NaaS Market Presents Golden Opportunity for Telcos

By Greg Tavarez, TMCnet Editor  |  July 11, 2022

Enterprises, to support digital transformation today, need solutions that offer cloud-native agility, multi-cloud accessibility and services that can fluctuate. As a result, there is increased interest in the network-as-a-service market.

ABI Research expects the NaaS market to reach over $150 billion by 2030, at which time, about 90% of enterprises will have migrated at least one-quarter of their global network infrastructure to be consumed within a NaaS model.

Telecoms companies, seeing a decline in revenue from connectivity, are presented with an opportunity to dominate the NaaS market. However, as ABI Research (News - Alert) Distribute and Edge Computing Analyst Reece Hayden says the investment strategy, business, operational and go-to-market models of telcos are not quite ready to deliver a competitive NaaS solution.

“The market is immature and highly fragmented, but telco market revenue will exceed $75 billion by 2030 if they act now and transform technology, culture and structure to better align with the requirements of the NaaS market,” said Hayden.

There are three areas telcos need to look at to transform as they face competition from interconnection providers and infrastructure providers.

Telcos must first virtualize network infrastructure to deliver cloud-native services and continue to invest to integrate automation throughout network services. This includes paying attention to 5G slice-as-a-service and other value-add services that are critical to monetization.

Telecom operators must then restructure business and operating models with a look toward openness and partnerships across the industry and reduce internal fragmentation to drive cross-business service continuity.

Telcos must also look to develop a problem-solving culture and realign their go-to-market strategy to better position themselves within the NaaS market. This step will involve developing vertical and enterprise size-specific sales strategies and establishing consultative processes that educate enterprises to bridge the gap between awareness and understanding.

The outlook in the NaaS market is a positive for telcos with the rising demand from startups and small- and medium-sized enterprises. 

However, Hayden also said that the uphill battle will be expensive and crucial in the long-term, but if the opportunity is missed from telcos, interconnection providers and hyperscalers will be waiting to catch the ball that was dropped.

Edited by Erik Linask
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