We’re closing in on 2016 and what will surely be a pivotal year in terms of network operator strategy. I’ve already blogged about the results of the operators’ fall planning cycle, and I think that offers a pretty clear view of their technology plans. Because even the best of plans can be contaminated by internal biases (personal and company) I want to offer my own analysis of the year to come.
First and foremost, 2016 is a year when a combination of operations efficiency and new revenue opportunity will come to dominate network operator planning. The industry has tended to focus on capital budgets, in no small part because Wall Street uses network operator capex as a means of assessing the opportunities in the network equipment space. However, the Street’s own measure of network operator financials (EBITDA) omits capex, and in any event operators have known for at least two years that there are really no technology measures they could take that would effectively address capex. That leaves new revenues or lower operations costs to address the revenue/cost-per-bit convergence.
In one sense, this shift in sentiment seems to offer some significant opportunities. The fact is that the overwhelming majority of the stuff needed to either enhance revenues or reduce operations costs is concentrated in OSS/BSS systems under the CIO. With one super-sponsor and one technology target, it’s far easier to build a consensus and implement it. On this basis, you could assume progress would come quickly in 2016.
The problem is that CIOs are the most glacier-trained of all operator executives. Operations systems have greater inertia than even network equipment. Thus, despite the fact that top-down planners of network transformation have long accepted the need to drive those top-down changes through OSS/BSS, very little has been done. Everyone seems to get bogged down in details, meaning that even in OSS/BSS where top-down focus has been clear, people have started technology changes at the bottom and hoped for convergence in some sense.
What seems to be driving changes to this practice in 2016 is the fact that operators are now committed to the “wing and a prayer” strategy of NFV deployment. “I don’t know whether we understand what an NFV transformation would look like, as a company,” one CIO told me. “We are committed to evolving from trials toward something, but I don’t really know what that ‘something’ is or exactly how we’ll approach it.” Put in technology terms, operators are committed to building up from their trials and PoCs, which are overwhelmingly focused on a single service concept, and in the majority of cases on vCPE. So, here’s the key point for 2016; service-specific silos are not only here to stay, they’re on the rise.
While no operator wants to admit that they’ve invented in NFV a new way to build silos, that’s pretty much what’s happened. What a few operators are now recognizing is that silo convergence in the new age is probably a technical problem that OSS/BSS could solve. If that is true, then the silo-convergence mission at the technical level might lead (accidentally?) to a pathway to implement the top-down strategy operators have been grasping for. Where do you converge silos other than at their top?
The problem with this approach, for vendors at least, is that the big bucks in NFV benefits terms are only available at the silo-top. If we’re relying on OSS/BSS to converge the silos and deliver the benefits, then the benefit delivery will occur largely after the silos are deployed. That means well beyond 2016, even discounting the time it might take for CIOs to frame a silo-convergence strategy.
If nobody converges silos explicitly then there’s only one other option to escape them, and I’ll call it the cult of the ginormous silo. If NFV deployment is the success of a thousand Band-Aids, then one really big one could be a game-changer. There are, as I’ve noted, only two opportunities for a ginormous silo—mobile/content and IoT. Mobility (as we’ll see below) is a key factor in another technology shift, and IoT is a darling of the media, but neither of them has shaped a solid vision of how it might change operator costs or revenues decisively. The best anyone has done is to say “sell 4/5G to every human, and when you run out sell to the gadgets directly.” Presumably 3G printing would then combine with robots to create autoreproducing gadgets to continue the trend. Not very insightful.
If nobody pushes the ginormous silo approach effectively, then vCPE will dominate early services. Here we are likely to generate an interesting dynamic, because the great majority of credible vCPE opportunities are associated with business sites (the remainder are linked to content delivery, which then links back to mobile and social services). Enterprises have their own technology plans, focused as always on enhancing worker productivity. The technology vehicle for this is mobility, a transitioning of workers from a desktop-centric “bring work to your workplace” approach to a mobile-centric “take your workplace to where you’re working” model.
Mobility, particularly when viewed as something you’re transitioning to, almost demands a connection network or VPN that is interdependent of, rather than created with, physical network connectivity. Read, then, a virtual network. I would contend that social-based services that focus on the person and not on the network have this same need. In both cases, the logical thing to do is to build an overlay VPN to accomplish what you need. Unlike most of these “SDN” networks, this overlay would have to be supported on every device, and in parallel with the “normal” Internet connectivity. You could tunnel over the Internet or create something alongside it—either would work—but you don’t want to be pushing Internet and VPN traffic on VPN for egress somewhere else.
This raises the last of my 2016 technology issues, which is the cloudification of the network. You can already see that mobile services are impacted by the notion of personal digital assistants that would offer users answers to questions and not access to information. IoT will develop and extend this trend by building an analytics framework to collate and interpret sensor contextual inputs and combine them with social and retail data. The result of this will be an increasing shift toward answer delivery from website delivery, to agent handling from search. That will subduct more and more of the Internet into the cloud, or rather put it behind a cloud edge.
This would create a profound shift in the dynamics of the Internet. If you could sell the user an agent that answers all their questions, what value does anyone else’s search engines or ad placements have? Everyone knows that nobody is going to replace Google or Yahoo, but suppose that’s not even the goal any longer? Suppose that “over-the-top” is now under the covers?
There are network implications too. A shift of traffic from website-to-user to website-to-agent wouldn’t eliminate access networking because bandwidth is still key for content delivery. What it would do is create a massive intra-cloud traffic flow, one between data centers. That could radically increase the high-capacity trunking needs of operators while making the access network more of a simple on-ramp to the cloud. Big pipe, but a dumb subordinate.
So these are the things I think we should be watching next year. I know I will be, and I promise to keep you posted on how I’m seeing things develop.