The Telecom Infrastructure Services (TIS) market in North America will decline from $30.4 billion in 2015 to $27.4 billion in 2021 at a CAGR of -1.7 percent, according to the latest market study by Technology Business Research (TBR). Telecom network operators will shift their focus to software-mediated networks, specifically orchestration, automation, SDN and NFV.
Fifth generation (5G) networks will begin to be deployed commercially in 2020, but ongoing rollouts will be use case-driven rather than a nationwide build-out like what occurred in previous generations of wireless technologies, providing little relief to the market.
Software-Defined Networking Momentum
Decommissioning of legacy infrastructure -- and the implementation of NFV and SDN -- will accelerate the decline in the maintenance market. Telecom network operators are decommissioning legacy infrastructure, with Tier 1 service providers leading the charge to an all-IP environment.
"The deployment and maintenance services that make up the product-attached services market will bear the brunt of the decline in the overall TIS market, as these areas will suffer the most during the transition from LTE coverage to densification deployments, the decommissioning of legacy infrastructure and the use of open-source software across commoditized hardware," said Chris Antlitz, senior analyst at TBR.
Network operator transformation will support growth in the professional services market, according to the TBR assessment. Ongoing adoption of open source for SDN, NFV, cloud and IoT will drive growth in the market. Software-mediated transformation requires a full range of professional services from savvy vendors with skilled and experienced technical staff.
Telecom Managed Services Market Transition
In contrast, the managed services market will decline during the forecast period for several reasons. First, network operators are accelerating their transition away from legacy technologies. Second, they are moving more functions onto a cloud platform and leveraging XaaS solutions to reduce costs and increase operational flexibility and scalability.
And third, they are squeezing the telecom managed service vendors for price reductions when renewals are up for renegotiation. For telecom vendors, the North America TIS market remains dynamic and diversified, with no single vendor leading in more than one services category.
All the leading TIS suppliers that are heavily exposed to telecom service provider hardware-related services saw their revenue decline in 2015, while software-centric and professional services firms grew market share.
This trend will continue through the forecast period, as demand for product-attached services declines.