Carrier Ethernet 2.0

Comptel: The Contrarian View

ORLANDO, Fla. -- COMPTEL Plus Fall 2013 -- One of the things I've always liked about the Comptel Plus show is that it is a show for competitive carriers by competitive carriers, so the carrier execs are there. And because most of them grew up in the competitive carrier space, they tend to be a bit more opinionated -- or willing to share their opinions, at any rate.

And this time around I wasn't disappointed by the thoughts, often volunteered, about some of the "hottest" trends in telecom. To wit:

Carrier Ethernet: Ethernet has been a game-changer for telecom. And we have an entire event next week that grew out of the development of Carrier Ethernet. Know who's unimpressed? Level 3 Communications Inc. (NYSE: LVLT) CTO Jack Waters.

Waters says Carrier Ethernet "didn't get the widespread adoption that was expected," and that in today's market, the distinction between Carrier Ethernet and what was developed for the enterprise has blurred substantially. "It lacked value and a supply chain," Waters insists. "The economics were never as good. All the volumes are in the enterprise and if carriers want to buy a version of Ethernet, the lines between what they are buying and enterprise Ethernet are blurred."

Small cells: Everyone knows small cells are a major trend in wireless, and just about to take over the planet... or not, says Tower Cloud Inc. SVP of business development George Townsend.

"There hasn't been the explosion in small cells everyone expected," Townsend says. "There may be 20 nodes here and 15 modes there, but a lot of what was supposed to be small cells has been addressed by indoor DAS [distributed antenna system].

Interference issues have loomed that prevented small cells from delivering the improvements in coverage and capacity that wireless carriers expected, Townsend says. At this point, he sees small cells as "a solution looking for a problem," although he concedes the interference issues and other complications can still be worked out."

Software defined networking (SDN) and network functions virtualization (NFV): Multiple carrier executives downplayed their interest in the twin trends of virtualization, saying they don't yet see the relevance for those mostly engaged in transport networks right now.

That's not surprising, according to Joe Cumello, CMO of Cyan Inc. , and Patrick Ostiguy, CEO of Accedian , two companies that are suppliers to the competitive space, and that are also heavily engaged in SDN/NFV development. Comptel Plus doesn't tend to attract the IT executives from the carriers, and they are the folks who are going to be most interested in cutting their capex costs by moving to commercial off-the-shelf hardware and specialized software. Ostiguy told us:

These guys are tired of all the different appliances, most of which run on Linux PCs, but all of which have different service elements, different sparings, and different warranty and replacement schedules. If they could have two vendors, for vendor honesty sake, at the hardware level, for IT and in the datacenter, they'd do it.

The competitive carriers are driven by what their customers want and Cumello says those serving datacenter interconnection and similar markets are probably hearing from their customers about the need for more flexible services, which will push them in the direction of SDN and NFV. Those serving other markets might not be hearing it yet, but he's convinced they will.

And that's this year's contrarian report from Comptel.

— Carol Wilson, Editor-at-Large, Light Reading

Carol Wilson 9/26/2013 | 3:51:08 PM
Re: Contrarians matter Joe,

Thanks for weighing in with such a detailed response. I think you are raising some excellent points.

I also think this goes back to what Dan O'Shea said at the beginning of the thread - it's important to remember that different network operators come at these trends from very different places, and at a different pace and level of interest. 
joe.cumello 9/26/2013 | 3:36:27 PM
Re: Contrarians matter When it comes to SDN and NFV, I think there are three key issues at play as to whether or they're likley to engage in the discussion or pursue the technology.

1. Ability to React/Limited Capex: Many of these operators have become very efficient at driving maximum revenue out of limited capex resources. Additionally, because of these constraints, they wait until incumbent vendors can provide the technology or until the larger operators have vetted it/tested it first to limit risk.

2. Customers-base: If you're a regional service provider connected to major financial customers, content players, and data centers (or have aspirations to), it's likely that you are dealing with customers that are familiar with elastic compute, cloud services, and virtualization and these customers are looking for that same efficiency and flexibility from their network services. Operators who mainly derive revenue from wholesale or from triple play/residential may not be feeling the same customer pressure for the service types SDN and NFV enable.

3. Business/Revenue Model Simplicity: Related to #2, NFV assumes that the service provider is offering many different service types, hardware, or technologies that need to be virtualized in order to realize the capex and opex reduction promised by this technology. But if you're a small provider that has a simple product porfolio (fiber-based services, or just triple play services) you may not have many functions that need to be virtualized, and as a result, may not see the value yet. 

Speaking from experience, the entry point for Cyan to start SDN conversations in this market is usually in multi-vendor management, visibility, and orchestration of services - which solves a tangible pain-point by simplifying their current operations. 



Dredgie 9/26/2013 | 2:32:24 PM
Re: Contrarians matter Yeah – and in all fairness, this might not be on the radar for smaller players... though it should be! Big or small, network operators should all have a 'software telco' mindset.  
Carol Wilson 9/26/2013 | 12:30:16 PM
Re: Contrarians matter You also have to remember that most of the guys at Comptel are there to buy and sell services from each other - so they are not necessarily talking technology at all. 

Having said that, most are techno-savvy. I think for them, the SDN/NFV discussion is at the point where they've heard a lot about it but aren't convinced it's happening in the near-term. 

I would agree with you on needing public financial models and Project Clearwater is a good example. 
Dredgie 9/26/2013 | 12:27:46 PM
Re: Contrarians matter Must admit - I was sorta stunned by this as well, given the 26? more? or so carriers driving NFV, (in one example). But if these guys were suits, that's not so surprising. I think the techies have seen the business model in their heads and are driving ahead as if it's obvious to everyone. What we need is more public financial models like the one created by the Project Clearwater community. Yes – it's simple... but powerful. http://www.projectclearwater.org/technical/clearwater-performance/
TeleWRTRLiz 9/26/2013 | 10:33:10 AM
Re: Contrarians matter Very. I've already passed this article onto my colleague who is running a NFV member workshop on Monday. 
Carol Wilson 9/26/2013 | 10:30:09 AM
Re: Contrarians matter Liz, 

I was genuinely stunned by the number of blank looks and sheepish smiles I got from CLEC execs who clearly knew of the trend, but don't see it as something they have to understand just yet. Now these were the business guys, not the techies. 

But it was a good reality check, for sure.
TeleWRTRLiz 9/26/2013 | 10:27:45 AM
Re: Contrarians matter Considering the hype around SDN and NFV, that section of your article really puts things into perspective.
Carol Wilson 9/26/2013 | 9:43:33 AM
Re: Contrarians matter Dan, well-said and I agree. That's one of the fun things about Comptel is talking to folks who speak their mind even it if bucks conventional wisdom. I always learn stuff from people like that. 

DOShea 9/26/2013 | 9:35:59 AM
Contrarians matter These are important opinions, and we need these kinds of perspectives more often when massive hype builds around new technologies. It's a reminder that innovation isn't one-size-fits-all, and different carriers have different needs--their disinterest should not necessarily be viewed as a failure to understand. In fact, maybe they're seeing something the rest of us don't see, or don't want to see, at any rate.
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