2023 will be a year of growth within the communication service provider (CSP) market according to new data from A10 Networks’ latest research. Its biannual Global Communication Service Provider Insights report was undertaken to understand the priorities, expectations, and perspectives of senior IT professionals in CSPs across the globe by interviewing 2,750 senior IT professionals in a variety of roles across 21 countries.
We found that despite supply chain struggles and economic uncertainties, providers are expecting consistent growth in traffic which they will match by investing in improved security and coverage.
This growth is the driving cause of planned reforms, but it is not the only factor encouraging CSPs to make changes. The need to close the digital divide by expanding coverage to previously underserved communities, to counter increasingly sophisticated cyberattacks by enhancing cybersecurity measures, and to keep up with the ever-changing global compliance and regulations landscape are catalysts for current and future investments.
Robust Market Growth
Although there are several key themes from the report, the central one, and the one driving other investments and reforms, is the expectation of demand. Ninety-nine percent of the CSPs surveyed expect to see growth in traffic volumes in the coming two to three years, with almost half (48%) expecting traffic to rise by between 50 and 75 percent, while one in five expects to see growth of more than 75 percent.
The pandemic surge in traffic that stretched networks to their limits may have been a one-off, but coming growth will be more consistent and sustained. Confidence is now the main driver of reform according to those surveyed, which in turn will lead to vital improvements in network security.
This optimism contrasts with our 2021 CSP report, which illustrated how the pandemic led to economic insecurity and therefore a pause in investments and expansions – even in the face of surging demand.
Overcoming Connection Inequality
Providing a secure and reliable connection to hard-to-reach or previously economically unviable areas is crucial to reducing inequality and ensuring future growth – and so is a key area of focus for CSPs in 2023.
The survey showed that 69 percent of respondents aim to expand their networks to unserved and underserved communities. Among these, half are expecting to achieve an uplift of more than 10 percent on their current subscriber base and 19 percent are expanding for an uplift of more than 50 percent.
Improving Security
In the last survey, we found that much of 2021’s investment focused on basic cyber hygiene such as upgrading firewalls. This year, however, respondents were aiming for a more mature, multi-layered, and defense-in-depth approach – where DDoS detection and monitoring is a much higher priority and is complemented with security policy automation as well as ransomware and malware protection.
DDoS detection and monitoring are now a priority for 27 percent, while 26 percent are prioritising investment in ransomware and malware protection services. The same percentage are looking to focus on security policy automation and the simplification and integration of disparate point solutions.
CSPs must continue to improve their network security if they want to keep up with the growing number and sophistication of cyberattacks. With threats evolving rapidly to target the ever-widening attack surface and lengthening digital supply chains, CSPs and security vendors must be proactive, flexible, and nimble.
Cloud Migration Success
As customers continue to transform to digital businesses and migrate to the cloud, CSPs can now assess the impact this is having on their business. For almost two-thirds of respondents to the survey (63%), it has been positive.
One-quarter have seen direct revenue growth, one in five has evolved to offer public cloud and managed data centre services, and 19 percent have differentiated their services so that they stay relevant and match changing customer demand. Inversely, only 16 percent of respondents said they had lost revenue because of this shift to cloud-based data storage.
Cloud is affecting CSP buying decisions, too. A cloud-native form factor was the top purchasing criterion for new network equipment, while integration with existing networks and systems was also high on the list.
Rising demand will put increasing pressure on CSPs to overcome IP address scarcity by making the switch to IPv6, which will exponentially increase the number of addresses for sites on the web. However, the study showed that only 30 percent expect to successfully achieve this in the next two to three years. Instead, more than one-third are adopting a strategy of carefully managing their IPv4 pools and gradually transitioning to IPv6, while 34 percent aim to run the two in parallel.
Industry Pressures Remain
Despite general optimism around growth, the global CSP community is still dealing with a significant number of challenges – namely the fallout from the pandemic as well as the invasion of Ukraine. The first priority for those surveyed were the number of vulnerable application programming interfaces (APIs) left exposed by the use of AI, open source, and application modernisation more generally.
The second most common concern was around supply chains with more than a third of respondents saying that issues have meant that they couldn’t find the staff to meet their growth expectations. Challenge number-three was the constant struggle to provide a quality service and avoid outages.
What Next?
The research shows that CSPs are at a crucial point as they aim to capitalize on demand and seize opportunities to grow and diversify. To realize their full potential, service providers need to scale their networks while ensuring they are increasingly secure.
CSPs should work with security partners to scale and transform their networks safely. This process should include the overhaul of legacy systems with the use of AI, machine learning, and threat intelligence capabilities that match the rapidly evolving and ever numerous cyberthreats present in the market.
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