fiber buildingMajor U.S. carrier enterprise revenue trends declined between the first quarter of 2016 and the first quarter of 2017, according to new research from Technology Business Research. AT&T, Verizon, and CenturyLink saw declines in the range of 5%, while Level 3 saw flat enterprise revenues.

One bright spot was IT services, which grew 4.7% among the 10 global carriers that TBR benchmarks. The main drivers were IoT, cloud and security.

Strategic data had the highest growth rate in benchmarked enterprise service segments in 1Q17, rising 6.6% year-to-year, TBR noted in a press release.

Carrier Enterprise Revenue Drivers
TBR notes that carriers are investing aggressively in software-based network technology such as SDN/ NFV, 5G and the Internet of Things (IoT) to remain competitive in the enterprise market. AT&T earlier this month said that it will invest as much as $200 million to a venture capital fund aimed at investing in and developing software-based platform technologies.

“The main justification for investment in NFV and SDN by operators is the incremental revenue-generation opportunities and cost savings these technologies provide,” said TBR Analyst Steve Vachon. “Offering software-mediated network services is becoming a necessity for enterprise operators to maintain market share, as most benchmarked companies have either commercially launched or announced plans to offer SD-WAN services.”

Carriers increasingly may be recognizing their own limitations. For example, TBR found that pricing pressures have led some carriers, such as Verizon (which sold its cloud business to IBM) to exit the IaaS market. And BT, CenturyLink and AT&T are moving to partnership models with Web players such as Amazon Web Services. The carriers, according to TBR, are moving to a more supportive role by providing network connectivity, security, and orchestration platforms.