Cisco SVP: Telecom Must Transform or Lose Out
CHICAGO -- Big Telecom Event -- Companies in the telecom industry must transform themselves into platform providers and collaborate more closely or they will be left behind by over-the-top players such as Uber and Amazon, according to Cedrik Neike, Cisco's senior vice president of global service provider delivery.
Speaking on a keynote session this morning at Light Reading's Big Telecom Event in Chicago, Neike said operators and vendors had reached a crossroads where they could either continue to focus on providing connectivity or reinvent themselves as platform players.
"At the moment, the value is not in the connectivity -- the industry we have is being redefined by other players, the Ubers of this world," he told attendees, in reference to the app developer that has shaken up the taxi industry.
Neike went on to complain that innovation in the telecom industry has moved too slowly, with operators testing equipment from vendors over a period of months or even years, and that an open source environment and stronger relationships could spur radical improvements.
Last October, Cisco Systems Inc. (Nasdaq: CSCO) embarked on a massive internal reorganization aimed at better positioning itself for "the future of cloud, security, virtualization, analytics, data center, IoE [Internet of Everything] and collaboration," said the company in a statement sent to Light Reading at the time. (See Report: Cisco Starts Reorg, Layoffs.)
Cisco further indicated the restructuring would affect up to 6,000 roles, or about 8% of its global workforce, and argued that "technology disruption has never moved more quickly, requiring all companies to adapt and accelerate through change."
But Neike claimed Cisco was also embracing a more open model as part of that restructuring and said this had already had a positive impact on its dealings with service provider customers.
In addition, having built a reputation as a seller of boxes, it has made good progress on reinventing itself as provider of platforms and software with a focus on virtualization, he said. In March, Cisco claimed it could offer nearly 50 virtual network functions -- more than any other player in the industry -- and that number will increase to 100 in the future, according to Neike.
Cisco's recent work with Deutsche Telekom AG (NYSE: DT) was held up as an example of the kind of collaboration Neike would like to see more of in the months ahead.
The German incumbent has been developing a pan-European all-IP network using Cisco's technology and says it can now set up virtual private networks for business customers in just 15 minutes, compared with 30 days previously. (See Deutsche Telekom Turns On Pan-European IP.)
The Cloud VPN service, as it is branded, also provides customers with a self-management feature through which they can prioritize traffic for particular locations and applications.
Deutsche Telekom's ultimate aim is to support services across a number of European markets from a small number of centralized production facilities, phasing out many of the country-based silos it has relied on until now. (See T-Mobile US Sale Fits DT's All-IP Game Plan.)
"We co-developed this in a way we'd never done before," said Neike. "We built a platform by changing the processes of working together -- that's what made the difference."
— Iain Morris, , News Editor, Light Reading