Light Reading

What Carriers Can Learn From Shipping

Mitch Wagner
6/17/2014
50%
50%

CHICAGO -- Light Reading's Big Telecom Event 2014 -- Carriers need to understand they're in the service delivery business, not just the network operations business, Heavy Reading Chief Analyst Graham Finnie said here on Tuesday.

Finnie compared the Internet and information networks today to the shipping industry in the 20th century. Shipping and trucking entrepreneur Malcolm McLean pioneered the use of the shipping container, thereby revolutionizing supply chains by automating transportation.

"Malcolm McLean's fundamental insight, commonplace today but radical in the 1950s, was that the shipping industry's business was really cargo, not sailing ships," Finnie said, quoting from the book, The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger.

Malcolm McLean at Port Newark, 1957. Source: russavia
Malcolm McLean at Port Newark, 1957. Source: russavia

Similarly, today's carriers need to think of themselves as being in the business of delivering services to end-users, not operating networks, Finnie said.

Applying that insight, there should be no distinction between over-the-top services and telco services, Finnie said.

Fortunately, the industry is shifting. More and more decisions are being re-cast as business decisions for the purpose of delivering services that can be monetized, rather than running efficient networks (though those goals are not mutually exclusive). But there's still a long way to go, Finnie said.

Nearly half -- 46% -- of network operators say failure to adapt to new business and market conditions is the biggest problem they now face regarding their long-term business outlook, according to a Heavy Reading survey ahead of BTE. Only 9.5% identified failure to cope with or take advantage of technology changes as the biggest problem.

Heavy Reading's Graham Finnie brings his shipping news to BTE.
Heavy Reading's Graham Finnie brings his shipping news to BTE.

"So it's really about business as the issue, rather than the underlying technology," Finnie said.

As an example of the diminishing importance of technology compared with business, survey respondents said SDN and NFV will not have a transformative effect on network operators in terms of efficiency and profitability. Some 51% said the effect would be slightly positive. "Not exactly a ringing endorsement," Finnie quipped. About 30% said the technologies would have no impact or a negative impact. Only 22% said they would have a very positive impact.

"Delivering services that people actually want and are willing to pay for is really at the heart of the issue here," Finnie said.

We've turned the corner, and carriers are finally looking at things from more of a business and services point of view rather than simply a technology point of view, Finnie said. As an example, carriers are rolling out new service plans based on policy management, such as shared usage, application specific packages, packages supporting gaming, add-ons like particular services for Spotify, and sponsored data.

Carriers are more willing to work with third-party OTT providers, particularly in emerging markets, too. That's particularly encouraging because OTT providers deliver the services and value to end-users. And, Finnie said, the gap is diminishing inside telcos between network, IT, and product marketing teams.

"I'm far from downplaying technology. Technology is absolutely critical, but it has to be properly applied, with services in mind," he said. More importantly, technology has to be at the service of improving customer experience.

The Internet "was founded on delivering services. The technology as really incidental," Finnie said. "Tim Berners-Lee certainly didn't want to be known as the man who invented HyperText Transfer Protocol. He wanted to be known as a man who created a new means of collaborative working and information exchange," Finnie said.

— Mitch Wagner, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profileFollow me on Facebook, West Coast Bureau Chief, Light Reading. Got a tip about SDN or NFV? Send it to wagner@lightreading.com.

(14)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Page 1 / 2   >   >>
Infostack
50%
50%
Infostack,
User Rank: Moderator
6/20/2014 | 6:15:41 AM
Re: Shipping Whatever
Steve, you are right on.  The failure of the balkanized edge providers is that they have not been able to come up with new service delivery platforms that embraced the fundamentals of the new digital technology era, namely moore's, metcalfe's and zipfs laws.

As balkanized, edge access providers, ISPs and MNOs are incapable of waking up every day and asking,  "how do we provide more for less to more people across more contexts?"  Principally, that's because they have a narrow and uneven view of demand, as opposed to those at the core (OTT).  Netflix has a tremendous advantage in pricing and service delivery of VoD from its vantage point.  Today they are constrained only by their flat-rate pricing model, but have you seen that it costs them only 4 cents to store and deliver an hour of video on average?  And that number is declining by 30% annually.

