& cplSiteName &

The Big Telecom Switch

Steve Saunders
7/9/2014
50%
50%

It's been about six months since I re-acquired Light Reading from our insect overlords at the end of 2013. (See Stephen Saunders Acquires Light Reading From UBM.)

I was expecting to be crazily busy in the post-purchase phase (expectation met!), but what I wasn't prepared for was just how much our industry had changed while I was away. (For those unfamiliar with my "backstory," I took six years off from telecom from 2007 to 2013, either running an integrated marketing agency or serving hard time for criminal negligence, depending on your choice of grapevine.)

Coming back was a bit like being cryogenically frozen -- Han Solo-style -- and then being thawed out and finding that just about everything you thought you knew about telecom had changed.

To help me get an up-to-date handle on what's happening today, and to avoid making a giant ass of myself in front of my old/new Light Reading employees, I undertook what all new CEOs are supposed to do -- a series of 100 customer meetings in my first 100 days back "in office."

These meetings were mostly with C-level and Senior VP level execs, at both service providers and equipment manufacturers, and under NDA, a condition that probably provided me with a more accurate indication of what the industry really thinks than the paid marketing messages now competing for your attention in the html pages of industry websites.

So what did I learn on my journey through the telecom industry?

By far the biggest change evident since I left is the shift in priorities amongst Light Reading's service provider audience.

In 2007, network operators were still entrenched in the business of building high-capacity networks and making sure they were reliable. And that work continues, of course, every day. But today's service providers now face a new challenge -- monetizing all that capacity, and doing so in a way that both maintains acceptable levels of profitability while differentiating them from a slew of competitors, old and new.

In fact, it seems to me that it might be time to revisit and update our old friend the OSI model by adding an extra layer -- Layer 8, or the Money Layer, as shown below in a slide from my keynote presentation at the recent Big Telecom Event. Because that's really where the focus of the industry is right now: this segue from building the network to monetizing the network.

(Note: It's apparent that as the industry's interest moves up into the higher layers of the model and beyond, so the level of interest in lower OSI Layers such as 1 (optical), 2 (switching), and 3 (routing) is decreasing. If not actually commoditized, there is certainly far less to talk about or debate in areas such as carrier class Ethernet or IP routing than there was 10 years ago, something which raises all sorts of questions about the future role and relevance of organizations such as the MEF .

The most obvious effect of the monetization trend is the way it is now driving the world's telecom providers to undertake a dramatic business transformation process that is manifesting itself in a number of different ways: mobile operators looking to compete with terrestrial operators; cable operators looking to move into the mobile market; OTT operators buying fiber assets; and Tier 1 operators trying to beat the newcomers at their own game.

Factor in new players such as municipal and county governments, broadcasters, and utilities, and things get really interesting. (Obviously, these are all sectors that both Light Reading and Heavy Reading will be covering intensively during the next year, so stay tuned for lots more on all of these markets).

So that's the big picture. But within that superset there were a number of noteworthy technology trends that kept recurring in my meetings earlier this year.

The most notable, by far, relates to SDN and NFV. This is obviously the story of the year -- maybe the decade. And it's clear that of the two, SDN has so far swallowed the majority of marketing budgets and publicity. (Why, some people are even naming their industry publications after SDN!)

But behind the scenes it's NFV, not SDN, that dominates the conversation and the excitement.

Why? Because NFV is what service providers have decided they want, and need, right now. And that is a unique and unprecedented occurrence in the history of the telecom industry. For the first time, we are seeing the top technologists in the service provider community get out in front of the vendors and set a new direction (and, it must be said, catching some of the incumbent equipment manufacturers on the hop).

So what on earth is going on with SDN? Is it possible that our entire industry has just gotten it wrong on this tech?

It's happened before, after all, as those of you (like me) that are old enough to remember the battle between ATM and IP in the late 1980s will recall. Back then pretty much the entire trade press backed asynchronous transfer mode to wipe IP and Fiber Channel off the network. Thirty years later and, well, you know how that worked out.

