Two Winds Blow Changes

Out with the old, in with the new.  Sounds like New Year’s Day, and so clearly inappropriate to the season in a calendar sense.  It also works with networking, though, and we have a couple of the OWTOIWTN items in news today.

First, financial sources are saying today that Juniper is dropping MobileNext, its architecture for mobile metro infrastructure and connectivity.  One of the themes of Juniper’s future success, at least as touted by analysts and on some earnings calls, was that MobileNext would take off and increase Juniper’s share of the mobile capex pie, the only pie getting bigger in all of the carrier world.  So what now?

Actually, Juniper hasn’t been setting the world on fire with MobileNext so in one sense it’s probably not losing something in a tangible sense if the story proves true.  Operators have tended to look to vendors with a bigger piece of the total mobile infrastructure picture in their configuration diagrams, particularly RAN and IMS.  Juniper didn’t have that and so was always a bit on the outs, and it was late to market to boot.  What Juniper is losing whatever intangible upside that a bigger chunk of mobile spending might bring, but that’s where things get complicated.

Mobile metro infrastructure, notably the Evolved Packet Core (EPC) stuff, is high on operators’ list of things they want network-function-virtualized.  Nearly everyone is already near to or offering virtual MME, the signaling-plane part of the process, but operators are looking for hosted versions of the critical PGW and SGW stuff that handles traffic.  Given that, it really doesn’t make a lot of sense to be expecting big windfalls from an EPC-focused product line.

But then there’s the flip side.  If you are a vendor who wants mobile capex bucks in your own pocket, and if you know you lack the full mobile ecosystem, why not jump out with your own totally virtual solution to mobile metro infrastructure?  Particularly when operators tell me that they believe the big players in EPC will not surrender their lucrative business by exposing their assets in virtual form.  The operators want virtual EPC, not just cloud-hosted discrete pieces of 3GPP diagrams, but a single metro-black-box that exposes external EPC-ish interfaces and does everything under the covers, but using new technology—like SDN, which Juniper has.

Poison the well here, Juniper.  If you can’t make EPC money, you should create a virtual EPC, a whole virtual metro core, and make sure nobody else does either.  That would twist competitors’ noses, make your customers happy, and make this whole MobileNext thing look less like a gigantic case of having your nose in the sand as the industry moved on past.

The other news item is the suggestion that Australia could walk away from their ambitious plan to push fiber broadband to over 90% of Australian homes and businesses.  The new proposal, which some say would cut the cost of NBN by more than half, would cover just a fifth of homes with FTTH and the remainder via FTTN, with a DSL hybrid making the final connection.  While this sounds like a typical political bait-and-switch game, the real news is that NBN has so far reached only a small fraction of the target deployment.  That’s what I think raises the big question.

Australia, like some areas of the US, suffers from low “demand density” the revenue-per-square mile that can justify broadband deployment by generating ROI.  The solution there was to bypass the incumbent (Telstra) and drive a publicly funded not-for-profit access business.  Run by?  Well, a former vendor CEO for one.  When this came about, I was highly skeptical given the fact that every politician loves to talk about giving the public free or nearly free Internet at extravagant levels of performance, at least till the actual deployment has to start and the actual bills have to be paid.  Creating what was just short of outright nationalism of assets of a public company to protect a scheme that had no credible foundation to prove it could ever succeed wasn’t a good move.

It probably was an inevitable one, though.  The lesson of Telstra is that you have to get access carriers, ISPs, make money.  If you don’t, they don’t invest.  If you have an unfavorable geography or customer base such that ROI to offer great services isn’t likely available, you can do some taxing or subsidy tricks to make things better, but you’d darn straight better think carefully about giving the whole problem to the government to solve.  Incumbent carriers know how to run on low ROI.  If we did any credible measurement of “government ROI” where do you suppose their numbers would fall?  In the toilet, in most cases.

Telecom regulation has to be an enlightened balance between consumer protection and “the health of the industry”.  We have passed over onto a decidedly consumeristic balance in Europe and under Genachowski the US has done some of the same.  Australia simply extended this bias to its logical conclusion.  If you can’t get companies to do what you want for the price you want because it’s not going to earn respectable ROI, you let the government take over in some form.  Maybe you force consolidation, maybe you quasi-nationalize.  In all cases, you’ve taken something you had regulated and made work as a public utility, and turned it into a business experiment.  Australia shows that experiment can have a bad outcome.  The government shouldn’t be running networks, and they can’t micromanage how they’re run if they want anyone else to run them either.

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