According to Technology Business Research Inc.’s latest Global Telecom Infrastructure Services (TIS) Addressable Market Forecast (AMF), covering the full year 2013, the TIS market grew 2% year-to-year to $96.9 billion in 2013, driven by LTE deployments in the U.S., but growth will slow to just above 1% going forward. Chris Antlitz, a senior analyst in TBR’s Networking and Mobility Practice, said, “The TIS market will be driven by services that enable LTE deployment in the early years of the forecast, but will decline starting in 2016. Professional services will then pick up the slack as operators shift focus to implementing new business models that monetize their broadband networks and reducing capex and opex spend by employing SDN and NFV.”
After some project delays in China and CALA in 2013, large LTE deployments in those markets will ramp up in 2014, peak in 2015 and be succeeded by deployments in Europe and India in 2016. All regions will have invested in LTE by 2016, initially bringing coverage to cities and then slowly expanding outward to rural areas. Network densification (using small cells, Wi-Fi and new bandwidth technologies such as carrier aggregation) and enhanced backhaul initiatives will supplement these LTE deployments as operators look for ways to cost-effectively boost network speeds and coverage. These broadband deployments will underpin the deployment and maintenance segments, but will taper off in the later years of the forecast.
Professional services will be the fastest-growing TIS segment through the forecast period, growing at a 3% CAGR from 2013 to 2018, driven by the need for integration services, security and SDN/NFV implementations. New business model development and OSS/BSS transformation will also drive spend, as they will help operators boost revenue.
Product-attached services will come under pressure in the later years of the forecast as LTE volumes slow and SDN/NFV take root. These new technologies hasten the commoditization and standardization of hardware and processes and will affect how much vendors can charge for deployment and maintenance services in the future. Another factor impacting the maintenance market in the later years of the forecast is the decommissioning of legacy equipment, which will accelerate as operators go all in on LTE.
The managed services market is slowing as new large-scale deals are becoming more difficult to find. Still, these services will remain in high demand, particularly among Tier 2 and 3 operators as they pursue drastic opex reduction methods to remain competitive with increasingly powerful Tier 1 rivals.