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Ericsson CTO: Carriers Moving Too Slowly on Virtualization

Steve Saunders
9/15/2015

"I'm worried about the pace of technology change in Tier 1 operators."

So said Ulf Ewaldsson, CTO at Ericsson, when Light Reading visited him at the Swedish vendor's HQ in Kista, Sweden, last week.

Culture is the number 1 factor holding things up, he said. "I'm sitting on a technology arsenal that can help them, but their risk appetite is low. These are big companies, with too much job protection."

In contrast to the Tier 1 players, Ewaldsson says Ericsson AB (Nasdaq: ERIC) is seeing a high level of interest from new and disruptive players in New IP capabilities. "There are so many others that are interested, that are non-traditional telcos," says Ewaldsson, adding that Ericsson expects 20% of its sales to come from the emerging players by 2020.

So what is a "non-traditional" telco? We asked Ewaldsson and he was nice enough to draw us a picture (see below).

Ulf's New World Order (With Car)
Ulf Ewaldsson interrupted his career as a new age abstract expressionist to become CTO of Ericsson.
Ulf Ewaldsson interrupted his career as a new age abstract expressionist to become CTO of Ericsson.

On the left of Ewaldsson's diagram is the access network; in the future it will include next-gen technologies such as 5G, next-gen PON and IoT, which will first take off in markets such as automotive. ("That's a car," Ewaldsson pointed out, helpfully.)

In the middle of the diagram is the next-gen central office and next-gen telco data center, which is the place where Tier 1 carriers should now be deploying virtualized services and applications using VNFs, Ewaldsson believes.

And the "non-traditional telcos?" They're the enterprise cloud services on the right of Ulf's diagram -- including Amazon Web Services, IBM Softlayer, Microsoft Azure and Google Cloud Platform.

The communications industry abhors an innovation vacuum and, according to Ewaldsson, the risk is that if Tier 1 Carriers don't deploy virtualization in their data centers soon, the enterprise cloud players will sweep in and expand their existing services into what has traditionally been a Tier 1-only space. That could leave Tier 1s playing in the access network, only -- not a good look for them, or their shareholders, at all.

Ewaldsson's analysis has some themes in common with that of Eric Xu, the Rotating CEO of Huawei, who we also met with last week for an exclusive interview in Madrid. [Editor's note: Someone is piling up the frequent flier miles around here!] Both executives see NFV as a step on a journey that ends in the cloud.

"NFV is about using software to realize network functions which will be then deployed on cloud data centers. So for us it is as much about cloud as it is about virtualization," Xu told us.

And both executives recognize that the telco data center is going to be the battleground where the future of today's service provider incumbents will be decided, which explains why Huawei and Ericsson are both busy developing solutions for next-generation data center architectures.

"We have been working on solutions designed to help telecom operators leverage their central office facilities and build data centers that are logically centralized but physically distributed," Xu says.

ó Stephen Saunders, Founder and CEO, Light Reading

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Ray@LR
[email protected]
9/15/2015 | 6:30:55 AM
How fast is too slow?
There's no doubt that some operators appear to be laggards, but even when operators move as fast as their day-to-day operations allow, is that still too slow?

Are they doomed? Is it already too late for many telcos in terms of transforming to survive (and I mean survive rather than thrive)?
mendyk
mendyk
9/15/2015 | 8:33:52 AM
Re: How fast is too slow?
Ray -- there's certainly a risk of marginalization for network operators, but really, why would the Web players even want to get into that middle part of the diagram? Maybe through acquisition it makes sense -- Google buys Verizon, or DT, or something like that. That part of the diagram is essential, but I would be very surprised to see any significant overbuilding to displace what's already there, even if it isn't virtualized.
Ray@LR
[email protected]
9/15/2015 | 9:48:47 AM
Re: How fast is too slow?
It is an interesting proposition from Ewaldsson -- and let's not forget that all vendors always want operators to move faster and, well, buy mores stuff (kit, services, software).

