Financial analysts have noted that US carrier capex was soft in the first half, a trend that’s somewhat consistent globally, and also that there appears to be a shift of focus toward projects that are perceived as being direct revenue generators. This information backs up our survey results, which have shown that monetization projects are seizing management attention at most operators and that it’s increasingly difficult to fund “upgrades” to networks where no improvement in ROI can be demonstrated.
The challenges of ROI aren’t going to be easy to meet, and nothing demonstrates that more clearly than the fact that very little has been done over the last year to meet them. Operators have had monetization projects underway for almost four years at this point, and they’ve articulated their needs fairly clearly. There has been little in the way of meaningful vendor progress, and we asked our survey operators why they believed that was the case. Here are their top responses.
Number one on the list was that vendors are pursuing their own profit goals without regard for the operator business case. The second issue was that vendors lacked the understanding of the monetization problem and thus had no real idea of how to approach it. The third view was that the problem lies outside the realm of the network; it’s IT’s problem to solve and networks are less relevant. The final view is that the operators themselves are not prepared to plan and drive the projects, which means that they can’t really make the vendors do what’s needed because they don’t know what that is.
This last point is critical because it points out where we are today. Operators need to improve ROI, period. Until they can, capex is going to soften. What’s at issue isn’t this basic truth, but rather the “how”, or maybe more accurately the “who”. Are operators going to drive the projects, or force vendors to step up? What seems to be the deciding factor is the timelines. Most operators say that they have about a year max left on the mandate for their monetization projects, after which they either have to be into a trial or they need to get renewed executive direction and approval. Most would admit privately that they don’t think they can drive at that pace without outside support, so unless vendors step up the mandates will expire. I think that if those mandates DO expire, the OTTs will have won the service race decisively before the projects could mature, and networking will be forever commoditized.