But that kind of catastrophic error of analysis isn't what is happening here, I think. There's no question that 21st century telecom networks must be automated and virtualized, but the reality is that defining SDN and implementing it in wide area commercial communications networks is non-trivial.

Regardless of what industry pundits think, the process will take years -- probably a decade, in fact.

What type of SDN will emerge at the end of that time? Forget about any SDN solution that requires service providers to rip and replace boxes to obtain benefits. That's not going to happen.

Overlay solutions offer advantages, but isn't SDN supposed to be about simplification and consolidation?

As has happened many times before, it's likely that a hybrid will emerge, with networks that are more programmable than they are today but still recognizable as wide area communications systems.

What's intriguing -- and where companies stand to win or lose an awful lot of money -- is working out how our industry will get from where we are now to that new architecture. And in the meantime, NFV offers immediate benefits.

So those were the biggest findings of my tour of telecom during the first quarter of this year. Do you agree with them? Please let me know on the message board below.

— Stephen Saunders, Founder and CEO, Light Reading

(12)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Page 1 / 2   >   >>
Steve Saunders
50%
50%
Steve Saunders,
User Rank: Blogger
7/17/2014 | 3:35:41 PM
Re: Ironically
I'd agree with that Mitch. 
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
7/17/2014 | 2:29:57 PM
Re: Ironically
Steve - In addition to the companies you name, I cite HP.
Infostack
50%
50%
Infostack,
User Rank: Moderator
7/11/2014 | 3:16:14 PM
Value Based Pricing
Steve,

Firstly, the epic protocol battles you referred to occurred in the mid to late 1990s.   Data was a relative pimple on the elephant's butt in 1990 and few even knew of IP.  This is important in terms of understanding the interplay between voice and data and how FCC policy intentionally and unintentionally resulted in "the internet" and why the concept of net neutrality is both fiction and farce.

Secondly, your layer 8 supports the "old school" of network economics in which value was based on cost.  The "new school" developed over the past 30 years has priced based on value.  I call it marrying the communications session to the commercial/economic transaction.  Settlements should be occurring at every layer and boundary given the extreme range of (marginal) demand and nearly infinite upside.

The distinction is significant in terms of how we look at and understand convergence of supply and divergence of demand, and new business models defined by:

Core vs edge

Digital vs analog

Horizontal vs vertical

Geometric vs linear

Marginal vs average cost

Until the carriers (edge access providers) realize this fundamental shift that began when we undertook a vertical/logical separation of the Monopoly 30 years ago they will continue to fall behind by 20-30% annually in terms of their ability to monetize their capex and opex based on value-based pricing.  The old silos have dissappeared (or will do so quickly) and they are all at the edge of the global core. 

The debate we should be having needs to be less about supply and more about demand stimulated by 4K VoD, seamless mobile BB, 2-way HD video collaboration, and the IoT.  These 4 trends represent a compression of all the change over the past 30 years into the next 10.  In other words, it is enormous.  As I've said elsewhere in comment fields on this site, the current discussions about where the carriers are reminds me of the parable where the "Emperor Has No Clothes".

BTW, the single biggest thing that has impacted the market since you left in 2007 was layer 2 offload in the smartphone foisted on AT&T by Steve Jobs.  Just think about that along the lines of what I said above and the importance of translating that to current policy debates on interconnection, settlements, and net neutrality.

Michael
nasimson
50%
50%
nasimson,
User Rank: Light Sabre
7/10/2014 | 11:06:12 PM
welcome back
Steven you are back. And you are back with a bang. And you have hit the nail on its head. If this portal can crack the 8th OSI layer, you have lot of people like me as your permanent customers.
Steve Saunders
50%
50%
Steve Saunders,
User Rank: Blogger
7/9/2014 | 8:06:30 PM
Re: Ironically
Mitch - which vendors are getting itright with balancing NFV and SDN in the portfolios? 

