com/~/media/Files/A/ATT-IR-V2/financial-reports/quarterly-earnings/2022/4Q22/ATT_4Q22_Earnings.pdf

https://www.sdxcentral.com/articles/interview/att-disaggregation-drive-hits-traffic-milestone/2023/01/

AT&T and BlackRock’s Gigapower fiber JV may alter the U.S. broadband landscape

AT&T Deploys Dis-Aggregated Core Router White Box with DriveNets Network Cloud software

 

 

 

Dell’Oro: Optical Transport market to hit $17B by 2027; Lumen Technologies 400G wavelength market

According to a recent forecast report by Dell’Oro Group, the Optical Transport equipment demand is forecast to increase at a 3 percent compounded annual growth rate (CAGR) for the next five years, reaching $17 billion by 2027. The cumulative revenue during that five year period is expected to be $81 billion.

“We expect annual growth rates to fluctuate in the near term before stabilizing to a more typical 3 percent growth rate,” said Jimmy Yu, Vice President at Dell’Oro Group. “There is still a large amount of market uncertainty this year due to the economic backdrop—economists are predicting a high chance of a recession in North America and Europe. However, at the same time, most optical systems equipment manufacturers are reporting record levels of order backlog entering the year, and we expect that most of this backlog could convert to revenue when component supply improves this year,” added Yu.

Additional highlights from the Optical Transport 5-Year January 2023 Forecast Report:

  • Optical Transport market expected to increase in 2023 due to improving component supply.
  • WDM Metro market growth rates in next five years are projected to be lower than historic averages due to the growing use of IP-over-DWDM.
  • DWDM Long Haul market is forecast to grow at a five-year CAGR of 5 percent.
  • Coherent wavelength shipments on WDM systems forecast to grow at 11 percent CAGR, reaching 1.2 million annual shipments by 2027.
  • Installation of 400 Gbps wavelengths expected to dominate for most of forecast period.
About the Report

The Dell’Oro Group Optical Transport 5-Year Forecast Report offers a complete overview of the Optical Transport industry with tables covering manufacturers’ revenue, average selling prices, unit shipments, wavelength shipments (by speed up to 1.2+ Tbps).  The report tracks DWDM long haul, WDM metro, multiservice multiplexers, optical switch, Disaggregated WDM, DCI, and ZR Optics.

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Separately, Lumen Technologies is expanding its 400G wavelength network across North America. Lumen said it has now deployed the network in 70 markets. More than 240 data centers have access to Lumen’s 400G Wavelength Services, and the network has over 800 Tbit/s of capacity.

Lumen said it plans to continue its intercity 400G expansion this year, pushing the network “deeper into the metro edge.” The company noted that wavelength services will assist customers in moving workloads to the cloud, and provide private, dedicated connections.

Enterprise customers can also examine network options, plan out their wavelengths and get cost estimates with Lumen’s Topology Viewer.

References:

Optical Transport Equipment Market to Grow at 3 Percent CAGR through 2027, According to Dell’Oro Group

https://www.prnewswire.com/news-releases/lumen-kicks-up-its-400g-offering-across-the-us-301730126.html

High Tech Layoffs Explained: The End of the Free Money Party

Thanks to the Federal Reserve Board’s “free money party” (aka Quantitative Easing/QE and Zero Interest Rate Policy/ZIRP) from 2009-March 2022, investors desperate for returns sent their money to Silicon Valley, which pumped it into a wide range of start-ups that might not have received any funding in other times. Extreme valuations of both public and private companies made it easy to issue stock or take on loans to expand aggressively or to offer sweet deals to potential customers that quickly boosted market share.

“The whole tech industry of the last 15 years was built by cheap money,” said Sam Abuelsamid, principal analyst with Guidehouse Insights. “Now they’re getting hit by a new reality, and they will pay the price.”

Cheap money funded many of the tech acquisitions that were a substitute for internal growth. Two years ago, as the pandemic raged and many office workers were confined to their homes, Salesforce bought the office communications tool Slack for $28 billion, a sum that some analysts thought was way too high. Salesforce borrowed $10 billion to do that deal. This month, Salesforce said it’s laying off 8,000 employees, about 10% of its staff, many of them from Slack.

More than 46,000 workers in U.S.-based tech companies have been laid off in mass job cuts so far in 2023, according to a Crunchbase News tally.  Last year, more than 107,000 jobs were slashed from public and private tech companies  Here are just a few:

  • Amazon is laying off 18,000 office workers and shuttering operations that are not financially viable. More below.
  • Google parent Alphabet is cutting 12,000 jobs.
  • Microsoft, which has been riding high on cloud revenues for years, is eliminating 10,000 jobs.
  • Cisco plans to cut 5% of workforce – approximately 4,100 people will lose their jobs.
  • Facebook parent Meta announced in November that it plans to eliminate 13% of its staff, which amounts to more than 11,000 employees.
  • Shortly after closing his $44 billion purchase of Twitter in late October, new owner Elon Musk cut around 3,700 Twitter employees.
  • IBM said today it would eliminate about 1.5% of its global workforce, which amounts to a “ballpark” figure of 3,900 job cuts.

The easy money era (which started shortly after the Lehman Brothers bankruptcy in September 2008) had been well established when Amazon decided it had mastered e-commerce enough to take on the physical world. Its plans to expand into bookstores was a rumor for years and finally happened in 2015. The media went wild. According to one well-circulated story, the retailer planned to open as many as 400 bookstores.  Instead, the eRetail and cloud computing leader  closed 68 stores last March, including not only bookstores but also pop-ups and so-called four-star stores. It continues to operate its Whole Foods grocery subsidiary, which has 500 U.S. locations, and other food stores. Amazon said in a statement that it was “committed to building great, long-term physical retail experiences and technologies.”

