Telstra International has the scope and scale to aggressively participate in the network-as-a-service (NaaS) space, an ability backed by ongoing network upgrades that allow the operator to support innovative NaaS business models and tap lucrative partnerships with the world’s largest hyperscalers, but it’s still working through the commercialization of those opportunities.

Roary Stasko, CEO of Telstra International, explained that the Australian-based telecom giant has spent years modernizing its infrastructure to a point where it can more efficiently run its diverse network assets. This is similar in approach to what other large telecom providers around the world have done.

This work has allowed these operators to more precisely manage those network assets to a point of better monetization. This includes being able to provide cloud-based and layered access to those network resources using a NaaS model, or as Stasko termed it a “network-as-a-product” model.

“It helps us think of it as actually something we are monetizing,” Stasko said. “It helps us think of all the features, and the APIs, and the quality-of-service levels that we can offer.”

Analysys Mason reported last year that these network operators are in prime position to capture one-third of the expected $8.7 billion investment enterprises are forecast to make in multicloud NaaS by 2028. The research predicts those operators will pocket 32% of that global enterprise spend on multicloud NaaS, which “offer platform-based NaaS having introduced sufficient automation and programmability in their IP networks.”

Gaining a share of that opportunity does require network partnerships that allow large, but geographically limited operators to offer a more robust set of network services to enterprise customers. Operators have implemented various models toward this goal, including those that tap API work conducted by industry trade groups like MEF.

“I firmly believe that companies that will be differentiated and successful are those, in many ways, that figure out how to partner best, those that figure out how to build those mutually beneficial partnerships, not transactional engagements, if you will, but deep partnerships,” Stasko said. “And I think that's across all layers of the network, whether that's digital infrastructure, the network, and even on the customer end.”

Stasko pointed to BT’s Global Fabric NaaS platform as one initiative on the commercial side that has gained some attention. This NaaS platform is designed to provide enterprise customers with access to a global networking footprint and marketplace where they can select pre-integrated cloud and networking services that they pay for on an as-needed basis.

However, from an industry perspective, these types of models can prove challenging to adopt for some operators.

“They've worked to create the software layer, but ultimately the commercial model for anybody who wants to plug into it, it's BT led. It's not so clear that the commercials are going to be most advantageous for me,” Stasko explained. Yeah, I've got others like ConnectiviTree or some smaller places out of Europe where they're saying, ‘well, we want you to plug in.’ It's again, well, where am I commoditizing my assets, as opposed to where am I monetizing?”

Despite the challenge, Stasko did note “we’re making good progress on that, but I wouldn’t say it’s done.”

“I don't think there's a winner or a loser in that space yet, but I think it comes back to it has to be a commercial model that drives the right incentives at an industry level for further infrastructure investment and monetizes the assets that we continue to have and operate,” Stasko said.

Hyperscaler dance

This monetization challenge is “more nuanced” when hyperscalers are involved.

Telstra’s Australian home also has positioned the carrier as a big player in subsea connectivity. Stasko noted the carrier can leverage around 400,000 kilometers of subsea fiber and 38 cable landing stations that have been established through decades of partnerships. Much of this presence is in the trans-pacific corridor, which has drawn the attention of the world’s hyperscalers.

“There's a lot of hyperscaler space in that market,” Stasko said of that region. “We increasingly look at how do we partner with the hyperscalers to take capacity on systems that they're going to deploy, that they're going to put out in the market. How do we take some capacity, partner with them, provide some layer-zero services for them, whether that's managing equipment for them, whether we're doing the landings, whether we're helping with some permitting in places that are a little bit difficult, whether it's providing the terrestrial backhaul … whatever that combination is, we see a strong partnership opportunity on the trans-pacific side with the hyperscalers.”

This hyperscaler opportunity is driving a significant return for some NaaS players.

Lumen CEO Kate Johnson recently told investors that the company’s NaaS platform is gaining traction and disrupting the market. That disruption is in taking business from data center companies but also in helping to drive more business to Lumen’s cloud service provider partners.

That former disruption is based on Lumen being able to tie together its physical and virtual infrastructure in a package that makes it easier for enterprises to manage their data connectivity. The latter is in turning that easier management into more direct traffic-generating opportunities for hyperscalers like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP).

“And when I say higher, like it's an incredible rate,” Johnson teased of that interest. “I don't want to give it right now, but over the past 90 days, very, very significant growth. And what that suggests is that there's a faster path to revenue for the cloud companies, partnering with Lumen to provide networking for their end customers.”

Johnson previously noted that Lumen had signed up more than 400 NaaS customers, with customers moving quickly from testing a few ports to driving “additional service innovation.” That service innovation includes the ability to layer in security services, which Johnson said during an earnings call last year, “is an opportunity for us on the horizon to sell into every NaaS customer.”

Stasko echoed this opportunity, noting that operators need to be very open to different partnership models that can take advantage of their inherent position in the network to drive growth.

“We need to come in as operators and continue to serve those communities in that sort of neutral space, if you will, with the ability to provide everything from a way on the underlying network all the way down to the backbone,” Stasko said. “Many of those companies might be reticent to buy their needs off of one of their competitors and I think that's part of the sweet spot that we can help continue to fill.”