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Cloud connections, not video or 5G, will be the global network operator's growth drive.
October 5, 2018
Global network operator Telia Carrier is celebrating its 25th year of operation by noting a significant shift in growth drivers, away from consumer consumption of video and online content in developed areas and toward cloudification and major data center connectivity, says Mattias Fridstrom, its chief evangelist. He claims Telia Carrier has done a better job than other wholesale providers of getting connected to the biggest clouds over the past five years, to be ready for this shift.
Interestingly, Telia Carrier isn't expecting a lot of traffic growth on its global backbone network from the rise of 5G and Internet of Things, since most of the traffic from those services will likely stay local, according to Fridstrom.
"I would say, absolutely, [those trends] are super relevant to the national operators," he says. "But to the big international operators yes, there will be a lot of international traffic, but I don't think it's going to be much because of 5G and the Internet of Things."
Figure 1: Telia Carrier's Mattias Fridstrom
Fridstrom has been around for all but three of Telia Carrier's 25 years and has seen significant market shifts along the way. In an interview with Light Reading, he says Telia Carrier has spent the last five years connecting the web giants as a wholesale operator and not getting distracted by the enterprise market and advanced services it can sell there -- although it will sell connectivity services to companies who want to reach major clouds. That positions the wholesale operator well for the real traffic growth which he believes is based on connecting large cloud sites.
"Right now, there's a trend in the world, and this is the same when I talk to every incumbent, they all see less growth than before, in terms of consumption by their end-users," Fridstrom comments. "That's just because everybody's already consuming as much video as they can. I think you're at the point now where you spend most of your time in front of your computer already. And it's hard to have more hours per day to do that."
While there is still enormous growth in South America, Africa and other less developed areas, "in the US and Europe, where we are very mature, the growth is not big there anymore," he says.
Cloud connections key
That pushes network operators such as Telia Carrier to look for other areas of growth, and that means connecting the big clouds, which the company is already doing.
"Telia Carrier has done a really good job the last 15 years of picking the next big companies," Fridstrom says. "We connect them -- connect Amazon, connect Google, connect Microsoft -- and help them develop their business over the Internet."
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He concedes that every network operator is making the same push, but says Telia Carrier is out ahead of the market and its focus on the big clouds and not the enterprise makes it more competitive.
"I think everyone else wants to be connected to them, but I think what made us number one in the world, was that we were the one that really in the last five years has focused on being the main supplier to the big five in the world," he says. "All of our competitors went after enterprise customers to do advanced services for them and other types of services for the enterprise people."
That includes CenturyLink, which acquired Level 3 Communications, formerly Telia Carrier's top competitor, he notes. Fridstrom sees Level 3 as more of an enterprise play now than a pure IP connectivity provider.
Fridstrom says the traffic spikes around 5G spill over to the international circuits but the volume won't be "crushing as some things have been in the past."
"That's because people are going to be consuming content that's cached locally," he says. "And for the most part with the IoT stuff, again you're talking about very small amounts of data that will be mostly kept local and acted on from there."
Next page: Why vendors are becoming less relevant
Telia Carrier is focused on finding new growth, including new connections to its large cloud customers and services to smaller enterprises, because simply driving cost out of the wholesale business through things such as automation isn't a viable approach to the business, Fridstrom states. In fact, since the telecom bubble burst back in the early 2000s, driving multiple global network operators into bankruptcy, the entire industry has been living on relatively thin margins, he says, driving costs out continuously over the last 15 years.
"We can still do a lot better, but I don't think we will save ourselves by saving on cost," he says. "We need to grow somewhere else, and for us, cloud is one way to grow. We will of course do automation, but not so much for cost reasons but to make us more attractive to do business with."
As a company of 490 people, Telia Carrier is focused on automating processes to become "super simple to do business with" and because it can't throw people at a problem, Fridstrom says. The network operator has brought on board a new team of IT folks, including some from outside the telecom space, to specifically address ways in which it can integrate its systems to, among other things, let customers dial up bandwidth on an automated basis to consume more without any manual intervention.
The decision to bring IT-skilled people on board and do the work internally followed unsuccessful efforts at getting consultants and others from outside to direct the effort.
"The problem we had was they didn't know our industry, so they could not really help us," Fridstrom says. "They did what we asked for, but it's hard to ask for something and then someone else to build it. I think we now realize that we need to have the people ourselves, and we need to have our people building our things because we know our business the best, and that's been a major change the last two years."
Fridstrom admits the shift to doing things internally has also made Telia Carrier's vendors a bit less strategically relevant, and that shift could well continue as more hardware is commoditized and as the operator develops its own internal orchestration of a variety of boxes and systems.
"They become less relevant to us over the last year, where we had realized that we need to have the skillset ourselves, we can't just outsource the thinking to them, because they have no clue what we want and what we do," he comments. "They do a lot of good things and we'll have a dialog with them about what new features are and what they can do but we have to internally develop something to take advantage of everything they do and make it perfect for us."
He would like to see the telecom industry agree on some standard approaches to the way live data is pulled from network appliances so that the network operators can make better use of that data. In today's realm, every vendor's gear does things like streaming telemetry a little differently.
"We talk a lot about APIs and connecting our systems to other systems and that's actually an area where I think we can start to see some standardization, so it's not that difficult for customers to connect directly to our systems," Fridstrom says.
The end goal would be letting customers enter their own orders and allowing those to flow connect systems inside an operator and between networks, with the different systems being able to talk to each other. The Telia Carrier exec thinks that's within reach but admits he isn't clear on exactly how it's being driven. Fridstrom does credit the Telecom Infra Project with bringing network operators together on a number of interoperability issues.
Telia Carrier has no plans to do its own hardware and will still rely on vendors for that, but instead of buying a "huge system" from a vendor, will likely buy "pieces of systems" and knit together its own orchestration, counting on the vendors to share required coding to make that happen.
— Carol Wilson, Editor-at-Large, Light Reading
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