Telecom Cloud Market

Market Overview

The global telecom cloud market size was valued at USD 32.3 billion in 2023 and is projected to reach a value of USD 259.2 billion by 2032, registering a CAGR of 26.0% during the forecast period (2024-2032). The demand for SDN and NFV-based cloud-native solutions to replace old networking methods drives the telecom cloud market market growth.

Telecom Cloud refers to using cloud computing technology in the telecom business to provide a wide range of services and solutions. Integrating cloud infrastructure with telecommunications networks allows operators to expand their capabilities, increase efficiency, and provide innovative services to their clients.

The shift to cloud computing helps businesses to use networking resources more efficiently. The telecom cloud market share will help industries using cloud computing optimize information technology. Despite the pandemic, the major driving forces could maintain market value. People stayed at home during the lockdown, and enterprises decided to allow remote work, resulting in increased demand for telecom cloud services. The telecom cloud industry will cause the global economy to grow enormously because it can generate demand even in critical times.

Highlights

• The solution generates the highest revenue share by type.
• Billing and Provisioning accounts for the largest market share based on application.
• Software-as-a-service influenced the market growth.
• BFSI is the major end-user of the market

Market Dynamics

Global Telecom Cloud Market Drivers

5G Network Rollout

The global implementation of 5G networks is a game changer for the Telecom Cloud business. 5G technology promises faster data speeds, lower latency, and greater connection, necessitating a more agile and adaptable network infrastructure. Telecom Cloud solutions are essential in meeting 5G requirements by offering the scalability, virtualization, and responsiveness required for effective deployment and management of advanced telecom services. According to a GSM Association (GSMA) report, as of January 2023, over 90 fixed broadband service providers had launched commercial 5G-based selected. As of June 30, 2023, at least 57 operators in 33 markets had deployed 5G SA networks. As of January 2023, there were 229 commercial 5G networks worldwide, with over 700 5G smartphone models accessible to users. As 5G technology becomes more widely adopted, significant investments in network infrastructure and supporting technologies are being made.

Similarly, telecom Cloud makes it easier for operators to deploy cloud-native network functions, such as dynamic resource allocation, process automation, and creative service delivery. For example, deploying cloud-native evolved packet core (vEPC) and virtualized RAN (vRAN) functionalities in the Telecom Cloud allows operators to easily handle growing data traffic and improve overall 5G network performance.

Moreover, telecom Cloud solutions enable operators to leverage cloud infrastructure for efficient network slicing, edge computing, and rapidly deploying new services tailored to diverse 5G use cases. As a result, the seamless integration of 5G networks with Telecom Cloud solutions marks a game-changing transformation in the telecoms environment, allowing operators to fully realize the potential of 5G technology and provide next-generation services to consumers and enterprises. This opens the door for an increase in the telecom cloud market trend.

Global Telecom Cloud Market Restraints

Security Concerns

Security is a top priority in the Telecom Cloud industry because of the sensitive nature of telecom data and the potential consequences of security breaches. The multi-tenant nature of cloud settings shared resources, and the complexities of distributed systems pose concerns regarding data security, integrity, and availability. According to Thales CPL's 2023 research, 81% of telecom respondents are concerned about 5G security concerns. The paper also claims that the quick transition to digitization has resulted in more distributed infrastructure and data to safeguard. The significant changes in the 5G ecosystem add new dimensions to the telecom threat landscape and allow bad actors to attack network security vulnerabilities.

According to a 2023 IBM analysis, the average global cost of a data breach is USD 4.45 million, up 2% from 2022. The average price of a data breach in the United States is USD 9.48 million, with the Middle East close behind at USD 8.07 million. The average cost of a massive breach of 50 to 60 million records in 2023 is USD 332 million, down from USD 401 million in 2021. Further, According to a McAfee analysis, telecom companies suffer an average of over 1,700 weekly cybersecurity incidents, demonstrating the sector's persistent and targeted cyber attacks.

As a result, security concerns may make telecom operators hesitant to shift essential infrastructure and sensitive data to the cloud, particularly if they perceive a more significant risk of unauthorized access or data breaches. Data breaches and security incidents can harm telecom operators and cloud service providers' reputations, undermining consumer and stakeholder trust. Furthermore, regulatory agencies and industry associations may enforce strict cybersecurity standards and compliance requirements on telecom operators, highlighting the importance of robust security measures in Telecom Cloud installations.

