Embracing the cloud "could bring European telcos €39 billion"

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European operators stand to realise €39 billion by adopting virtualisation and transforming themselves into cloud carriers, a report from Bell Labs has claimed.

According to the study conducted by Alcatel-Lucent’s research division and management consultancy ADL, embracing network functions virtualisation and software-defined networking will allow operators to tap into higher-value segments and prevent themselves being edged out by alternative service providers.

The report concluded that “full IP transformation” could be worth up to €14 billion per year in the network domain alone, by allowing operators to consolidate and automate functions and ditch legacy hardware.

As a result, the study claimed operators could greatly advance their network functionality, allowing them to tap the lucrative IT security, cloud services and non-access-based wholesale segments in Europe.

It added this is particularly crucial in the face banks, retailers and media companies increasingly encroaching on telcos' turf in the digital services market.

[Read more: Telcos could benefit from battle between media, OTT players]

ADL Partner Jesús Portal, said: “The time is now for Europe’s telecommunications industry to bring networking into the cloud era. It will not be trivial to execute programmability and automation at the scale required for success, but the prize is significant.”

The report also proposed that European telcos form an alliance akin to the airline industry’s StarAlliance and SkyTeam in order to facilitate collaboration in the development of new services and capabilities.

Cassidy Shield, Managing Partner at Bell Labs Consulting, said: Moving to the new ’cloud network’ is no longer a question of ‘if’ for service providers but the real questions are ‘how and when’. The answers and strategies can be very different based on the technology structure and business model for each operator but there is no doubt the planning needs to start now.”

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A-L launches consulting division to prep industry for transformation

Cloud security market hits €6.4 billion as operators embrace virtualisation