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NaaS is now. Can CSPs mobilize to ‘get it’?

Analysts are making big calls on it. Enterprises want it. And communications service providers (CSPs) are ideally positioned to deliver it: Network-as-a-Service (NaaS). But they need to act fast and be smart if they want a piece of the $15-billion NaaS opportunity.

IDC expects global enterprise network infrastructure spending to hit $45 billion by 2025, with about a third of that — $15 billion — NaaS-related. If that alone isn’t enough to grab CSPs’ attention, it might help to know nearly half of the enterprise IT respondents in a recent Nokia survey said their companies already have plans to “go NaaS”. 

Why the surging interest? Chalk it up to enterprises getting used to the flexibility and convenience of as-a-service offerings in the IT domain.

“Organizations view the network as the next logical step for a consumption-based approach"

Patrick Filkins, IDC

“Businesses are exploring consumption-based models in the network as a means to speed up digital transformation, reduce risk and capital costs, and enhance scalability,” says Patrick Filkins, Senior Research Analyst IoT and Mobile Networks, IDC. “Leveraging experience gained in the IT domain, organizations view the network as the next logical step for a consumption-based approach.”

The bespoke aspect of as-a-service offerings appeals to CSPs, too. Similar to the way Starbucks has changed morning coffee from “cream or sugar?” into a radical customization event, NaaS opens up new, customizable possibilities with highly configurable and adaptable network services.

Opportunity up for grabs

CSPs aren’t the only ones alert to the promise of NaaS. Webscale companies such as Amazon and Microsoft are getting in on the action as a natural extension of their cloud IT services offerings. And there are other players in the mix.

“NaaS opens the network services window to non-infrastructure operators,” says Karl Whitelock, Research Vice President, Communications Service Provider Operations and Monetization, IDC. “It positions virtual services providers, including next-gen mobile virtual network operators (MVNOs), to meet customer needs with advanced business solutions using low-latency and enhanced broadband connectivity.”

CSPs can compete by playing to their natural advantages in edge and access networks. Getting fully NaaS-ready will require some investment, but adopting the necessary technologies is part of the digital transformation journey CSPs are already on. They need to continue the move away from manual configurations and embrace an orchestration and automation-led approach, according to a new report from IDC.

NaaS differs from traditional managed services in that it relies inherently on orchestration, giving CSPs the tools to deliver flexible services beyond just connectivity. Given the dynamic needs of today's applications, which are often hosted over multiple clouds and more and more often at the edge, orchestration and automation basically become table stakes.

Delivering what the market demands

CSPs also need to get aligned with what enterprises want from NaaS. They currently have different ideas about where NaaS can bring value and which services are most appealing — with enterprises prizing security and CSPs keen on private LAN/WAN, for instance. They even differ over how it should be bought and sold, according to a recent Nokia survey.

Six characteristics of NaaS

Nokia Bell Labs has identified six characteristics of NaaS based on the National Institute of Standards and Technology (NIST) definition of cloud computing:

On-demand self-service

Customers can automatically provision network functions and services without any human intervention on the CSP side.

Network agnosticism

Service offerings and service requests are abstracted so network implementation can be configured any number of ways, even across multiple providers. 

High resource availability

NaaS services are intent-based, with location-specific performance characteristics such as low latency or the ability to attach to resources such as mobile devices.


Services are defined in code that expresses everything from functional capabilities needed such as firewall rules to full definition of a complete service.


Network systems automatically control and optimize resource use through metering and measurement, with transparent reporting for CSPs and customers.


Network functions and services are defined with service-level agreements (SLAs) or service performance metrics.

Among the findings from Nokia surveys: CSPs think enterprises should be most excited about the benefits of shifting to an OPEX model while enterprises feel they will benefit most from enhanced network security. That misalignment could get in the way of near-term NaaS success.

Enterprises are looking to solve some very specific problems by going the as-a-service route, such as better aligning IT spend and usage, optimizing infrastructure and adopting cloud-like approaches, reports IDC. They want to consume network services the same way they consume IT services and stop buying and maintaining network infrastructure. 

CSPs who help them do that can break their own flat revenue ceiling with new service streams, and the ones who do it first — and best — will win out against their competitors in the enterprise services space. 

IDC graph new

Seize the day

CSPs are already offering certain kinds of NaaS services, such as virtual private networks, cloud-based managed Wi-Fi and private LTE services. And most recognize that doubling down on NaaS will set them up for further enterprise wins as 5G matures. In the Nokia survey, 91 percent agreed offering NaaS is critical to the successful delivery of enterprise 5G services, and most are already investing in NaaS-essential technologies as part of their digital transformation programs.

“CSPs are pivoting to the NaaS opportunity,” says Patrick Filkins, Senior Research Analyst, IoT and Mobile Networks, IDC. “CSPs are logical NaaS providers, given their well-established role as managed connectivity providers. With nearly one-third of the $45 billion enterprise network market expected to be consumed through a NaaS model by 2025, CSPs cannot ignore this emerging opportunity.”

To make sure the NaaS prospect doesn’t slip by, CSPs need to update their infrastructure and tailor their offerings to the market — and not wait around for someone else to get there first.