More telecommunication operators in Asia and Europe are outsourcing network management as they place more emphasis on the provision of services to customers, said a Nokia Siemens Networks (NSN) top executive.
Michael Murphy, head of technology for Asia-Pacific at NSN, said the growing complexity of carrier business models is causing more operators to outsource their networks--a trend which opens up new opportunities for network infrastructure players such NSN.
One contributing factor is service providers offering both fixed and mobile broadband at increasingly low tariffs. The effect of this "commoditization" of connectivity offerings is pushing players to offer commodity services to differentiate themselves, he said.
Furthermore, the worlds of telcos and Internet players are converging, as vendors from both sides of the fence are encroaching upon each other's services, Murphy noted.
"Voice and SMS are commodity, red oceans...and now with VoIP (voice over Internet Protocol), the voice market is no longer a captive market for [phone] operators. It is an open one," he said.
As a result, telcos need to move beyond providing traditional phone services as markets get saturated and Internet companies move in, he said. Skype, for example, clocked 40 billion voice minutes last year--revenue that would otherwise have gone to carriers, he added.
"But it's a two-way street, and telcos can do the same thing," Murphy said, offering the example of Australian carrier, Telstra, which bought and is running 11 islands in online world, Second Life, to serve content.
"Operators do not compete well in the Internet [space] to date," said Murphy, on the online world posing unfamiliar challenges for many operators. It is a volatile and unpredictable market, with short consumer attention spans plaguing the "guaranteed" success of a content portal, he said.
Nonetheless, various operator APIs (application programming interface) will start to appear for user-generated applications, as telcos open up to Web 2.0 trends, he added.
As a result of this "services explosion", players providing the underlying connectivity stand to benefit from operators outsourcing network functions.
Kamlesh Patel, head of strategy and business development for Asia-Pacific at NSN, said this trend is "beginning to pick up" now because of the "growing complexity of business" where carriers have to think beyond traditional services.
"With time, providing content services will become more strategic than [managing] network outages," he said.