Is your network built on 'The Old IP,' or are you part of 'The New IP' revolution?

Steve Saunders, Founder, Light Reading

September 11, 2014

11 Min Read
Introducing 'The New IP'

As anyone who's met me knows, it's not often that I'm stuck for words, but the huge changes that are currently sweeping the telecom industry this year have had even me struggling for the appropriate vocabulary to describe what's going on.

Fortunately, on a recent trip to Silicon Valley I heard a new industry term doing the rounds -- one that I think encompasses the current telecom zeitgeist perfectly.

The term is "The New IP" (and yes, it implies that there is also an "Old IP," of which we shall speak more shortly).

So what is The New IP? In simple technology terms, it's a state-of-the-art, virtualized IP network. But the reason why service providers and large enterprises need to sit up and take notice of The New IP doesn't have to do with technology nearly as much as it has to do with money.

It's about the money, dummy!
Specifically, networks built on The New IP technology help service providers to both save money on capex (capital expenditure) and opex (operational expenditure), and make money by selling new content-driven services.

This sets them apart from networks built on The Old IP, which typically don't do either of those things, consisting, for the most part, of utilitarian pipes designed to reliably deliver mucho traffic from hither to whence (and whose most important characteristic as far as service providers go is that they cost money).

Ok, so I'm simplifying things here -- but the telecom industry is actually well overdue for a dose of simplification, isn't it? The reason service providers today are anxious about having to plan their future network strategies is that the tech media (with the exception of Light Reading, obviously) has done an absolutely splendid job of obscuring the importance of virtualization by smearing it in a thick and bewildering layer of technical jargon, acronyms, buzzwords, and hype.

Sure, everyone has heard about SDN and NFV (boy, haven't we?!), but those specifications aren't what matters here; it's how they revolutionize service providers' businesses that counts (note to telcos everywhere -- "follow the money," in other words). These acronyms are actually symptoms of an absolutely huge upheaval that's about to turn the telecom ecosystem (and its economics) on its head.

Old, new, or somewhere in between
I'll dig into how The New IP changes everything in a minute. But first, gentle Light Reader, let's work out if YOUR telecom network is part of The Old IP world, or part of The New IP nirvana.

To do that, Light Reading has devised the following simple quiz to show how far you've come in moving from old to new, and how that progress could affect your company's bottom line.

The rules are simple: give yourself one point (1 pt) for each New IP box that your network checks, subtract one point (-1 pt) from the total for each box you check in the Old IP column, and then compare your score to our handy "What Your Score Means" key.

The Old IP

The New IP

Designed to scale clients (devices/nodes)

Capable of scaling clients and resources on-demand (cloud-like)

Rigid topology and architecture

Fluid in topology and architecture

Hardware-centric

Software-centric

IT-centric

User-centric

Integrated control and data planes

Disaggregated control and data planes

Decentralized intelligence and management

Centralized intelligence and management

Proprietary but standards-driven innovation

Open platform and open-sourced innovation

Time-bound provisioning and change management

On-demand provisioning and programmability

Key success metric: performance (speeds and feeds)

Key success metric: agility (usability)

Killer apps: data networking communications (email), ecommerce, voice/video/data integration (VoIP, unified comms)

Killer apps: Cloud everything, mobile data centers, big data analytics, virtualization everywhere

Management considers your network as an essential budget line item

Management considers your network to be a strategic asset that serves both the bottom and the top line by saving/making money

Source: Light Reading

What your score means

  • +10 points (max. possible)
    Whoa! Check out the big brain on [YOUR NAME HERE]. Are you sure you don't come from the future? Because, dude, your network like totally defines state of the art. Would you like a job at Light Reading? Scratch that -- can we all come and work for you?

  • +9 to +6 points
    All hail, IP visionary, we salute you! Where other service providers enervate, you innovate. Truly you are a trail blazer on the information superhighway, charting a course that the rest of the telecom industry must follow.

