It’s always popular to talk about who’s going to lead the next big step in something. In networking these days, you might look to Cisco’s Robbins, for example. I have my own candidate, one many of you may never heard about. It’s Ajit Pai.
Pai is the new Chairman of the FCC, and like all Federal commissions, the FCC is changing leadership and tone with the change of the party controlling the Presidency. Under the previous Democratic Chairman, Wheeler, the FCC took dramatic steps to impose net neutrality. Pai is already dedicated to relaxing those rules. On May 23rd, the FCC took the mandatory first step of issuing a Notice of Proposed Rulemaking (NPRM) that outlines what the FCC is looking to do, which is essentially to reverse the Wheeler FCC decision to declare the Internet a telecommunications service subject to full FCC regulation. This could make a radical change in the business of the Internet, and a similarly radical change in infrastructure. We’ll see what that might look like, and what’s driving my “could” qualifier, below.
There’s not much point in doing a deep analysis of the regulations at this point because there are still steps to be taken, and the final order probably won’t come along until well into 2018. However, one of the key differences between the positions of the two FCC party factions is the issue of paid prioritization and settlement on the Internet. So, let’s not try to handicap the outcome of the FCC’s current action. Let’s also forego the question of whether this is “good” or “bad” for an open Internet. Instead let’s look at what specific technology impacts we might see were the FCC to reverse the policy on prioritization and settlement.
Way back in the ‘80s, I was involved with the then-CTO of Savvis, Mike Gaddis, on an RFC to introduce settlement to ISPs. This was obviously in an earlier and less polarized time, and many in the Internet community believed that for the Internet to prosper as a network you had to introduce some QoS, which can’t happen if each ISP bills its own connection customers and keeps all the revenue they gain. Why prioritize when you’re not paid? I still think this principle is a good one, and in any event, it opens a great avenue to discuss the technology implications of changes in neutrality policy.
The thing we call “the Internet” here, of course, is virtual. In the real world, the Internet is a federation of operators, and it’s this fact that makes the whole QoS thing important, and difficult. Remember that we started this discussion with a “suppose…” Just because the US creates QoS and settlement within this community of operators doesn’t mean everyone does. We still might have places where there is neither settlement nor QoS, and the more such places exist, the harder it would be to totally eclipse private networks globally. But let’s carry on with our supposition to see what else could happen.
Suppose that you could ask for specific QoS from the Internet and get it? There would be two impacts, one a leveling of business services into an Internet model, and the other the populization of QoS by its extension into the consumer market. Both could be significant, but the second could be seismic. In fact, the changes that Chairman Pai may be contemplating would change the business structure of the Internet, perhaps taking such a long step toward establishing a rational business framework that it would reverse the pressure on capex.
With full QoS on the Internet, the notion of VPNs now separates from the network and focuses instead on edge devices and the SD-WAN model. SD-WANs can manage the prioritized services and request priority when needed, balancing traffic between best-efforts services and various levels of priority. SD-WANs can also add security to the picture, creating what is much closer to being a true “virtual private network” than just using a subset of Internet addresses would create.
Consumer QoS, in either the subscriber-initiated form (premium handling subscriptions or the “turbo button”) or provider-paid (Netflix or Amazon paying for premium delivery) would mean that QoS would have to be a much broader capability, touching many more users and impacting much more traffic. It’s likely that this would drive operators to seek the most effective way of offering QoS, especially since consumer price tolerance would be lower. Thus, prioritization and settlement could boost things like fiber, agile optics, and SDN virtual wires.
Prioritization doesn’t mean that you don’t still have the current model, but I’m sure many would argue that ISPs would all collude to make best-efforts services unavailable or so bad that they were useless. Well, we have best-efforts now and that’s not the case. Just being able to charge for special handling doesn’t eliminate all other handling options.
QoS and settlement would tend to favor larger operators with either a lot of reach or with market power to enter into agreements with other operators. Regulations aimed at preventing that would end up looking much like common carrier regulations, and if the FCC is getting us settlement and QoS by declaring that Internet services are not common carrier services, those additional regulations to prevent large-operator dominance might be hard to impose. However, the experiences I had myself, and those of others still involved in brokered peering, suggest that the ISPs overall would be happy to adopt an open brokered peering strategy, where everyone could do QoS peering at designated points.
All of this, of course, depends on there actually being a demand for Internet QoS. If there were no consumer demand, then operators would obviously have no incentive to offer it even if regulators allowed for it, because operators would lose money on a business switch from MPLS VPNs or Ethernet VLANs to SD-WAN Internet VPNs. Research suggests that in order for consumer QoS to pay, it’s essential that a “third-party payment” mechanism be validated. If Netflix can charge customers for premium delivery, then settle with the ISPs for the QoS, there’s a very strong chance that this can all work. The “turbo button” approach has much less appeal.
