Telecommunications operators are expected to cumulatively spend $114 billion on network cloud between 2019 and 2025, according to Analysys Mason. Those investments include network functions, cloud software, hardware, and professional services.

5G and edge computing are fueling the bulk of this spending as operators continue to shift to cloud-native and multicloud platforms for network infrastructure, analyst Gorkem Yigit explained in a new report.

“Traditional network function virtualization (NFV) has only partly enabled the software-ization and disaggregation of the network, and as such, limited progress has been made on cloudifying the network to date,” he wrote. 

Network virtualization only reached 6% of the total addressable market for mobile networks in 2019, according to Analysys Mason, which didn’t provide figures for 2020.

It expects cloud computing to pervade 5G mobile networks, including the network core, radio access network, and edge, but frames this transition as a years-long effort. “This will require radical changes to the way in which networks are designed, deployed and operated, and we expect that investments will shift to support this new paradigm,” Yigit explained.

Multicloud network infrastructure, one of many segments that operators are shifting investment to, will grow from $4.3 billion in 2019 to $32 billion by 2025, representing a compound annual growth rate of 40%, according to Yigit.

“Network cloudification currently has the largest impact on mobile core network spending, and this will continue to be the case for the next five years,” he wrote, adding that most of that investment during the previous two years was driven by 4G LTE capacity upgrades and 5G non-standalone (NSA) deployments.

Analysys Mason forecasts operators’ spending on 5G standalone (SA) core, including network functions and the cloud, will reach $2 billion by 2025. Moreover, while a small group of global operators have deployed 5G SA cores, the firm doesn’t expect those activities to reach a widespread level until 2023. 

“We believe that the mobile core will go through a long transition period where traditional NFV and cloud-native networks will run side-by-side with hybrid, dual management, and virtual infrastructure management such as OpenStack and Kubernetes-based containers,” Yigit wrote.

Spending on virtualized RAN (vRAN) represents the fastest-growing cloud domain for operators at a compound annual growth rate of 132% to $11 billion by 2025, according to Analysys Mason. The firm also doesn’t expect those deployments to hit early mainstream deployments until 2023.

Finally, the analysts forecast operator investments on network edge clouds will approach $3.6 billion by 2025. “Most network edge clouds during the next five years will be [operator] private clouds or vendor-managed clouds,” Yigit said, adding that some more advanced carriers will deploy converged clouds that will require the use of public cloud providers’ edge services. 

“However, this is unlikely to happen on a large scale in the next couple of years due to the stacks’ immaturity and inability to meet the stringent performance and latency requirements of the RAN,” Yigit concluded.