Ericsson CTO: Carriers Moving Too Slowly on Virtualization

Steve Saunders
News Analysis
Steve Saunders, Founder, Light Reading

"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.

Stephen Saunders, Founder and CEO, Light Reading

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