For me, Brocade and RAD have the most well thought out strategies, followed by ALU.

Who are your winners here? 

 
Steve Saunders
50%
50%
Steve Saunders,
User Rank: Blogger
7/9/2014 | 8:03:14 PM
Re: Publication names
Hi Craig! 

I only included the joke because I knew you'd take it in good spirit! 

:)))

 

 
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
7/9/2014 | 5:32:32 PM
Re: Publication names
Yes, and it's something that will pass the test of time with flying colors.
brookseven
50%
50%
brookseven,
User Rank: Light Sabre
7/9/2014 | 5:29:45 PM
Re: Publication names
Dennis,

I still think the best product name is...."Free Beer".  Who doesn't want to have Free Beer?

The ads, the marketing, all of it writes itself.

seven

 
Mitch Wagner
100%
0%
Mitch Wagner,
User Rank: Lightning
7/9/2014 | 5:20:31 PM
Ironically
Ironically, NFV has a business advantage because the benefits are smaller. 

SDN promises to generate hundreds of millions of dollars in savings and additional revenue -- but first you have to rearchitect the entire network. Tell that to the CEO, and he says, great, let's form a committee to write a report to set up a working group to study the opportunity. 

Whereas with NFV, you might generate a much smaller savings and additional revenue. But it also requires a much smaller investment. You don't even have to go to the CEO to present the opportunity. You can go to him when you've generated results. Then iterate on a larger scale.  

NFV scales up much easier than SDN scales up. 
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
7/9/2014 | 2:54:36 PM
Re: Publication names
Yeah -- everybody knows the real money is in creating a unique and distinctive brand -- like GigaMats or something.
Page 1 / 2   >   >>
More Blogs from Column
In the second of a three-part series, OpenCloud's Jeff Gordon delves deeper into the driving forces for adopting a converged service layer.
Edge computing is a compelling option for telcos looking to balance tightening finances with increasing demands for bandwidth and processing speed. 
The conclusions of a new survey, commissioned by OpenCloud and conducted by Heavy Reading, suggests that the move towards converged service layers is now well underway.
WiFi is offering a challenge to the network-centric cellular status quo and that's something that mobile network operator CEOs recognize, believes Devicescape CEO Dave Fraser.
NFV can bring operational headaches as well as operational gains, argues Andy Huckridge.
From The Founder
The independent evaluation of Nokia's key virtual network functions (VNFs) was a defining moment for the Finnish giant.
Flash Poll
Live Streaming Video
Charting the CSP’s Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it’s going from two industry veterans.
LRTV Custom TV
Cisco's Innovations in Cable

5|26|16   |   03:18   |   (0) comments


Marc Aldrich from Cisco discusses the latest in security, the evolution and momentum for CCAP and what the industry will be seeing next from Cisco.
LRTV Documentaries
Leading Lights 2016 Highlights

5|25|16   |   02:26   |   (1) comment


Some of the high points from this year's Leading Lights awards dinner at the Hotel Ella in Austin, Texas.
LRTV Documentaries
Light Reading Hall of Fame 2016

5|23|16   |   05:43   |   (0) comments


Find out who has been welcomed into Light Reading's Hall of Fame this year.
LRTV Custom TV
ZTE TM Forum Highlights

5|23|16   |     |   (0) comments


ZTE showcased its new ICT solutions at TM Forum in Nice.
LRTV Interviews
Gamma's MD on the Emergence of UC2

5|20|16   |     |   (0) comments


Gamma Communications Managing Director David Macfarlane believes the unified communications (UC) market has reached a tipping point.
LRTV Custom TV
The Ultimate 5-Minute Guide to Digital Customer Engagement

5|20|16   |     |   (0) comments


In this short video, you will hear all about how Digital Customer Engagement is the key to meeting customer expectations, keeping them happy, and maximizing revenue. VP Product & Marketing at Pontis, Ofer Razon, breaks down for us the five essential capabilities for successful Digital Customer Engagement. Don’t miss!
LRTV Custom TV
NFV in 2016: Part 1 – NFV Use Cases Get Real