Until the edge access providers restructure and get out from under their siege mentality they are doomed.  They are, quite literally, the city states and small kingdoms who hid in their fortified castles in the early to mid part of the last millenium and failed to adapt to the cannon and understand that power lay in mobile armies with great supply chains.

 
thebulk
50%
50%
thebulk,
User Rank: Light Sabre
6/18/2014 | 10:13:57 PM
Re: Getting there
That would be great, I think the best way would be to reach me on twitter @danablouin 
MordyK
50%
50%
MordyK,
User Rank: Light Sabre
6/18/2014 | 9:46:30 PM
Re: Getting there
mainly because the carrier management focus is telco and they ignore opportunities that are not telco. I am drafting a more detailed blog post and if you give me your details, i'll send you the link when I post it.
thebulk
50%
50%
thebulk,
User Rank: Light Sabre
6/18/2014 | 9:38:01 PM
Re: Getting there
So I have to ask now, did they ignor the market because they just didnt care or they just didnt care to see the opportunity? 
MordyK
50%
50%
MordyK,
User Rank: Light Sabre
6/18/2014 | 7:54:25 PM
Re: Getting there
The problem is less the time rather than the approach. Simply copying anothe rappproach will not work, but bringing a new dynamic approach would work well.

I was doing a consulting gig for a fraud company and every client required the same set of data which is only even possible from the carriers, but the carriers simply ignore the market.
thebulk
50%
50%
thebulk,
User Rank: Light Sabre
6/18/2014 | 7:47:45 PM
Re: Getting there
I dont know, they always seem to catch up about 5 years or more behind everyone else, and many times that is just too late. you would be talking about a major shift for that to change. 
MordyK
50%
50%
MordyK,
User Rank: Light Sabre
6/18/2014 | 7:42:59 PM
Re: Getting there
If carriers ever get their act together, I believe that its never too late as they bring some real benefits to the table that their competitors simply can't.
thebulk
50%
50%
thebulk,
User Rank: Light Sabre
6/18/2014 | 7:36:50 PM
Re: Getting there
no doubt its not something we can hold our breath for, carriers are not quick and nimble, the are large, goofy and move slow. lets not wait around, but it will happen, just when its too late. 
MordyK
50%
50%
MordyK,
User Rank: Light Sabre
6/18/2014 | 7:34:02 PM
Re: Getting there
That's been my argument since somewhere around 2003, so while I welcome it I no longer hold my breath for it :)
thebulk
50%
50%
thebulk,
User Rank: Light Sabre
6/18/2014 | 6:22:50 PM
Re: Getting there
As networks begin to see their network as the service that may very well change. 
Page 1 / 2   >   >>
Flash Poll
From The Founder
Last week I dropped in on "Hotlanta," Georgia to moderate Light Reading's inaugural DroneComm conference – a unique colloquium investigating the potential for drone communications to disrupt the world's telecom ecosystem. As you will see, it was a day of exploration and epiphany...
LRTV Documentaries
Verizon's Emmons: SDN Key to Cost-Effective Scaling

5|22|15   |   03:53   |   (0) comments


For Verizon and other network operators to ramp up available bandwidth cost effectively, they need to move to SDN and agree on how to do that.
LRTV Documentaries
Lack of Universal SDN a Challenge

5|21|15   |   04:51   |   (3) comments


Heavy Reading Analyst Sterling Perrin talks about how uncertainty about SDN standards and approaches may be slowing deployment.
LRTV Custom TV
Steve Vogelsang Interview: Carrier SDN

5|20|15   |   05:02   |   (0) comments


Sterling Perrin speaks to Steve Vogelsang, Alcatel-Lucent CTO for IP Routing & Transport business, about the new Carrier SDN-enabling Network Services Platform and the operator challenges it solves.
LRTV Custom TV
Carrier SDN: On-Demand Networks for an On-Demand World

5|20|15   |   20:52   |   (0) comments


Steve Vogelsang, Alcatel-Lucent CTO for IP Routing & Transport business, talks about requirements and benefits of Carrier SDN during the keynote address at the Light Reading Carrier SDN event May 2015.
LRTV Documentaries
The Security Challenge of SDN

5|19|15   |   02:52   |   (0) comments


CenturyLink VP James Feger discusses concerns that virtualization could create new vulnerabilities unless network operators build in safeguards.
LRTV Custom TV
NFV Elasticity – Highly Available VNF Scale-Out Architectures for the Mobile Edge