  • +5 points to +1 point
    Congratulations, slugger -- you've clearly done battle with the latest in comms technology and come out a winner. Your network isn't bleeding edge, but you've made real strides towards dragging it into the 21st Century.

  • 0 points to -9 points
    Humph. The good news is that your IP network is no worse than 90% of those currently installed by service providers. The bad? You are paying too much to buy and run a network which is actually making it harder for you to deploy new and profitable applications and services. Ouchy!

  • -10 points (worst possible score)
    It's pretty dark where you are, isn't it, old timer?

The shock of the new
As mentioned, one reason service providers are getting pumped up about virtualization is that it has the potential to deliver a double whammy of benefits: saving money on capex and opex AND making money on new services.

On the capex side, virtualization reduces the number of router ports that service providers have to buy -- especially out at the edge of the network. Conversely, core routers aren't much affected, and optical gear not at all -- or, as Michael Capuano, VP of marketing at Infinera Corp. (Nasdaq: INFN), told me the other day, "as far as I'm aware, no one has yet invented a way to create photons in software."

Note: It's a clear indicator of the robust health of the telecom market that Tier 1 service providers such as AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) aren't planning to use those edge router savings to reduce their net capex spend (which, when combined, added up to an astonishing $21 billion in 2012). Instead, they're expected to continue spending at record levels for at least the next year or so. What virtualization means is that this spend will purchase a lot more infrastructure for service providers' money -- good for them and their customers (and the rest of the telecom supply chain, of course).

The capex savings are nice, but the opex benefits delivered by The New IP are potentially even more significant than the capex savings.

Those opex savings come in different varieties. Use of automation to enable on-demand services reduces the need for humans to be involved in service provisioning, thus decreasing the inevitable incidence of human error on telecom networks. At the network level, service providers can reduce the number of truck rolls required to provision new services by doing it with a mouse instead.

But this new opex model isn't just about saving, it's also about enabling. In fact, what The New IP enables is probably even more important than any cost savings. At the business development level, The New IP gives the telcos the ability to start acting much more like their new OTT competitors (Netflix, Amazon, Facebook and so on) by using their live networks as a venue to design, spec, test and deploy new and profitable content-driven digital services. By building on open-sourced standards, network operators should also be able to act as better partners to innovators and developers, and more quickly incorporate outside innovation into their service mix.

And there's more. A New IP environment hands greater control and flexibility to a service provider's customers, who will be able (policies and rules permitting, of course) to add/drop and flex the services and applications they're using without having to reach out to their service provider and wait for a response/action. All of that adds up to an improved customer experience and an environment that encourages experimentation with, and use of, a greater number of services.

All this represents a meta-shift from where service providers are today: The switch from Old IP to New IP is as big, in fact, as the change from circuit-based to packet-switched networks.

Having written about tech for 25 years I've seen more than my share of technology hype, but having spent this year talking to service providers and their equipment suppliers I'm convinced that The New IP is the real deal.

In fact, the only thing likely to prevent service providers from taking New IP technology and running with it is the service providers themselves. Culturally, while the telcos want to compete with the new wave of OTT competitors such as Amazon, and recognize that in order to do so they must act more like the OTT players, in day-to-day reality most of them are miles away from being able to do so. Proprietary attitudes and "worst practice" for customer relations that go back literally decades will have to be overcome before real change can take place.

In other words: the ability of the telcos to make full use of The New IP will have as much to do with their own business philosophies as it does with technology.

Next page: All change?

All change?
All this obviously raises big questions about what impact The New IP will have on the Old IP router market -- the one dominated by Cisco Systems Inc. (Nasdaq: CSCO), Juniper Networks Inc. (NYSE: JNPR), Alcatel-Lucent (NYSE: ALU) and Huawei Technologies Co. Ltd. .

And while all of these players are having to react and adjust to The New IP, that process has the greatest ramifications for Cisco Systems, which has defined and led the router market for more than two decades. As virtualization reaches mainstream deployment in 2015 and 2016, it's clear that John Chambers (or the next CEO) and his senior team will face increasing scrutiny from two key groups -- customers of Cisco, and investors in Cisco.

