30 October 2017
Cloud, internet of things, security and software-defined networks are challenges that the wholesale carrier industry is facing, says Capacity’s new report on Confidence, Innovation and Leadership
The wholesale carrier industry is, well, challenging.
That’s the one-word summary of this
year’s Confidence, Innovation and Leadership (CIL)
report from Capacity. This is the fifth annual report
we’ve produced. The 2017 report, like all our
previous reports, is based on a survey of senior executives in
the wholesale carrier industry, on the promise of anonymity.
That guarantee allows them to be candid in their assessment of
Five senior executives discussed the findings of the report
in a panel session at the Capacity Europe conference in London.
It’s one of those who provided the quote at the
bottom of page 77, the one that starts "Most executives will
say they are innovators …". Our survey shows that the
industry has identified a number of opportunities for
Cloud was hailed as a growth opportunity by 63% of our
respondents, up from 53% last year. The internet of things
(IoT) and security were both seen as sources of growth for the
Voice is going down. That’s no secret and this
year’s CIL recognises it, with 52% of respondents
from the voice market either not confident or not at all
confident about their sector. In a different section of the
survey, exactly the same percentage expects voice revenue to
fall, compared with 40% in 2016. Last year 44% still thought
voice revenue would rise; this year it was down to 40%. On the
data side, no surprise, confidence is much higher, though 18%
of this sector of the industry still expect revenues to fall
– a rise from 7% last year. Price compression and
over-the-top providers are the two biggest threats.
Questions on innovation provided some surprising results. A
surprising 81% think that innovation can be achieved without
spending money, yet budgetary constraints are the single
biggest obstacle to innovation, the same people told us.
Meanwhile our C-level respondents recognise the two biggest
game changers facing the industry: IoT and software-defined
General confidence across the entire wholesale industry has
remained flat compared with 2016, but those lacking in
confidence were much more noticeable.
The number of respondents who were very confident remained
at 26%, after an 8% fall in 2016, while the number who said
they were confident dropped to half overall.
The not-at-all confident hit the highest amount since 2013,
while not confident respondents were at an all-time high,
showing a fall in overall confidence in the industry connected
to falling revenues and greater demands on connectivity.
Attitudes to innovation
The number of companies that consider themselves pioneers,
in terms of its attitude to innovation has almost doubled over
the last 12 months. Interestingly, the number of companies that
would describe themselves as a strong innovator has fallen by
15%, likely owing to the fact that more of the same group from
last year now consider themselves as pioneers. The number of
followers fell by 5%, the number of 'could do
more’ increased by 10% and those who identify as
having no innovation culture remained at 2%.
Most important drivers of
Partnerships emerged as having the biggest growth in the
area of; drivers of innovation. Up by an impressive 17% from
the previous year, it goes to the show the importance these
interdependencies have on growth and technological evolution.
Research and development only rose by 1%, while acquisitions
fell by 2%, showing the preference for organics growth and less
Diplomacy is out in 2017 and vision and entrepreneurship is
back. Last year 40% of leaders saw themselves as experienced
guides, the biggest category, after two years when the top
category was entrepreneur or creative visionary.
This year entrepreneurship and vision led the vote, with a
whopping 56% of our respondents identifying this as their
Only 23% saw themselves as experienced guides in 2017, and
those who saw themselves in the ambassador/diplomat category
fell from 34% in 2016 – the second biggest category
last year – to a trivial 7%.
In 2016 we suggested that industry leaders were more
cautious than in the past. Now, with more than half espousing
vision and entrepreneurship, perhaps we’re in for
an exciting year.
Key issues with international business
Pricing and regulation are at the top of the
industry’s agenda in 2017, but recruitment has
become easier. However, worries about political or civil unrest
Last year transit pricing was identified by 45% of our
respondents as a key concern; this year it has gone up to 56%.
Similarly 48% said regulatory risk was an issue in 2016
– people could choose more than one topic –
and in 2017 this has been identified by 54%.
For more than half the top concern in 2016 was recruiting
local talent. Now that’s dropped to just 37%;
still a concern, but only three out of five.
Perhaps an unstable or uncomfortable political climate in
parts of Europe, the US, the Middle East and east Asia has
contributed to an increasing concern about political or civil
unrest: identified as an issue by 27%, sharply up from last
An increased tax burden is less of a worry this year. It was
second from the bottom of the list last year, above civil
unrest, with 21% concerned about it; this year just 17%
– about one in six respondents – think it an
Priorities over the next three years
Reshaping the business model has topped the list in this
section for three years. In 2015 more than two-thirds of
respondents – actually 69% – identified this
as a priority. Last year it was still top, but with
However, in previous years we’ve asked
executives to identify more than one priority, so total scores
added up to more than 100% – in fact 249% and 262%
This year we asked people to select just one priority, so
the scores add up to 100%. And this year reshaping the business
model is top again, picked by 37%.
This is perhaps more representative of real priorities.
Infrastructure is number two at 28%, and next-generation
technology at 14% – though who’d build
out infrastructure with last-generation technology?
Revenues by region
We went back to a former methodology this year when asking
where respondents earned their revenue. Until 2015 we allowed
people to make multiple choices for the regions in which they
operate, but last year we limited CIL respondents to just one
So it’s hard to compare 2017 with 2016.
However, looking back at 2015, it’s clear that
Africa and the Asia-Pacific are both more important to
wholesale carriers, while North America, South America, Europe
and the Middle East are less important than two years
This is giving a wider global picture to the CIL report
– and shows that, yes, as many people are observing,
Africa is becoming increasingly important to this sector, as is
CIL report 2017,