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Vodafone: The Pricing Isn't Right

Global operator about to announce some major vendor deals, but it's still looking for better pricing models in the cloud era.

March 30, 2017

5 Min Read
Vodafone: The Pricing Isn't Right

Vodafone starts its new fiscal year April 1 with a plan to roll out multiple live elements of its Project Ocean transformation process this year, and announce major new vendor agreements for OpenStack and CPE deployments in the coming weeks, the outgoing head of that project tells Light Reading.

As part of those vendor agreements, Vodafone is implementing a new simpler pricing model that it developed internally that moves away from traditional vendor pricing based on volume and toward a cloud-based approach, says David Amzallag, who is group head of Network Virtualization, SDN and NFV at Vodafone at least until June. (See Amzallag, Vodafone's SDN & NFV Man, Leaving in June.)

Implementing that pricing model is one of two major challenges Vodafone has faced -- the other being lack of skilled personnel with both IT and network backgrounds -- that Amzallag is hoping the broader telecom industry will address. Initially, it asked vendors for their approaches to different pricing models, but the responses -- eight vendors had eight different ideas -- weren't that useful.

"The network part of the industry is moving to the cloud and you cannot be half-pregnant," he tells Light Reading. "That means the pricing model needs to support this and not remain on bare metal and on boxes. Because currently the pricing model for almost all operators and SDN controller vendors is there."

Prices based on traditional models don't take into the account the need for new flexibility to turn up and turn down capabilities as needed, he notes. Without that flexibility, telecom network operators are hamstrung by old pricing strategies.

Amzallag would like to see the telecom industry come up with its own version of essentially what Amazon.com Inc. (Nasdaq: AMZN) is doing in pricing cloud services -- i.e, not basing prices on volume forecasts or traditional measures. That doesn't mean mimicking Amazon, but more adopting its mindset, he explains. To move in that direction, he says Vodafone is no longer sharing its volumetric forecasts with vendors -- but he adds quickly that this is "early days" for the simpler, half-page pricing model Vodafone Procurement Company developed internally, and getting broader industry support is critical.

It might seem like early-days as well for the ambitious Project Ocean transformation but, in fact, there has been major progress on that front in the past year, as part of a "deep dive" into an end-to-end architecture and approach to orchestration that supports two distinctly different sets of use cases -- one for enterprise services that has a more localized feel and one for central management of core services, to be delivered to operators across a region, according to Amzallag.

What Ocean has now produced is an end-to-end architecture that establishes orchestration at two layers -- a domain layer and a services layer -- that provides the flexibility sought by the 26 different operators within Vodafone and the four non-Vodafone operators who have joined the project, he says. And no, those four operators aren't being publicly identified... yet.

Earlier this year, Vodafone announced the two SDN controller vendors for its domain orchestration of its SDN portfolio for data center, hosting and service chaining -- Juniper Networks Inc.'s Contrail and Nokia's Nuage -- and both of those vendors have contractually agreed to the new pricing model regime, Amzallag says.

"We are going to announce about our OpenStack selection very soon and we are going to finalize the selection for SDN controllers for CPE as well as a new set of vendors for CPEs," he comments. All of that should be finalized in the next month or two, he says.

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Still to come, in six months or so, will be further details and vendor choices at the services orchestration layer. In each case, at least two vendors will be announced and the individual operators can choose for themselves which of the vendors to use.

That two-layer approach -- services and domains -- is critical to providing flexibility to individual operators, who are able to define for themselves what constitutes a domain, Amzallag explains.

"Domain is a logical term -- so every country, every operator is flexible to define its own concept of a domain," he says. "It can be a geographical region -- so for Vodafone Germany, it could be just the network in Munich or the entire network of Germany - or just the slice of IoT in Spain in the sense of network slicing."

Each domain is associated with its own domain orchestrator but the end-to-end architecture also spells out how domains interact with each other and with the services orchestrator. What's also important, Amzallag stresses, is that each domain orchestrator understands the network underneath. Those two key design principles -- understanding the network underneath and understanding the service layer above -- are things Vodafone worked on in conjunction with its vendors.

To support this approach, Vodafone will have operations and support systems (OSSs) that are not legacy in nature but are developed at the domain and services level. These will be multi-vendor OSSs, using the application programming interfaces (APIs) developed by the TM Forum, in a process to which Vodafone is actively contributing, he says.

As Amzallag has explained earlier, Vodafone designed Ocean to support two "families" of use cases: One is directed at enterprise customers and includes the VPN+ capabilities that encompass SD-WAN and other services that can be self-configured by users and then service-chained in real-time by Vodafone; the other is a centralization platform that started in Europe and enables multiple different systems for functionality such as IMS with a single IMS-as-a-service approach. (See Vodafone: Desperately Seeking Cloud-Centric Tech,)

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

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