The Wheeler FCC took the position that no paid prioritization was acceptable. The Genachowski FCC (before Wheeler) said that it was OK if consumers paid. What Pai may end up with is that any form of prioritization is OK as long as it’s non-discriminatory, meaning everyone can pay for it if they want, and pay based on the same pricing structure. That’s because the absence of Title II common carrier status for the Internet means that the FCC has no jurisdiction to regulate pricing or pricing policies there. That’s what the Federal Appeals Courts told the FCC, which is why we ended up with Title II status to begin with. Thus, we are probably heading for a prioritization and settlement decision that would lift all barriers, creating the largest business impact on operators and vendors, and potentially the largest technical impact as well.
In the near term, the prioritization-and-settlement policy would, as I noted above, reduce the pressure of price/cost crossover for operators. That would likely open up capital budgets, raising revenues for network equipment vendors. The increased spending would also be directed mostly at currently validated infrastructure and devices, meaning that it wouldn’t immediately result in a flood of SDN or NFV spending.
NFV would benefit from the SD-WAN process, but only in the limited premises-hosted vCPE model that we already see dominating. Operators now realize that even if you had multiple features to deploy (firewall, SD-WAN, etc.) you would almost certainly elect to use a composite image for all the current features rather than service-chain multiple separately hosted features. The latter approach would cost more in hosting, and generate more delay. It would also raise operational complexity considerably; a two-host chain is twice as complex as a single-host image to deploy and sustain operationally.
If you believe the operators, though, the relaxation in profit pressure that prioritization and settlement would create would further both SDN and NFV innovation. The operators recognize that anything that’s Internet-related and consumer-driven is going to be subject to price pressure, which means that it will have to be cost-managed carefully. Operators tell me that both SDN and NFV innovation would be accelerated by the regulatory shift, but that these would not be the first or primary focus points.
What would be? Number one is service lifecycle automation. The nice thing about the prioritization and settlement shift is that it would allow operators to undertake a change in their service management practices without the pressure of creating an immediate return in terms of cost reduction. Operators know, of course, that Internet prioritization is not constant as much as on-demand, episodic, based on content viewing. That means it has to be invoked and removed quickly and cheaply.
The problem with this area is that operators really don’t have a solid strategy. Most of their automation vision comes from pieces of SDN and NFV, and neither were designed as full-range lifecycle automation projects or based on advanced cloud principles. Not all operators (in fact, less than half) accept the need to frame automation on advanced cloud principles, but nearly all know that they have to cover the whole of the service lifecycle and the full range of operations tasks.
The second focus area is carrier cloud service-layer deployment. Operators are coming to realize that their best long-term strategy is to mimic the OTTs in framing higher-level (meaning non-connection) services, but they have struggled with how to get started, both in targeting terms and in infrastructure terms. I think it’s likely that the second problem needs to be solved in a way that delivers an agile, generally capable, infrastructure model that they can then trial-target as they build up confidence.
The problem in this area is obvious; they don’t have that model of infrastructure, they don’t know how to get it, and no vendor seems to be offering it. NFV and SDN make sense in a context of an increasingly cloud-centric infrastructure model, but neither can really drive operators there. They can only exploit.
The third focus is SDN and NFV, which operators have not abandoned but rather simply re-prioritized. Even that comment may be, on my part, reading motive into what they’ve expressed. I think that operators know that both SDN and NFV will play a big role in their future, but they’re coming to realize that, as I noted above, they are going to be important to exploit the cloud to do more with legacy services as they become more cloud-centric in infrastructure planning. In short, though I don’t think any operator planner would say this, they see themselves migrating to a more Google-like service-centric infrastructure model that they’ll simply run some legacy stuff on for continuity.
How many operators really see this? I can’t say, of course, but I have fairly good contact with 57 of them at the moment, and three or perhaps four would see things as I’ve just described. But that’s not really the question. The question is how many would buy in were they to be offered a pathway to that sort of future. I think all of them would.
There are some missing pieces in all this happy realization, not the least being that while operators may be willing to step into the future, there’s still no pathway to be had. The problem isn’t a hardware problem but a software problem, and it’s not strictly operations software or even service lifecycle management or MANO or SDN controllers. What’s really needed is what in the software world is called middleware. The future has to be built on software that’s designed to be infinitely agile and scalable. Google, Amazon, and Microsoft all know that now, and Google in particular has been framing their infrastructure to support the agile model we’re talking about. So, can operators follow?
No. Operators don’t have the kind of software people to do it, because they’ve not recognized they need them. Even vendors don’t have a lot of the right stuff, but they do have enough to make something happen here. It’s critical for vendors that they do that, because open source projects aren’t going to get us to the right place quickly enough. Chairman Pai is going to give the industry a gift, a gift of time. But it’s not going to last forever.