Cloud Native/NFV

Cisco's Kanouff: Service Providers Squeezed Between Demand & Revenue

LAS VEGAS -- Cisco Live -- Service providers are getting squeezed by increased demand for bandwidth from customers resistant to paying more for it, says Yvette Kanouff, SVP/GM of Cisco's service provider business.

Kanouff was named head of Cisco's service provider business in March when her predecessor, Kelly Ahuja, left after 18 years of service. The change was part of a broad change in top management after current CEO Chuck Robbins succeeded 20-year chief John Chambers last year. (See Cisco's Ahuja Quits as Robbins Revamps His Top Team.)

I sat down with Kanouff at the company's enterprise customer conference this week. I asked her what her crystal ball sees for service providers -- but also asked her not to discuss the need for networks to get virtualized, more flexible and scalable. Those things are important, but we've been talking about them for years, and I wanted to hear something different.

Kanouff was at a service provider herself not long ago, joining Cisco Systems Inc. (Nasdaq: CSCO) two years ago from Cablevision, where she was EVP corporate engineering and technology.

Kanouff started to forecast the future by talking about the past. From a technology perspective, service providers previously had racks of hardware, with each rack holding an individual vendor's equipment that performed a specific function.

To add a service, today a service provider writes an RFP, vendors respond, the service provider picks a vendor to build a platform, and negotiates terms. The vendor builds and tests the platform -- and then you find a bug and it's back to the beginning. But eventually the platform is ready, and the service provider has to buy equipment, rack it and stack it, and get it wired.

"And when you finally launch it a year has passed," Kanouff said. ("And it's obsolete," I joked.)

"That process has to end," she said. "There's a whole new way we have to work."

In the future, functions will be managed by software running on clouds, making service providers more agile and innovative. A service provider looking to innovate will deploy software from the vendor on its own cloud, segment the network, try the software on a small group of customers, then iterate together with the vendor on the production process. When the software is ready, the service provider deploys the software on its cloud instantly, on existing equipment.

"You can try things, do PoCs easier, it becomes a more flexible world," Kanouff said.

Those are technology changes in the pipeline.

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From the business side, bandwidth is growing 50% per year, and will continue to increase. But revenue is nowhere near keeping pace. "Service providers have to increase bandwidth without having to increase revenue," Kanouff said. They'll have to find ways to charge for bandwidth usage and build value-added services.

Net neutrality regulation can inhibit innovation, Kanouff said. "There has to be some kind of way to monetize the bandwidth," she said. "If you can't monetize the bandwidth, how will you have the industry expand?" In June, Cisco issued a statement saying it was disappointed by a court decision upholding the FCC's net neutrality rules.

This wasn't Light Reading's first time talking with Kanouff since she assumed the top job in Cisco's service provider business. Light Reading CEO Steve Saunders sat down with Kanouff in March. Watch the interview here:

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— Mitch Wagner, Follow me on TwitterVisit my LinkedIn profile, Editor, Light Reading Enterprise Cloud.

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