10 Cable, Telco Predictions for 2022: NFV, 5G, SASE, M&A and More
"If we're doing so great, why are we all under so much revenue pressure and margin pressure?" an analyst asked.
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Joe Fizor, solutions engineer at TBI, said partners need to move beyond voice solutions just as they evolved from circuits.
“Now more than ever agents/partners need to evolve beyond being the phone person. To provide end customers value, we all must improve our skills and change the conversation. Technology is not just IT’s problem,” Fizor said.
Kenzy said the carriers are also trying to move beyond basic connectivity. He pointed to the secure access service edge (SASE) as a driver for this change. Previously, midmarket and SMB customers relied on a siloed firewall or security team for their security concerns.
“With the implementation of SASE and moving some of that security out into the cloud, it’s going to allow for carriers to take a piece of that, and it’s going to be easier for customers to support because they’re just buying a subscription. And I think you’re going to see all carriers raced towards ‘SOS’– sell-other-stuff. It’s not just the network that they’re after anymore. It’s the thing right over the network that they want to sell with it. UCaaS, security, SD-WAN. I think they’re going to want the full package, not just the network anymore,” Kenzy said.
Some partners say they expect the MSOs to compete against each other more as their geographical swim lanes blur. Most cable vendors in the channel have embraced one another with the understanding that most of them operate in different regions of the U.S. However, some partners pointed to Comcast’s acquisition of Masergy as an example of an MSO gaining international capabilities. So much for a swim lane.
“In the past the MSOs have always been very united, because their network doesn’t overlap. And truly, they weren’t competitors. They could all just do things together, because it was ‘Sell cable’ not ‘Sell Comcast,'” Kenzy said. “I think we’re going to start to see a little more competition amongst the MSOs. And I’m interested to see what happens with the ‘cable brethren,’ if you will. Because they truly are becoming competitors, where in the past they were selling similar products but in different markets.”
Jason Ness, CEO of CommandLink, said bandwidth diversity is growing in importance as customers move from MPLS to SD-WAN. However, customers are facing vendor sprawl.
“For distributed enterprises, this means a mess of carriers, projects, invoices, and distractions from their core business. For the agent, this spawl work erodes their profitability,” Ness said. “Customers and partners will look to bandwidth platform providers that provide differentiated experiences and successful outcomes over single-source mega-carriers and digital dinosaur resellers. We saw this happen in 2021 and we know the velocity will increase in 2022.”
Washburn recently wrote about how the global chip shortage might lead to more enterprises using NFV. He said that although no single vendor is facing disastrous shortages, he said multiple vendors have disclosed lengthy equipment backlogs.
The solution to this unpredictability could be NFV.
“If Lanner doesn’t have a box in time because it’s not able to source all the right chipsets, then Dell’s got something, and if Dell doesn’t have something then someone else is going to have something, and as long as you can get a white box and load some software on it, then you can find a replacement for the ISR that you’re having trouble finding,” Washburn said.
That doesn’t mean NFV will flood the market.
“[NFV] is a Swiss Army Knife, and it’s like suddenly finding another extension of the Swiss Army Knife,” he said.
Kenzy’s CableFinder has seen wide adoption by the solutions brokerages and distributors like TBI and Pax8. Kenzy said partners need tools like CableFinder to automate the process of selling cable. That’s due in part to price compression on circuits.
“Because those coax circuits are getting cheaper and cheaper by the day, making it less and less profitable for agents and master agents to do business in that space,” Kenzy said. “As these things go lower and lower in cost, we have to transactionalize the selling process and make it easier for people to source and sell cable. Because there’s not as much margin as there used to be.”
Enterprises will come to view 5G security as a larger reality than ever, according to Donna Johnson, Cradlepoint‘s vice president of product and solutions marketing.
“As threat actors leverage new and sophisticated tactics, 5G can actually provide enhanced security and reliability for businesses today,” Johnson said. “CISOs are beginning to evaluate these technologies as viable solutions in the war against threats.”
Washburn said more business might turn to 5G failover offerings to support their remote workers in 2022.
That’s not to say that it will prove profitable for the providers, but Washburn said the value equation makes sense.
“There’s some skepticism as the extent to which enterprises are willing to foot the bill for corporate-liable broadband,” he said. “It seems to me that for those high value, always-connected workers, it’s a foregone conclusion that this is an easy value-add.”
Washburn said that although mobile will experience major B2B growth in 2022, it faces limitations when it comes to fixed network replacement.
“Nothing can beat fiber going directly into a facility. 5G can’t do it. And that’s just because you have basically infinite spectrum on fiber, and you have limited spectrum over the airwaves,” Washburn said.
Johnson said the intersection of network slicing, 5G and SD-WAN raise the question of who should be providing the traffic steering, QoS and segmentation.
“The enterprise with SD-WAN? The carrier with network slicing? What about both? WAN models support a jointly delivered SD-WAN and network slicing service which could change the future of wide-area networking,” she said.
Fizor pointed to Comcast’s acquisition of Masergy and Cox’s acquisition of Rapidscale as examples of cablecos getting deeper into services through M&A.
“The cablecos have struggled to expand their portfolios into emerging technologies and managed services, which has led to acquisitions – a ‘can’t beat’em, buy’em’ mentality. In 2022, connectivity costs will continue to shrink, forcing vendors to expand further into the MSP space. Vendors will have to find ways to break the mindsets of channel partners and build a new reputation as vendors who can be serious challengers in the MSP/MSSP space,” Fizor said.
Fizor pointed to Comcast’s acquisition of Masergy and Cox’s acquisition of Rapidscale as examples of cablecos getting deeper into services through M&A.
“The cablecos have struggled to expand their portfolios into emerging technologies and managed services, which has led to acquisitions – a ‘can’t beat’em, buy’em’ mentality. In 2022, connectivity costs will continue to shrink, forcing vendors to expand further into the MSP space. Vendors will have to find ways to break the mindsets of channel partners and build a new reputation as vendors who can be serious challengers in the MSP/MSSP space,” Fizor said.
Carriers and channel partners will evolve the way they build and sell connectivity solutions in the new year.
2021 gave the telecom and cableco channels plenty of news, as well as questions. Telcos and cloud hyperscalers partnered closer than ever as 5G came of age, landing consistent enterprise use cases. Lumen signaled a move out of the ILEC space to focus on digital services. Moreover, the commoditization of broadband continued to present challenges for partners.
Jed Kenzy, co-founder of Innovative Business Solutions and CableFinder, said the pandemic validated the importance of connectivity. Demand rose and continues to rise for good bandwidth.
Innovative Business Solutions/CableFinder’s Jed Kenzy
“As we tend to get on less airplanes, we tend to get on more video calls. And the more video calls that you have more people on, more consistent, symmetrical bandwidth is important,” Kenzy told Channel Futures earlier this year.
But despite overwhelming demand, the connectivity market is struggling to find profitability. Brian Washburn, Omdia‘s research director of service provider enterprise and wholesale, said the rapid influx of new traffic and solutions is only helping the industry keep pace.
Omdia’s Brian Washburn
“If we’re doing so great, why are we all under so much revenue pressure and margin pressure? We’re seeing all this new opportunity, disruption and changes that are driving communications demand, and then we look at the revenues. It’s like, ‘Where’s all the money we’re supposed to be getting for this? Where’s all the high margin we deserve for the changes that are coming into our industry?’ And in the end, this is all just work the operators continue to need to do to tread water,” Washburn said.
Scroll through the 10 images above to see 10 connectivity predictions for 2022.
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