Internet Protocol and over the top software attacks current telecom service provider revenues and profit margins on an ever-wider basis.
Content encryption has eliminated nearly 60 percent of the video and audio optimization market in 2015, according to ABI Research. That eliminates a major opportunity for Internet service providers to provide “quality of service” or quality-related management of those streams.
“Moving forward, telecom operators and vendors need to make significant and strategic operational moves to protect network performance and create a competitive advantage with streaming media entertainment,” says Joe Hoffman, ABI Research VP.
It is going to get worse. “We expect 85 percent of traffic to be encrypted,” said Hoffman.
“With encryption here to stay, operators need new tools to manage mobile broadband traffic,” says Joe Hoffman, Managing Director and Vice President at ABI Research.
Those new methods will be designed to work even with encrypted media streams.
Also, consider the revenue impact of software-defined wide area network services.
SD-WAN allows the creation of an over the top intelligent network infrastructure that aggregates transport from any number of providers or physical connections.
Enterprises can run their own software-defined wide area networks, using that control to
Apply least-cost-routing more easily, or highest-quality-routing.
That enables high-margin MPLS connections to be replaced with commodity Internet connectivity , to some significant extent.
Software-defined WAN capabilities also reduces enterprise customer loyalty or provider lock-in by establishing an “abstraction” layer above the network, controlled by in-house IT teams or competing managed service providers.
So the potential threat is a reduction in MPLS & other WAN services revenues, as well as lower potential united communications “as a service” or managed security services as well.