Global Telecom Cloud Market Opportunity

Internet of Things (IoT) and Connected Devices Demand

The growing deployment of Internet of Things (IoT) devices creates a significant opportunity for Telecom Cloud providers. As the number of connected devices increases, Telecom Cloud solutions can play an essential role in managing the large amounts of data these devices create, allowing for real-time processing, analytics, and insights. Telecom Cloud's scalability, adaptability, and data management capabilities are critical in meeting the different needs of IoT ecosystems. The Internet of Things (IoT) is a big trend in telecommunications that is predicted to flourish for many years. In 2023, the global number of connected IoT devices is estimated to reach 16.7 billion active endpoints, a 16% increase over 2022. 

According to the Ericsson Mobility Report, cellular IoT connections will reach 5 billion by 2026, including Narrowband IoT (NB-IoT) and Cat-M technologies. These connections are critical for many IoT applications and sectors. According to the survey, 4G/5G IoT connections will likely quadruple over the next three to four years. 

Furthermore, a recent International Data Corporation (IDC) Worldwide Internet of Things Spending Guide predicts that global spending on the Internet of Things (IoT) will be USD 805.7 billion in 2023, up 10.6% from 2022. Investment in the IoT ecosystem is estimated to exceed USD 1 trillion by 2026. Telecom Cloud systems can manage the various data kinds and formats IoT devices produce, including sensor readings, pictures, and video streams. This allows for efficient storage, processing, and analysis of IoT data. As a result, Telecom Cloud's capacity to handle and generate insights from large amounts of IoT data places it as a critical enabler of the ongoing digital transformation powered by connected devices.

Regional Analysis

North America Dominates the Global Market

The global telecom cloud market analysis is conducted in North America, Europe, Asia-Pacific, the Middle East and Africa, and Latin America.

North America is the most significant global telecom cloud market shareholder and is estimated to grow at a CAGR of 26.5% over the forecast period. Large corporations with experienced staff have made substantial advances in North America, bringing ongoing technological advancements. North America has seen a significant increase in mobility and high consumption of smart gadgets due to IT consumerization, which are primary factors for regional dominance.

Furthermore, some large manufacturers aim to deliver vertical-specific WebRTC customized solutions in the region, recognizing the growing demand for low-cost, user-friendly online communication solutions, which would indirectly fuel market expansion. In the United States and Canada, hybrid telco cloud installations are becoming more popular, allowing best-in-class data analytics and artificial intelligence embedded in the public cloud sector to predict and satisfy users' requirements and preferences. According to Made in CA, 92% of Canadian businesses utilize some cloud computing, and 41% want to invest in hybrid or multi-cloud technologies. Companies also use the cloud to eliminate silos in databases, combine customer data, deliver an engaging Omni channel customer experience, and build a 360-degree view of the consumer.

Asia-Pacific is anticipated to exhibit a CAGR of 26.8% over the forecast period. The region is going through a substantial transformation in installing new technology in many enterprises. The rapid implementation of 5G networks and infrastructure across Asia-Pacific, particularly in Singapore, Japan, Australia, South Korea, China, and India, presents enormous opportunities for telecom cloud adoption. During the COVID-19 epidemic, the Asia-Pacific telecom cloud business is increasing. AI, cloud computing, and the Internet of Things (IoT) are quickly being utilized to control connected equipment in hospitals, medical institutes, and other healthcare organizations. Firms in this region employ a remote work plan for their employees to ensure business continuity. As a result, telecom cloud services for enterprises are in great demand throughout the region.

The Middle East and Africa will have significant growth following Asia Pacific. Governments and businesses in the MEA area are launching digital transformation projects to improve services, increase efficiency, and promote innovation. Telecom Cloud solutions enable these activities by providing scalable and adaptable infrastructure. The Digital Government Authority (DGA) works to improve digital performance inside government agencies, raise service quality, improve beneficiary experience, promote Saudi Arabia's digital transformation, and realize Vision 2030 ambitions.

Europe is expected to grow steadily as company prospects and digital clients increase. As of November 2022, Revolut, a London-based app-only bank, had 25 million customers and is anticipated to reach 35 million by November 2023. Furthermore, the EU aims to have at least 80% of all adults with essential digital skills by 2030.