“High rates are painful for almost everyone, but they are particularly painful for Silicon Valley,” said Kairong Xiao, an associate professor of finance at Columbia Business School. “I expect more layoffs and investment cuts unless the Fed reverses its tightening.”

References:

https://www.cnbc.com/2023/01/18/tech-layoffs-microsoft-amazon-meta-others-have-cut-more-than-60000.html

https://news.crunchbase.com/startups/tech-layoffs/

 

 

Update on 5G Stand-Alone (SA) Core Networks

Statista:

The type of 5G cores currently deployed remains dominated with about 75% of non-standalone (NSA) cores, or cores using the preexisting 4G network infrastructure. However, 5G standalone (SA) cores, which require more up-front costs and development yet may provide faster and more scalable connection, are forecast to outstrip NSAs and consist of 24 of the 49 5G core launches in 2022. All but one of the 5G launches announced for 2023 are standalone.

GSA:

Network Operators are increasingly experimenting with and deploying 5G standalone (SA) networks. With a totally new, cloud-based, virtualized, microservices-based core infrastructure, some of the anticipated benefits of introducing 5G SA technologies include faster connection times (lower latency), support for massive numbers of devices, programmable systems enabling faster and more-agile creation of services and network slices, with improved support for management of service-level agreements within those slices, and the advent of voice over New Radio (VoNR) technology. The introduction of 5G SA is expected to facilitate simplification of architectures, improve security and reduce costs.

The 5G SA technology is expected to enable customisation and open up new service and revenue opportunities tailored to enterprise, industrial and government customers.

GSA is tracking the emergence of the 5G SA system, including the availability of chipsets and devices for customers, plus the testing and deployment of 5G SA networks by public mobile network operators as well as private network operators. This report is the latest in an ongoing series summarizing market trends, drawing on data collected in GSA’s various databases covering chipsets, devices, spectrum and networks.

GSA has identified 112 operators in 52 countries and territories worldwide that have been investing in public 5G SA networks in the form of trials, planned or actual deployments . This equates to almost 21.7% of the 515 operators known to be investing in 5G licences, trials or deployments of any type.

At least 32 operators in 21 countries and territories are now understood to have launched public 5G SA networks, two of which have only soft-launched their 5G SA networks. In addition to these, 21 operators have been catalogued as deploying or piloting 5G SA for public networks, and 31 as planning to deploy the technology, showing that launches of 5G SA look set to continue apace. GSA has also recorded 19 operators as being involved in evaluations, tests or trials of 5G SA.

As of the last update in December 2022,  GSA had collated information about 955 organisations known to be deploying LTE or 5G private mobile networks.

Countries and territories with operators identified as investing in public 5G SA networks have been granted a licence suitable for the deployment of a private LTE or 5G network so far. Of those, 391 are known to be using 5G networks (excluding those labelled as 5G-ready) for private mobile network pilots or deployments. Of those, 41 (slightly more than 10% of them) are known to be working with 5G SA already. They include manufacturers, academic organizations, commercial research institutes, construction, communications and IT services, rail and aviation organizations.

Dell’Oro Group:

At the close of 2022, we identified 39 mobile network operators  that have commercially launched 5G SA eMMB networks.

References:

https://www.statista.com/statistics/1330511/5g-core-deployments-worldwide-by-type/

5G Stand-Alone January-2023 Member Report

Mobile Core Network (MCN) growth to slow due to slow roll-out of 5G SA networks

 

ITU-R WP5D: Studies on technical feasibility of IMT in bands above 100 GHz

The development of IMT for 2030 and beyond is expected to enable new use cases and applications with extremely high data rate and low latency, which will benefit from large contiguous bandwidth spectrum resource with around tens of GHz. This suggests the need to consider spectrum in higher frequency ranges above 92 GHz as a complementary of the lower bands.

Report ITU-R M.[IMT.ABOVE 100 GHz] investigates technical feasibility of IMT in bands above 92 GHz including propagation characteristics, potential new enabling IMT technologies, which could be appropriate for operation in these bands, and relevant deployment scenarios.

The Report describes a series of propagation measurement activities carried out by academia and industry aiming at investigating the propagation characteristics in these bands under several different environments (such as outdoor urban and indoor office). It also includes a summary of the measurement activities collected for these bands, noting that bands of interest are more concentrated in 100, 140-160, 220-240, and around 300 GHz. Characteristics of IMT technologies in bands above 92 GHz, including coverage, link budget, mobility, impact of bandwidth and needed capabilities to support new use cases, have been presented in this Report.

To overcome major challenges of operating in bands above 92 GHz such as limited transmission power, the obstructed propagation environment due to high propagation losses and blockage, it describes enabling antenna and semiconductor technologies, material technologies including reconfigurable intelligent surfaces and MIMO and beamforming technologies as potential solutions.

Given the large bandwidth and high attenuation characteristics of bands above 92 GHz, some typical use cases are also envisaged in this Report, such as indoor/outdoor hot spots, integrated sensing and communication, super-sidelink, flexible wireless backhaul and fronthaul.

The radio wave propagation assessment, measurements, technology development and prototyping described in the Report indicate that utilizing the bands above 92 GHz is feasible for studied IMT deployment scenarios, and could be considered for the development of IMT for 2030 and beyond.

This ITU-R report is expected to be completed and approved in 2023.

References:

ITU-R Report in Progress: Use of IMT (likely 5G and 6G) above 100 GHz (even >800 GHz)