Report: Telco cloud revenue from 5G 2020 forecast turns bleak

The current bleak global economic infrastructure may have short- and long-term impacts on software-centric networks, according to the latest white paper of ABI Research, a tech market advisory firm. Even if demand for cloud-based services may experience a surge due to the new work-from-home arrangements, it is no guarantee that revenue will increase.

ABI Research said the telco cloud revenue from 5G core deployments will fall short of the 2020 forecast of $9 billion by 25%.

Companies cannot operate as governments impose lockdowns to curb the spread of the virus that causes COVID-19. The sector that would be hardest hit will be businesses at the macro level as it may have a causal effect on the demand side (enterprise verticals).

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“The sales in the enterprise domain are expected to fuel innovation and diffusion of 5G core rollouts and new telco digital offerings,” according to the ABI Research’s media release. “Without a doubt, telco cloud revenue from 5G core deployments will fall between 20%-30% short of the forecasted $9 billion in 2020. The investment shortfall in modernizing telco networks may well be somewhere in the range of $2 to $3 billion in the short term.”

5G standalone

“The 5G market was growing faster than anticipated, with 2020 expected be the starting point for 5G Standalone (SA) core commercial deployments in Communications Service Providers’ (CSPs) networks,” said Don Alusha, senior analyst at ABI Research. “But that expectation may take a little longer to materialize. That is due, in part, to the fact that COVID-19 will almost certainly derail further trials and testing to verify the processing performance and stability of 5G SA networks. In the short term, the industry may have no choice but to protect existing consumer revenue. CSPs will accompany that defensive approach with small-scale projects that aim to seek operational efficiencies without necessarily committing to new investments for 5G SA networks and intelligent software.”

While the world is in a standstill, the production processes of some major economies will give the industry to assess the situation and change its course as health experts that the world is in this pandemic for quite a long haul.

“With 5G SA core, fiber-optic network, and dynamic new software, it is now possible for the industry to usher in a new era of prosperity, innovation, and collaboration for enterprises, communities, and individuals,” the report said.

There is no doubt that impending 5G SA core network deployments and cloud-native software give the industry an edge over competing forces. But sooner or later, those at the upper echelons of both the supply and demand side of telecoms will almost certainly realize that they need to preserve the current order of doing business if they are to sustain that edge.