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
Network architects aiming to upgrade their networks to support agile, open, virtualized services in the 21st century need to consider new criteria when choosing between technology suppliers.
Live Streaming Video
BTE 2015 Sponsor Keynote: HP
Dr. Prodip Sen, CTO, Network Functions Virtualization, HP
LRTV Custom TV
Red Hat Demo

7|2|15   |   10:53   |   (0) comments


Red Hat's Nicolas Lemieux demonstrates how Red Hat is driving innovation through open source communities.
LRTV Custom TV
Red Hat's Approach to OpenStack Adoption

7|2|15   |   5:17   |   (0) comments


Red Hat's Radhesh Balakrishnan outlines his company's open source strategy for both enterprises and telcos.
LRTV Custom TV
The New IP Goes Mobile With vEPC

7|2|15   |   1:12   |   (0) comments


Heavy Reading's Gabriel Brown discusses results of a Light Reading survey sponsored by Brocade that shows a clear commitment by mobile operators to move quickly to virtual EPC deployment.
LRTV Custom TV
Making Business Sense of SDN

7|2|15   |   1:42   |   (0) comments


Results of a Brocade-sponsored survey show that CSPs have a clear sense of SDN use cases but are wrestling with the business case. Sterling Perrin of Heavy Reading looks behind the numbers.
LRTV Custom TV
NFV Will Be Here Sooner Than You Think

7|2|15   |   2:22   |   (0) comments


Forget the usual ten-year cycle for new technologies – NFV will be a core part of CSP networks in five years, based on results of a Brocade-sponsored survey, says Heavy Reading's Caroline Chappell.
LRTV Custom TV
The New IP Gains Traction With CSPs

7|2|15   |   1:42   |   (0) comments


Roz Roseboro of Heavy Reading analyzes results of a Light Reading survey sponsored by Brocade showing that CSPs are getting serious about making the transition to the New IP era.
LRTV Custom TV
It's (Real) Time for Analytics

7|2|15   |   1:42   |   (0) comments


Heavy Reading's Jim Hodges looks at how CSPs say they plan to use analytics to deploy new services in real time as part of The New IP, based on results of a survey sponsored by Brocade.
LRTV Documentaries
IoT in Action

6|30|15   |   1:39   |   (8) comments


Two co-workers discuss the benefits of IoT technology.
LRTV Interviews
Ericsson Opens Up on OPNFV

6|30|15   |   14:16   |   (3) comments


Martin Bäckström, VP and head of industry area Datacom at Ericsson, talks to Light Reading founder and CEO Steve Saunders about the emergence of OPNFV, the importance of standards and Ericsson's OPNFV plans.
LRTV Custom TV
NetNumber Founder Discusses NFV/SDN Impact on SP Networks

6|26|15   |   4:15   |   (0) comments


NetNumber Founder Doug Ranalli examines why SPs need a new network infrastructure for service agility. While NFV and SDN are the tools, the old ways of thinking about signaling control are inhibitors. Doug provides his recommendations.
LRTV Custom TV
Orchestrating NFV vCPE Services Across Multivendor Networks

6|26|15   |   5:46   |   (0) comments


Nirav Modi provides an overview of vCPE, the fastest-growing NFV use case, showing how Cyan's Blue Planet orchestrates vCPE services across a multivendor infrastructure to rapidly deliver new managed services for business customers.
LRTV Custom TV
ZTE at LTE Summit Amsterdam 2015

6|26|15   |     |   (0) comments


As one of the leading global telecommunications providers, ZTE presented its cutting-edge technology at LTE World Summit 2015 in Amsterdam. On display at ZTE's booth were the latest R&D achievements in wireless, 5G development, HetNet, deep convergence of FDD and TDD, and RCS/IMD/iSDN/vCN.
Upcoming Live Events
September 16-17, 2015, The Westin Galleria Dallas, Dallas, TX
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
October 6, 2015, The Westin Peachtree Plaza, Atlanta, GA
October 6, 2015, Westin Peachtree Plaza, Atlanta, GA
October 14-15, 2015, New Orleans Ernest N. Morial Convention Center, New Orleans, LA
November 5, 2015, Hilton Santa Clara, Santa Clara, CA
All Upcoming Live Events
Infographics
Hot Topics
Who's Feeding Fiber to LinkNYC Hotspots?
Mari Silbey, Senior Editor, Cable/Video, 6/29/2015
What's a Gigabit Good For?
Carol Wilson, Editor-at-large, 7/1/2015
Colt to Jettison Ailing IT Business
Iain Morris, News Editor, 6/30/2015
Eurobites: Activist Investor Takes Stake in AlcaLu
Paul Rainford, Assistant Editor, Europe, 6/30/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Casa Systems has been going from strength to strength over the last couple of years. In 2013, it became the first vendor to ship an integrated CCAP device -- the ...
Cedrik Neike, SVP of Global Service Provider, Service Delivery, at Cisco, talks to Light Reading founder and CEO Steve Saunders about solving service provider customer problems in a virtualized, DevOps world, including multivendor support and the future of network procurement.
Cats with Phones