5|19|16   |   05:57   |   (0) comments


Consensus is building around the key use cases for NFV, including managed IP services at the network edge and on customer premises, which can generate new revenues from enterprises/SMBs and consumers; Evolved Packet Core to support LTE migration; and adjacent technologies, such as TAS and IMS, to support VoLTE and next-generation charging and policy control ...
LRTV Custom TV
Nokia's Steve Vogelsang on NFV – Part 3

5|19|16   |     |   (0) comments


Steve Vogelsang discusses the challenges of operational transformation and how Nokia helps its customers. Join Steve at the Big Communications Event in Austin the morning of May 24, on his keynote and optical networking panel.
LRTV Interviews
Level 3: Why UC Is In Demand

5|17|16   |   04:12   |   (1) comment


Andrew Edison, Level 3's senior VP of sales, EMEA region, talks about the drivers of growth in the unified communications services market.
LRTV Custom TV
ARM's OPNFV Action

5|17|16   |     |   (0) comments


At the ARM booth at MWC 2016, Joe Kidder and Bob Monkman speak to Light Reading about OPNFV and their upcoming action.
LRTV Custom TV
Nokia's Steve Vogelsang on NFV – Part 2

5|16|16   |     |   (0) comments


Steve Vogelsang gives advice to service providers on how to move to NFV. Join Steve at the Big Communications Event in Austin the morning of May 24, on his keynote and optical networking panel.
LRTV Interviews
Interoute CTO on NFV's Maturity

5|13|16   |   06:46   |   (1) comment


Matt Finnie, CTO at international operator Interoute, explains how NFV has made life easier in terms of logistics and how Interoute can now enable a 'software-defined moment' for its customers.
Upcoming Live Events
September 13-14, 2016, The Curtis Hotel, Denver, CO
December 6-8, 2016,
June 16-18, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
A new survey conducted by Heavy Reading and TM Forum shows that CSPs around the world see the move to digital operations as a necessary part of their overall virtualization strategies.
Hot Topics
DT: Telcos Must Escape Vendor Prison
Iain Morris, News Editor, 5/24/2016
AT&T to Start 5G 'Friendly' Trial by 2016 End
Dan Jones, Mobile Editor, 5/24/2016
WiCipedia: Short Skirts & Back-Up Plans
Eryn Leavens, Special Features & Copy Editor, 5/20/2016
Eurobites: Be More European, EU Tells Streaming Services
Paul Rainford, Assistant Editor, Europe, 5/20/2016
Cable Is Eyeing Its Retail Options
Mari Silbey, Senior Editor, Cable/Video, 5/25/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
In this latest installment of the CEO Chat series, Craig Labovitz, co-founder and CEO of Deepfield, sits down with Light Reading's Steve Saunders in Light Reading's New York City office to discuss how Deepfield fits in with the big data trend and more.
Grant van Rooyen, president and CEO of Cologix, sits down with Steve Saunders, founder and CEO of Light Reading, in the vendor's New Jersey facility to offer an inside look at the company's success story and discuss the importance of security in the telecom industry.
Animals with Phones
Live Digital Audio

Our world has evolved through innovation from the Industrial Revolution of the 1740s to the information age, and it is now entering the Fourth Industrial Revolution, driven by technology. Technology is driving a paradigm shift in the way digital solutions deliver a connected world, changing the way we live, communicate and provide solutions. It can have a powerful impact on how we tackle some of the world’s most pressing problems. In this radio show, Caroline Dowling, President of Communications Infrastructure & Enterprise Computing at Flex, will join Women in Comms Director Sarah Thomas to discuss the impact technology has on society and how it can be a game-changer across the globe; improving lives and creating a smarter world. Dowling, a Cork, Ireland, native and graduate of Harvard Business School's Advanced Management Program, will also discuss her experience managing an international team focused on innovation in an age of high-speed change.