5|18|15   |   5:50   |   (0) comments


Peter Marek and Paul Stevens from Advantech Networks and Communications Group talk about their NFV Elasticity initiative and the company's latest platforms for deploying virtual network functions at the edge of the network. Packetarium XL and the new Versatile Server Module: 'designed to reach parts of the network that other servers cannot reach.'
LRTV Huawei Video Resource Center
Bay Area Spark Meetup 2015

5|14|15   |   3:54   |   (0) comments


Developed in 2009, Apache Spark is a powerful open source processing engine built around speed, ease of use and sophisticated analytics. This spring, Huawei hosted a meetup for Spark developers and data scientists in Santa Clara, California. Light Reading spoke with organizers and attendees about Huawei's code contributions and long-term commitment to Spark.
LRTV Custom TV
The Transport SDN Buzz

5|12|15   |   06:01   |   (1) comment


Sterling Perrin, senior analyst at Heavy Reading, speaks with Peter Ashwood-Smith of Huawei and Guru Parulkar of ON.Lab about the evolution of transport SDN and the integration of technologies.
LRTV Custom TV
Next-Generation CCAP: Cisco cBR-8 Evolved CCAP

5|5|15   |   04:49   |   (0) comments


John Chapman, Cisco's CTO of Cable Access Business Unit and Cisco Fellow, explained the innovation design of Cisco's cBR-8, the industry's first Evolved CCAP, including DOCSIS 3.1 design from ground-up, distributed CCAP with Remote PHY and path to virtualization. Cisco's cBR-8 Evolved CCAP is the platform that will last through the transitions.
LRTV Custom TV
Meeting the Demands of Bandwidth & Service Group Growth

5|1|15   |   5:35   |   (0) comments


Jorge Salinger, Comcast's Vice President of Access Architecture, explains how DOCSIS 3.1 and multi-service CCAP can meet the demands of the bandwidth and service group growth.
LRTV Custom TV
DOCSIS 3.1: Transforming Cable From Hardware-Defined Network to Software-Defined Network

4|29|15   |   03:48   |   (0) comments


John Chapman, Cisco's CTO of Cable Access Business Unit and Cisco Fellow, explains how DOCSIS 3.1 can transform cable HFC network to a more agile software-defined network.
LRTV Huawei Video Resource Center
Predicting Traffic Patterns for Quality Mobile Broadband

4|29|15   |   6:45   |   (0) comments


Accessing information ubiquitously creates complexity and creates heavy traffic onto the network, especially at large-scale events like sporting events or festivals. In this video, Huawei's Mohammad Hussain speaks to experts about how to predict traffic and improve user experience during periods of heavy traffic.
Upcoming Live Events
June 8, 2015, Chicago, IL
June 9, 2015, Chicago, IL
June 9-10, 2015, Chicago, IL
June 10, 2015, Chicago, IL
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
October 6, 2015, Westin Peachtree Plaza, Atlanta, GA
November 11-12, 2015, The Westin Peachtree Plaza, Atlanta, GA
All Upcoming Live Events
Infographics
Network functions virtualization (NFV) is not the easiest of topics to take on board, so here's a Light Reading infographic, developed following conversations with the folks at HP, that helps make sense of where NFV is taking the industry.
Hot Topics
Choosing a Technology Supplier? Consider Changing Your Selection Criteria
Steve Saunders, CEO and founder, Light Reading, 5/18/2015
Verizon Saves 60% Swapping Copper for Fiber
Sarah Thomas, Editorial Operations Director, 5/19/2015
Chattanooga Charts Killer Gigabit Apps
Mari Silbey, Senior Editor, Cable/Video, 5/20/2015
Smarter 'Dumb' TVs Will Drive OTT Adoption
Mari Silbey, Senior Editor, Cable/Video, 5/18/2015
Charter, Bright House: The Wedding's Back On
Mari Silbey, Senior Editor, Cable/Video, 5/19/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
With 200 customers in 60 countries, Stockholm-based Net Insight has carved out a solid leadership position in one of the hottest vertical markets going in comms right now: helping service providers and broadcasters deliver video and other multimedia traffic over IP networks. How has Net Insight managed to achieve this success in the face of immense competition from the industry giants?
My ongoing interview tour of the leading minds of the telecom industry recently took me to Richardson, Texas, where I met with Rod Naphan, CTO and SVP, Solutions, ...
I recently popped down to Texas to chat with CEO Eric L. Pratt about his company, Taqua.
Cats with Phones