Telecommunication operators will need to prepare themselves to battle with a litany of formidable competitors in the hyperscaler, security, and networking space if they want a piece of the considerable $400 billion in addressable market opportunity presented by the enterprise space.

That warning was part of a new report from GSMA Intelligence, which noted that telecommunication operators “need to look beyond connectivity driven solutions and services and take a broader view of the opportunity.” The report found that “core telecom” services like SD-WAN, unified communications (UC), and mobile voice/data services account for 70% of the $250 billion in enterprise revenues operators gobbled up in 2023, but are forecast to grow at a 3% compound annual growth rate (CAGR) through the end of the decade.

“Greater focus is needed on offering advanced network solutions such as network slicing and private networks in the short term and developing end-to-end solutions to support a variety of enterprise use cases combined with integration capabilities in the longer term,” Tim Ratt, head of research for GSMA Intelligence, wrote. “Enterprises are increasingly looking for service providers to integrate a blend of technologies that fit their specific technology environments and business needs. Though the competition is fierce, telcos have assets and capabilities they can leverage to play in over one-third of this trillion-dollar market.”

Those fierce competitors come from different angles, with the report noting that list includes traditional telecom rivals, equipment vendors, hyperscalers, and security vendors.

“In fact, 24% of operators view hyperscalers as formidable competitors in edge networking and cloud, while 41% view security vendors as key competitors in security,” GSMA Intelligence added.

That competitive sentiment has been echoed by others.

A recent report from Technology Business Research (TBR) found that hyperscalers will be “eager to extract economic value from distributed computing use cases,” including an increased focus around artificial intelligence (AI) opportunities.

That notion was seconded by Andy Cvengros, managing director for U.S. data center markets at real estate consulting firm JLL, who noted those large-scale players are growing their ability to expand.

“It’s all kind of consolidating to the big groups who are well capitalized [and can] do this stuff,” Cvengros told SDxCentral in an interview. “I think the users themselves are not necessarily ones to go procure the data center space so that’s going to be offered through, call it an Oracle, or Microsoft, or AWS service offering. … You go to AWS to get cloud edge services in a specific market, cloud on-ramps and things like that. I think that’s more likely than somebody doing it themselves.”

Telecom network operators need to think different about the enterprise

GlobalData in a recent report stated telecom network operators need to think more horizontally toward the lucrative enterprise market to take advantage of their core telecom network assets.

The firm stated that past telecom efforts to more aggressively target enterprise verticals have ended in heartbreak for operators due to their inability to focus enough resources on penetrating specific markets. There have been some successes when an operator partners with a third-party in specific areas, but GlobalData’s Gary Barton noted that “often success is built on opportunism rather than developing a deep relevance to that vertical.”

“There are examples of point solutions in areas such as IoT in certain verticals, and co-developed solutions, but these remain the exception rather than the rule,” Robert Pritchard, principal analyst at GlobalData, added.

Barton explained that operators are often tripped up by not understanding the specialized buying patterns of what GlobalData terms “sub-verticals, which all behave differently.” that telecom network operators should think about the enterprise space from a different perspective.

“Telcos cannot realistically develop the depth of understanding to address all these highly nuanced needs,” Barton wrote. “Furthermore, doing so will lead to targeting increasingly smaller numbers of businesses thereby reducing the total addressable market or excessive go-to-market expenditure.”

Operators should instead continue to focus on network-based services that can serve more horizontal needs across enterprise markets. While not as sexy as being viewed as a specific enterprise vertical expert, GlobalData notes there is a lot of opportunity for operators taking this approach.

“Telcos’ core capabilities in connectivity and data networking make them naturally horizontal. This can make it more difficult for network operators to be vertical specialists as they work with enterprises of all kinds,” the research firm claims. “However, this broad appeal is as much a strength as a weakness. Telcos are selling solutions that almost all enterprises need. The challenge for providers is to nuance their messaging around the business benefits of their solutions.”

How telecom operators are reacting

Operators are taking notice.

Ulf Ewaldson, president of technology at T-Mobile US, during a keynote address at this week’s Mobile World Congress (MWC) Las Vegas event touted the carrier’s 5G network and underlying 5G core architecture as a key driver in better penetrating the enterprise space.

Ewaldson specifically cited services like network slicing, which is powering T-Mobile US’ recently launched first-responder focused T-Priority service and private 5G networks.

“It's powering our enterprise market in a way that we have never seen before,” Ewaldson said of 5G. “It's transforming from a competition on smartphones into strategic engagement with C-suites all across the country to solve their most pressing connectivity needs.”

Verizon CEO Hans Vestberg noted a similar path.

“On the 5G use cases, now we start talking more and more about private networks because the number of them are many, then the value of them are still fairly small,” Vestberg said during the carrier’s earnings call earlier this year. “But when we build that base of private network, managed spectrum for enterprises, that, over time, is going to be a great opportunity for our enterprise sales force to add in, do the mobile edge compute.”