Seven Telco Industry Predictions for 2015
In addition to the end of the year bringing the holidays and New Year’s resolutions, it also brings some perspective on the passing year, as we separate the hype from what really happened. All of which, surprisingly, doesn’t discourage us from dusting off our crystal balls and boldly making predictions for the year ahead. In a telecommunications industry that rarely lacks for change, I see some interesting changes ahead in 2015, which I’ve summarized in seven, predictions.
Prediction #1: SIP trunking continues to grow. This is a safe prediction, but SIP trunking is an area that doesn’t get enough attention. Right now, about one in five U.S.-based enterprises uses SIP trunking (the number is even lower in Europe and Latin America). That means there is a huge, untapped market for SIP trunking services, especially for enterprises that are looking for ways to unify communications and cut costs (i.e., just about every enterprise). I predict that SIP trunking gets more of the attention it deserves in 2015.
Prediction #2: UC as a Service takes off. Most early adopters of Unified Communications (UC) deployed on-premise solutions, but early adopters tend to be technologically savvy like that. As the middle adopters move to UC, they’ll be more likely to deploy hosted solutions in the Cloud as they look to accelerate and integrate these solutions in their business. Managed service providers (MSPs) are anticipating this trend as are vendors like Microsoft, Cisco and BroadSoft, each of whom currently offers Cloud-based UC solutions. Microsoft’s decision to add enterprise voice to Office 365 especially bears watching.
Prediction #3: The video tsunami arrives. Connected to the rapid acceleration of UCaaS, I believe 2015 will see the long-anticipated explosion of video in the enterprise. UC-based apps make video as simple as a phone call, which will in turn put pressure on corporate networks to expand their capacity. Unlike VoIP, the resource-intensive and unpredictable nature of video means it is not economically feasible for enterprises to build out network capacity to handle peak demands. Instead, enterprises will need to look closely at alternative solutions around policy/routing intelligence and software-defined networking. Using policy decisions to define resource allocation down to the individual user level will help ensure that enterprise networks aren’t brought to their knees by the high demands of video communications.
Prediction #4: Infrastructure as a Service (IaaS) gains traction among enterprises. As enterprise network requirements become more complex, I expect the IaaS model to become the new standard for communications networks. With enterprises moving to hosted business apps, hosted infrastructure is a logical next step for them. As this trend plays out over the course of 2015, more enterprises will opt to simply install a layer-two switch at their enterprise edge and move their remaining infrastructure—including firewalls, routers and even session border controllers (SBCs)—into a hosted environment managed by their service provider.
Prediction #5: Network Function Virtualization becomes the reality for more telco operators. One area which I expect to go mainstream for telcos in 2015 is Network Function Virtualization (NFV). Just as server virtualization has become the standard for enterprise data centers, NFV promises to be just as important for telecommunications networks. The majority of large service providers have already begun building their NFV architecture and strategy with the goal of migrating network functions off purpose-built hardware. This migration will initially focus on software applications that do not have strict real-time requirements such as billing and management applications, and then move closer to the network edge where real-time performance becomes critical. As the NFV architecture is fine-tuned, expect to see firewalls and caching servers become virtualized, followed by real-time communications, with SBCs and application servers becoming part of the NFV story.
Prediction #6: Software-Defined Networking follows NFV for a virtual one-two punch. Hot on the heels of NFV will be the telco migration toward software-defined networking (SDN). Just as virtualized hypervisors allow businesses to uncouple their software from their hardware, SDN does the same thing for routers and switches while making the network highly programmable. With SDN, service providers can help enterprises provision more capacity on demand and define policy so that they can intelligently ramp and deploy unified communications right to the edge of their network’s capacity. Service providers will leverage SDN to support customers in a way that is more nimble and helps them address the potentially disruptive flood of video demand.
Prediction #7: WebRTC goes from generating interest to generating real revenue. The “arrival” of WebRTC has been a perennial prediction for the last few years, but I believe 2015 is the year that service providers figure out how to turn the hype into hope for bankable, long-term revenue. Look for business-to-consumer (B2C) apps initially as enterprises find ways to improve customer service and deliver rich, real-time experiences without being locked into technology/device platforms.
One prediction we can all agree on is that telco service providers will continue to looks for ways to reduce costs and discover new revenue-generating services in 2015. Some things, it seems, never change.