Latin America's growth will be steady due to numerous foreign investments in the telecom industry. For example, in May 2023, China Telecom launched eSurfing cloud services in Brazil in partnership with its subsidiary China Telecom do Brasil (CTB). The rise of cloud solutions and the industry will likely increase market share.

Segmental Analysis

The global telecom cloud market is segmented based on type, application, cloud platform, and end-user.

The market is further segmented by type into Solution and Service.

The solution segment dominated in 2023, accounting for 65% of sales. The solutions category provides unified communication and collaboration, content delivery networks, network function virtualization, and other services. Furthermore, increased internet and mobile device usage are pushing solution adoption. As a result, firms are increasingly aware of the need to use new technologies to improve organizational agility and operational efficiencies. Enterprises deploy telephone, email, voice mail, instant messaging (IM) and presence, unified messaging, audio, web, video conferencing, file sharing and whiteboarding, social networking, mobility, and other applications. Furthermore, the exponential growth of media content and demand for rich video content among increasing internet users and the digitalization trend among organizations across end-user sectors drive demand for content delivery network solutions.

The services segment is expected to grow the fastest during the projection period. Telecom Cloud provides managed services, advice, and support to operators looking to install, optimize, and sustain cloud-based systems. These services are frequently offered by specialized cloud service providers or telecom vendors with cloud technology experience. This segment's growth can be attributable to integrating and implementing telecom cloud services. These services enable smooth operation and increased operational efficiencies throughout the process. The services segment is further divided into professional and managed services.

The market can be bifurcated by application into Billing and Provisioning and Traffic Management.

The Billing and Provisioning application area focuses on solutions and services that help to streamline telecom billing and provisioning. Cloud-based billing solutions enable telecom operators to manage and automate the billing lifecycle, including rating, charging, invoicing, and revenue assurance. Provisioning refers to the activation and configuration of services for clients, and Telecom Cloud solutions in this category improve the agility and accuracy of provisioning processes. 

Furthermore, Traffic Management in the Telecom Cloud segment refers to solutions and services that optimize the flow of data and communication within a telecom network. Cloud-based traffic management tools are designed to handle network traffic efficiently, ensure peak performance, and improve overall service quality. These applications use cloud infrastructure to carry out traffic shaping, load balancing, and network optimization tactics. They are essential in managing network congestion, prioritizing data traffic, and providing users with a smooth and dependable experience.

Based on cloud platforms, the market is sub-segmented into Software-as-a-Service, Infrastructure-as-a-Service, and Platform-as-a-Service.

The Software as a Service (SaaS) market will dominate in 2023. The Software-as-a-Service (SaaS) category focuses on delivering software applications via the cloud on a subscription basis. Telecom operators can access and employ software applications without investing upfront in infrastructure or software licenses. The Telecom Cloud's SaaS products may include customer relationship management (CRM) software, billing systems, analytics, and communication services. SaaS is a cost-effective and scalable model that enables telecom operators to use various software solutions without managing the underlying infrastructure.

The IaaS (Infrastructure as a Service) segment is expected to develop at the fastest CAGR throughout the projection period. The Infrastructure-as-a-Service (IaaS) segment of the Telecom Cloud market refers to delivering virtualized computer resources via the cloud. This covers virtual machines, storage, and networking infrastructure. IaaS enables telecom carriers to scale their infrastructure based on demand, minimizing the requirement for substantial capital expenditures. IaaS products allow telecom operators to construct, administer, and control virtualized infrastructure while outsourcing physical hardware and data center operations to cloud service providers.

By end-user, the market is fragmented into BFSI, Retail, Manufacturing, Transportation and Distribution, Healthcare, Government, Media, and Entertainment.

The BFSI industry relies mainly on secure and dependable telecommunications infrastructure to enable banking transactions, financial services, and insurance operations. Telecom Cloud solutions enable BFSI firms to improve client interaction, streamline operations, and meet regulatory requirements. Manufacturing sectors use Telecom Cloud solutions to improve supply chain management, increase stakeholder cooperation, and provide real-time monitoring of manufacturing operations. Cloud-based telecommunications allows manufacturers to deploy Internet of Things (IoT) devices, track inventory, and analyze production data to improve operational efficiency.

Recent Developments

• February 2024- AT&T launched the first and only network with built-in security controls.
• February 2024- BT Group, Ericsson, and Qualcomm Technologies, Inc.'s network slicing trial offered new consumer and enterprise possibilities in the 5G SA era, including better mobile gaming.