Page 27 - Telecom Reseller March-April 2015

December/January 2015 Telecom Reseller 27

Ovum forecasts CSP capex over 2014–19 period will surpass US$2tn

Revenue growth rates for communications its importance to future network operations. service/feature deployment.
Alibaba, and many others – to continue
service providers (CSPs) remain modest, but And then there are sotware-deined networks Walker concludes, “While CSP capex is
growing over the next few years. hese
CSPs will continue to invest heavily in their (SDN) and network functions virtualization tightly constrained, adjacent markets are providers represent an attractive growth
networks, expects Ovum. With global CSP (NFV).
starting to invest heavily in networks. Internet market opportunity for vendors selling
capital expenditures (capex) forecasted to total While not necessarily ofering immediate content provider (ICP) capex will reach nearly technology.” n
more than US$2tn from 2014–19, the global capex savings, one clear aim of CSP $57bn in 2014, up from $18.3bn ive years ago.
More at www.ovum.com
analyst irm warns CSPs must continue to do proponents of SDN/NFV is to lower both We expect network capex from the ICPs
less with more, leveraging new technologies, operations and capital costs, along with new
– which include Google, Apple, Facebook,
network designs, vendors, and operating
models.
In a new report,* Ovum reveals 2014 capex will likely be US$346bn, with ixed CSPs
accounting for 41% of the total and mobile the
remainder.
Ovum expects lat capex in 2015 due to
mobile growing roughly the same amount as
ixed capex declines. he years 2016 and 2017
are likely to be weak capex-wise, for both the
ixed and mobile segments.
We expect a modest recovery in 2018–19 as
a new wave of ixed broadband, ixed cloud/
data center, and mobile broadband upgrades
start rolling out in a number of large markets.
Report author and principal network
infrastructure analyst Matt Walker says: “CSPs
have invested fairly heavily in 2013–14 across
both ixed and mobile networks to support
broadband rollouts.
“But this capacity will be absorbed, and
technology and feature upgrades will drive
capex back up to about $354bn by 2019. Over the entire 2014–19 forecast period, CSP capex
will total over $2tn.”
As CSPs have navigated the tight revenue
climate, they have been faced with one
constant pressure: the need to continue
investing in their networks. he CSP business
is a capital-intensive one. Technology doesn’t
stay stagnant. Users continue to put more
pressure on the networks.
New players from adjacent markets threaten
to steal customers and revenue streams if CSPs
can’t keep up. Hence CSPs have continued to
spend heavily on networks in the last ive years,
plowing an average of nearly 18% of revenues
per year into capex. Going forward, we expect
CSPs’ capital intensity (capex/revenue ratio) to
fall slightly, to roughly 17.4% on average from
2014–19.
Walker notes that CSPs have faced a tough revenue climate for several years now, and
learned to keep a lid on capex through a
number of tactics. Network sharing is one.
“We’ve seen rapid growth in network-
sharing agreements over the last year or two,
as discussed in the November 2014 report,
‘Network and tower sharing projects reach 100
by end 3Q14, up 32% from last year.’
“Even China has joined the party; mobile
revenue growth has slowed rapidly there over
the last few quarters, and the new tower-
sharing venture is meant to help operators
lower their cost base and increase eiciency.”
CSPs are also adding sotware intelligence
into their networks, in many ways. Mobile
operators have been deploying sotware-
deined radios for many years, which may
lower the initial capex requirements of radio
upgrades.
Sotware-enabled features also appear in
most other parts of the network, even in
optical transmission and ixed broadband
equipment.
Vendors typically spend 50–70% or more of
product R&D on sotware, in fact, revealing

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