The Hidden Costs of relying on Telco-Delivered Networks
- Tim Sullivan
Key Takeaways
- In 2026, there are 6 billion people currently using the internet.
- Gartner shows that worldwide IT spending is predicted to grow 10.8% this year, totaling $6.15 trillion.
- Server spending is projected to accelerate throughout 2026, growing 36.9% year-on-year.
- Total data center spending is forecasted to increase 31.7%, surpassing $650 billion in 2026 – up from nearly $500 billion in 2025.
- In such a highly connected environment, enterprises need to prioritize more seamless digital connection, collaboration, and communication, with a stronger focus on network connectivity and security.
- To get ahead, enterprises must consider adopting networking technology like SD-WAN or SASE and shift away from traditional telcos.
In a world with more connected devices than ever before, where the cloud powers everything from communication channels to security measures, enterprise network bandwidth requirements are at an all-time high. In 2026, there are 6 billion people currently using the internet.
In such a high-powered and interconnected environment, today’s enterprises are playing catch up. Having successfully serviced their network and connectivity needs in the past, enterprises continue to turn to telecommunications providers for network solutions that leverage their private infrastructure, extensive reach, and ‘all-in-one’ approach. However, in the era of cloud ubiquity and rapidly evolving network requirements, the value that traditional telcos offer enterprises is now obsolete.
With disruptive players offering more flexible solutions at competitive prices, enterprises must ask themselves if telcos can adequately service their evolving business needs now and into the future, or whether co-managed solutions can offer a better approach.
Forward-thinking IT leaders must take a fresh look at telco-delivered networks through a wider lens to uncover the hidden costs that can emerge over time. These hidden costs stem from four key areas: rapidly changing business requirements, restrictive technology and commercial lock-ins, add-ons to fill gaps, and limited managed services portfolios on the telcos’ part.
Read on to learn more about the hidden costs of telco-delivered networks and why SD-WAN and SASE solutions are the way forward.
Telcos are struggling to keep up with rapidly changing business requirements
According to Gartner, worldwide IT spending is predicted to grow 10.8% in 2026, totaling $6.15 trillion. Server spending is projected to accelerate throughout 2026, growing 36.9% year-on-year. In addition, total data center spending is forecasted to increase 31.7%, surpassing $650 billion in 2026 – up from nearly $500 billion in 2025.
With IT spending skyrocketing, it’s clear that enterprises will require more flexibility when it comes to bandwidth options. However, telcos can’t deliver this level of flexibility with their standard deal structures.
It isn’t just ‘where’ business happens that is changing today, but ‘how’ business works. Enterprises are more dispersed than ever, increasing the need for more seamless digital connection, collaboration, and communication. This puts pressure on businesses to fine-tune their network connectivity and security. That’s where adopting next-generation technology like Software-Defined Wide Area Networks (SD-WAN) or Secure Access Service Edge (SASE) enter the picture: solutions that are not the standard domain of traditional telcos.
Technology Solution | Key role | Key benefits |
SD-WAN | Intelligent network connectivity | Improves application performance, agility and reduces cost |
SASE | Integrated networking and security architecture | Provides secure, consistent access to applications, users, and data across distributed environments |
Multi-Cloud | Application and workload deployment across multiple cloud environments | Enables flexibility and scalability while reducing dependence on a single cloud provider |
As enterprise applications, data and users move beyond the traditional network perimeter, telco-led networking models are becoming increasingly misaligned with business needs. Organizations must connect a growing ecosystem of cloud platforms, SaaS applications, remote users and distributed workloads across multiple regions, often at a pace that traditional carrier models struggle to support. This can result in higher costs, slower scalability and suboptimal application performance. To remain competitive, enterprises increasingly require networking solutions that provide greater flexibility, visibility and control over how connectivity is sourced, managed and optimized.
Restrictive commercial lock-ins that limit new technologies
Naturally, most companies procure enterprise network solutions on three-to five-year contracts. However, being locked into lengthy telco contracts can prove costly, as service agreements can quickly become outdated in an evolving digital landscape. While this service model once worked well for traditional networks with predictable traffic flows and a limited need for internet connectivity, the same can’t be said for today’s cloud-centric business environments.
