Europe to lead telco spending says Infonetics

Expect a slowdown in the Americas, but for a change, Europe will be in the telecom capex driver's seat this year, says Infonetics Research. That’s the perhaps surprising conclusion of the market research firm’s 44-page “Global Telecom and Datacom Market Trends and Drivers” report, which analyzes global and regional market trends and conditions affecting service providers, enterprises, and subscribers, and the interaction with the global economy.

Expect a slowdown in the Americas, but for a change, Europe will be in the telecom capex driver's seat this year, says Infonetics Research. That’s the perhaps surprising conclusion of the market research firm’s 44-page "Global Telecom and Datacom Market Trends and Drivers" report, which analyzes global and regional market trends and conditions affecting service providers, enterprises, and subscribers, and the interaction with the global economy.

"We're forecasting global carrier capex to rise 4%, with EMEA as the growth engine despite unabated low-single-digit revenue declines all across Europe," said Stéphane Téral, principal analyst for mobile infrastructure and carrier economics at Infonetics Research. "After waiting for so many years to upgrade their networks, Europe's 'Big 5' -- Deutsche Telekom, Orange, Telecom Italia, Telefónica, and Vodafone -- have decided it's time to take the plunge."

Co-author of the report Matthias Machowinski, Infonetics' directing analyst for enterprise networks, adds, "Economic expansion in mature economies and falling unemployment in Europe is driving stronger growth in enterprise telecom and datacom expenditures this year. We expect the network infrastructure segment to be the main beneficiary of growing investments, followed by security. The communication segment will likely have another challenging year, as companies evaluate their deployment strategy going forward."

The International Monetary Fund (IMF) anticipates the world economy will expand 3.6% in 2014 (+0.06 from 2013) amid recoveries in the UK and Germany and slowing growth in Japan, Russia, Brazil, and South Africa.

Mobile service revenue remains the main growth engine for telecom and datacom worldwide, led by the unabated rise of mobile broadband, according to Infonetics.

To avoid falling into the role of pipe provider, many service providers are deploying or weighing new architectural options such as caching/content delivery networks, distributed BRAS/BNG, next-generation central offices, distributed mini data centers, and video optimization.

Software-defined networks (SDN) and network functions virtualization (NFV) have the attention of nearly all service providers, who are on the long road to widespread deployments – a topic that has been closely examined by Infonetics in several other recent reports (see "SDN and NFV enter carrier trial phase says Infonetics" and "SDN not playing key role in carriers' optical decisions says Infonetics").

As a result, big data is becoming more manageable, the market research firm says: Operators are leveraging subscriber and network intelligence to support marketing and loyalty strategies, churn management, and automation/optimization of networks using SDN and NFV.

The cloud, mobility, BYOD (bring your own device), and virtualization are the top trends driving enterprise networking and communication technology spending, with North America leading the way in these high-end uses.

Published twice annually, Infonetics' market drivers report assesses the state of the telecom industry, including spending trends; subscriber forecasts; macroeconomic drivers; and key economic statistics (e.g., unemployment, OECD indicators, GDP growth).

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