Frost Radar™: Enterprise Network Services, 2024

Network services are evolving from basic connectivity to more comprehensive digital infrastructure solutions. As the unit price of connectivity continues to fall due to progress in network equipment processing power, network providers must adjust to shifting economic conditions, and despite increasing traffic and rising bandwidth demands, revenue continues to decline. This creates pressure on network services providers (NSPs) to sell more to enterprises to maintain the same revenue levels. In response, NSPs are expanding beyond simple connectivity, increasingly positioning themselves as end-to-end digital infrastructure providers. This transformation includes offering services such as cloud on-ramp capabilities, advanced observability tools, and automated experiences to meet the evolving needs of enterprises. The ability to integrate network, cloud, and security services into a seamless, unified offering is a key market differentiator. The network landscape is increasingly dominated by software-defined networking (SDN), with embedded artificial intelligence (AI) and enhanced security features. These advancements enable more flexible, efficient, and scalable networks. In 2024, partnerships between hyperscalers (such as AWS, Google Cloud, and Microsoft Azure) and traditional network providers are intensifying, reflecting the growing need for integrated infrastructure solutions. As data consumption surges thanks to generative AI, the demand for solid data center-to-data center connectivity and multi-cloud networking is becoming a strategic priority. This trend is reshaping the competitive dynamics because network operators focus on building high-performance fiber infrastructure supporting high-traffic flows between data centers. Some providers are doubling down on this strategy by capitalizing on the need for low-latency, high-capacity connections between critical infrastructure.