Connectivity in 2016: While Markets Expand, So Does Competition

By: Mike Hollands

The past year was a rollercoaster ride for connectivity providers, as communication networks and the businesses that use them were forced to deal with new technology and almost untenable growth that left some players flourishing while others floundered. In 2016, however, providers need to buckle up even tighter, as new communication networks come to market and potential disruptors begin gaining market share. In my opinion, here’s what we can expect connectivity providers and the businesses that depend on them will be talking about this year.

Submarine Cable Expansion Will Open up New Revenue Opportunities

The New Year will see several submarine cables go live that are poised to connect underserved markets to developed economic hubs. This will allow established businesses to set up points-of-place (PoPs) in countries like Yemen, Cambodia and Indonesia for the first time, allowing businesses in these far-flung locales to explore mainstream markets that were once inaccessible. What’s more, by introducing new cables to the market, the legacy lines that have been in place for years will now be more affordable for small businesses to access for their own expansion.

New Players Will Help SDN Expand

In 2016, older SDN services will likely start to falter because their offerings are too broad. New companies like Megaport that offer custom-tailored portals and designs that better fit the demands of their consumer demographic will start to disrupt the industry. While there is room for growth in the market, expect it to come from smaller companies, while legacy SDN providers can expect to see their growth either stall or go in reverse.

Telcos Will Leave Cloud to the Big Three

It’s an almost flipped situation for cloud services than it is for SDN providers. Rather than new players entering the cloud marketplace and successfully carving out their share of the revenue, it appears that market leaders Amazon, Microsoft and Google will have the lay of the land. Telcos that were looking to diversify their revenue streams by adding cloud services will likely return to focusing on their core services rather than continue fighting a losing battle with the cloud giants.

Content Providers Will Spearhead Their Own Delivery

Amazon, Microsoft and Google will also continue to ease-off their reliance on traditional carriers to deliver their content. Instead, the big three will continue building out their own networks to better control costs, inhibit easier expansion and deliver more consistently.

Content Delivery Networks Will Increase Revenue through Existing Customers

Rather than look to massive expansion targeted at new customers, CDNs will offer enhanced or new services – like security and connectivity – to their existing client base as a new source of revenue. After all, a client would rather use a service created by their carrier and designed for their network than deal with multiple vendors.

European Internet Exchanges Will Continue Feeling Pressure

Internet exchange providers (IXPs) in Europe have been seeing many of their larger members leaving these markets in droves as of late, and this is bound to continue into 2016. IXPs will have to not only enter new markets to push back against financial pressures but also introduce new services to maintain existing partners.

While all of these predictions show big change in 2016, they will ultimately set the stage for more connectivity – and therefore revenue opportunities – for years to come. To learn more about each of these predictions above and the affects they will have on connectivity providers in the New Year, read our article What 2016 Will Have In Store for Connectivity Providers in WirelessWeek.