"[Virtualization] makes Cisco extremely vulnerable," says Michael Genovese, managing director and sell-side analyst at MKM Partners , an institutional equities brokerage firm.

That vulnerability is rooted in the industry standards now being defined for virtualization. These specifications will enable service providers to build multi-vendor virtualized networks comprising best-of-breed solutions from different manufacturers, as opposed to just installing end-to-end Cisco equipment.

While Cisco is playing ball with the industry groups now developing virtualization standards, it is unlikely to revise its current approach of recommending "all Cisco" networks for its customers. "Cisco claims to be open, but at the end of the day it's the same Cisco," says Genovese.

That would equate to a continuation of today's status quo -- or a Cisco lock-in. And that's fine with many of its customers, who are quite content to do what Cisco tells them.

But not everyone feels that way, and Genovese points out that more sophisticated customers, such as OTT service providers and big financial institutions, are increasingly buying best-of-breed multi-vendor solutions: Arista Networks Inc. , Brocade Communications Systems Inc. (Nasdaq: BRCD) and VMware Inc. (NYSE: VMW) are amongst a slew of well established companies aggressively competing to provide "open" and interoperable alternatives to the Cisco hegemony.

"Watch the leading edge companies," recommends Genovese. "They tell you where the rest of the market will go, eventually."

Clearly, Cisco itself is not unaware of the threat posed by interoperable virtualization, and has been "following the money" itself with a variety of investments in small cells and other promising areas. However, no one expects the new money coming from these fresh initiatives to equal the revenue Cisco could potentially lose from its bread and butter router business, should things not go its way. In order to maintain market dominance, Cisco must win The New IP war.

Light Reading's role
The New IP is such a big deal that Light Reading is doing a couple of things to recognize its advent. One is that, with this here column, we are officially adding the term itself -- "The New IP" -- to our lexicon of telecom terminology; expect to see us using it in our analysis of telecom news from here on.

The other big move we're making is that, on September 16, we will be launching an exclusive new web community, www.thenewip.net, dedicated to covering everything to do with The New IP revolution. I won't spoil the surprise by giving too much away now, but if you work at a service provider or large enterprise, I can promise you that The New IP community will definitely be worth a visit.

Or to both paraphrase and misquote The Who: It's where you'll meet The New IP, nothing like The Old IP.

— Stephen Saunders, Founder and CEO, Light Reading

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About the Author(s)

Steve Saunders

Founder, Light Reading

Steve Saunders is the Founder of Light Reading.

He was previously the Managing Director of UBM DeusM, an integrated marketing services division of UBM, which has successfully launched 45 online communities in less than three years.

DeusM communities are based on Saunders' vision for a structured system of community publishing, one which creates unprecedented engagement among highly qualified business users. Based on the success of the first dozen UBM DeusM communities, the UBM Tech division in 2013 made the decision to move its online business to the UBM DeusM community platform – including 20 year old flagship brands such as Information Week and EE Times.

Saunders' next mission for UBM is the development of UBM's Integrated Community Business Model (ICBM), a publishing system designed to take advantage of, and build upon, UBM's competitive strengths as a leading provider of live events around the globe. The model is designed to extend the ability of UBM's events to generate revenue 365 days of the year by contextually integrating content from community and event sites, and directories, to drive bigger audiences to all three platforms, and thereby create additional value for customers. In turn, these amplified audiences will allow business leaders to grow both revenues and profits through higher directory fees and online sponsorship. The ICBM concept is currently being discussed with a broad group of business leaders across UBM, and is earmarked to be piloted in the second half of 2013 and early 2014.

UBM DeusM is Saunders' fifth successful start-up. In 2008, he founded Internet Evolution (www.internetevolution.com), a ground-breaking, award-winning, global online community dedicated to investigating the future of the Internet, now in its fifth year.

Prior to Internet Evolution, Saunders was the founder and CEO of Light Reading (www.lightreading.com), Heavy Reading (www.heavyreading.com

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