Last week Dell’Oro Group reported on the telecom CAPEX stating that “telecom operators around the world invested heavily in their fiber and LTE networks in 1H14 as the transformation from voice-centric to data-centric drivers continued.” The research firm says that 2014 will see an increase in spending but a decline is projected for 2015.
CAPEX is precious. It enables new technology to be deployed in a service provider network and can jump-start new solutions and revenue-producing services. In order for CAPEX to be spent, it needs high ROI justification. That’s why it’s being spent on broadband, LTE, WiFi, IoT, and other high-impact, high-growth potential technologies.
For many operators building a new voice network simply makes no business sense: it’s low impact, high risk. New build-outs are CAPEX and OPEX intensive. They involve substantial upfront equipment investments with uncertain paybacks. And they require extensive network engineering, vendor qualification, and system integration work. Large capital outlays, high ongoing operations expenses, and nominal revenue contributions translate to long payback periods and poor investment returns. Unpredictable market dynamics—evolving subscriber preferences and unforeseen competitive threats—add risk and uncertainty. Worst of all, instead of yielding a competitive advantage, investing in a next-gen voice network substantially diverts time, capital investments, and organizational resources (engineering, operations) from strategic business initiatives. But at the same time, service providers don’t want to abandon voice.
This is where cloud sourcing VoIP and UCaaS can help service providers. Instead of spending that valuable CAPEX to rebuild a voice network, telcos, ISPs, cable MSOs can deliver high-quality, feature-rich voice to residential and business customers with an all-SaaS success-based model. The cloud voice platform is specifically conceived to help service providers reduce the cost of ownership, provide better service agility and build a high-margin, low-risk business case for VoIP.
With that projected tightening of capital budgets comes in 2015, resources can be diverted from VoIP and NFV build-outs and into other projects; yet service providers can still leverage the latest generation voice network in the cloud.
Read more in our free whitepaper: Service Provider VoIP: Next Gen is the Cloud.