Of course, if the vendors believe that they might lose a large part of their business because telcos go out of business or become so marginalized that their operations and networks shrink then that's certainly somethging to get woriied about.

I agree - getting into that middle part would be an M&A move, and that wold be acquisition of real estate. If central offices/local exchanges came up for grabs aI think the bidding would be fierce and valuable.

I know there are people who believe that operators will reach a point of financial distress and that is when Google steps in and buys the assets. That's probably the extreme case but not out of the question.

Of course, if Google did that, it may have to promise certain things to te regulators. 
msilbey
msilbey
9/15/2015 | 3:32:25 PM
Re: How fast is too slow?
I didn't realize most of the data center functions hadn't been virtualized yet by the carriers. Doesn't that put them behind the enterprise sector, or am I missing something here?
Steve Saunders
Steve Saunders
9/15/2015 | 4:35:07 PM
Re: How fast is too slow?
Depends what functions we are talking about. If we're taking about virtualization a full telco data center, no, no ones doing that yet. There's lots of virtualization in regular data centers but that's not as challenging.
Johny123456789
Johny123456789
9/23/2015 | 7:28:30 AM
Re: How fast is too slow?
Agreed and I would say that the further we go with data center capacity the faster it'll goes with new techno 
kq4ym
kq4ym
9/28/2015 | 12:19:54 PM
Re: How fast is too slow?
Very interesting how "...These are big companies, with too much job protection," can ultimately slow down the NFV journey and with the possibility of hampering the industry in what might be very significant ways. And not to mention how those carriers may well suffer big consequences down the road as well.
Ray@LR
[email protected]
9/15/2015 | 6:32:01 AM
Is that an Ulf original?
Can I buy the Ulf original artowork on eBay?

Car manufacturers should be studying that doodle...
Mohammad.Mahloujian@ite.se
[email protected]
9/16/2015 | 2:58:20 AM
The root cause Tier-1 operators or ICT vendors?
Accordin to Ericsson CTO, Evaldsson:

"...The communications industry abhors an innovation vacuum and, according to Ewaldsson, the risk is that if Tier 1 Carriers don't deploy virtualization in their data centers soon, the enterprise cloud players will sweep in and expand their existing services into what has traditionally been a Tier 1-only space. That could leave Tier 1s playing in the access network, only -- not a good look for them, or their shareholders, at all....."

 

I do not believe that anyone can find any operator in Tier one group who are not aware of Virtualization and by the way even automatization of their datacenters. This has been a trend the last 5-6 years within the IT and Telecom. In my understanding the necessity of virtualization could be divide in two categories

1-Virtualization of the servers with "hard tie" to the Telecom functions

In the first category it is the Telecom vendors and it's partners which almost define weather virtualization is possible or not. E.g. Ericsson and it's business partners providing a certain XG mobile functions to a tier one operators. But the delivered functions, licensing model, or HW does not really support the virtualization. There is also another complexity and it is the Multi vendor environment and existing infrastructure supporting the new or older technologies.

 

2-Virtualization with looser "tie" to the telecom functions

Many operators made a lot of long term and expensive investments in supporting functions for their telecom business. As far as I can see many of these solutions are more or less tailor made due to the complexity of the requirement, business and existing and chosen technology e.g. HW and/or SW from Oracle, IBM, Amdoc, SAP, SAP Hana, Etc.

 

The problem


In other words the telecom operators which did not made enough effort to virtualize their "datacenter" have in fact stocked with lack of support of virtualization from the Telecom vendors and their business partners or lack virtualization from their IT vendors. The problem owners are the operators but the problem is not necessarily caused by the same.
Steve Saunders
Steve Saunders
9/16/2015 | 3:56:11 AM
Re: The root cause Tier-1 operators or ICT vendors?
Mohammad, very interesting and thanks for sharing
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