Increasing bandwidth requirements means that long-term lock-in contracts can severely reduce the enterprise’s ability to adapt to changing market demands. Bandwidth requirements can also be unpredictable, making it nearly impossible to forecast usage requirements over a multi-year period. This makes long-term contracts even less attractive for fast-growing businesses.
Additionally, the closed, high-performance private global network that used to give telcos the upper hand in negotiations is no longer appealing to enterprises. Constantly improving Internet connectivity technologies have become a much more viable option, especially when compared to traditional leased line circuits for almost all branch office requirements.
It is still possible to procure SD-WAN and internet-based access from telco providers, but at Coevolve, we know from experience that the costs can be 50% to 60% higher than those of telco-independent providers.
Costly add-ons to augment capability gaps for enterprises
In today’s increasingly complex business landscape, the viability of any enterprise network and security solution is contingent upon its ability to respond to unknown future needs and requirements. Unfortunately, when enterprises are locked into long-term and inflexible telco contracts, they find themselves facing a cost optimization predicament.
The cost optimization issue arises when an enterprise approaches their telco or ISP provider about new capabilities that aren’t covered in the service level agreement (SLA) and then gets charged a premium for it. In this situation, an enterprise has two choices: they can either acquire these additional services from their existing telco/ISP provider at a premium cost and maintain operational simplicity, or they can partner with a new provider in conjunction with the current one.
Choosing to onboard with a new provider in addition to the existing provider (as they are locked in to maintain the rest of their network needs) can end up fragmenting the enterprise’s IT solution. This increases overheads and network complexity over time.
The scenario described is not a one-off, but rather a domino effect, as business requirements will inevitably continue to evolve. Ultimately, enterprises will end up constantly questioning the cost versus benefit equation of the telco-dependent approach.
To get ahead, a more robust and forward-facing solution is the telco-independent approach with SD-WAN, SASE, and Multi-Cloud solutions.
Limited portfolio of managed services points to telco-independence
When it comes to managed services, enterprises can either agree upon managed or unmanaged services with their telco provider. The unmanaged route is only recommended for well-resourced businesses with well-equipped IT teams, as they often have no SLAs or support and can prove much more hands-on for the enterprise.
And while managed services offered by telcos can vary, it’s not a telco’s core offering and remains relative to the margins they make on the underlying backbone infrastructure.
In summary, while the familiarity and comfort of telcos can be enticing for enterprises seeking new network solutions, several hidden costs can lead to increased expenditure, lack of agility, and increased operational complexity for modern-day enterprises.
Forward-thinking enterprises should consider a telco-independent approach to truly meet their networking requirements head-on. Not only does telco independence lead to reduced costs and overheads, but it can also provide greater flexibility, deeper customizability, and added value through more sophisticated technical capabilities and seamless service delivery.
Get in touch with us to explore how a telco-independent approach can deliver the enhanced business performance and robust outcomes you want for your growing enterprise.
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FAQs
What is the main difference between SD-WAN and SASE?
SD-WAN focuses on optimizing network connectivity, performance and visibility, while SASE combines networking with integrated security features to provide secure, cloud-delivered access across distributed environments.
Why are savvy enterprises today adopting SASE?
Enterprises are adopting SASE to simplify networking and security while delivering consistent, secure access to applications, users and data across cloud and hybrid environments. It helps reduce complexity and improve visibility as organizations become more distributed.
Does SD-WAN remain relevant with SASE?
Yes. While many enterprises are transitioning to SASE, reliable network connectivity remains essential. SASE builds on the connectivity and performance capabilities associated with SD-WAN by integrating them with centralized security and policy management in a single cloud-delivered model.
How exactly does SASE enable multi-cloud environments?
SASE provides centralized security and policy enforcement across multiple cloud platforms. It enables and ensures consistent performance and protection regardless of where applications are hosted.