Why has a Financial Times article suggested that “Telecoms innovation talk may be nothing but hot air?” It’s probably more important to wonder if it’s true, of course. Many pundits (myself included) have talked about this issue before, and even some telecom executives have offered their own views. I recently recovered a hoard of my past email exchanges, including those relating to some very significant telecom initiatives that turned out to be nothing. Some real-world experiences may help focus this long-standing topic on something useful, or at least uncover why nothing seems to be useful at all.
My first experience with the issue of telecom innovation came way back in the 1980s. The Modified Final Judgment had broken up the old Bell System, separating telephony in the US into long-distance and “Regional Bell Operating Companies” or RBOCs. The RBOCs established their own collective research arm, Bell Communications Research or Bellcore, and I was at a meeting there, doing some consulting on a project. It was a large and diverse group, and in an introduction, the sponsor of the project made a comment on development of what today would likely have been called an “advanced” or “OTT” service.
At this point, one of the attendees whispered something, and to my surprise, three-quarters of those present got up and walked out. The whisperer, a lawyer for one of the RBOCs, paused and said “I’m sorry, but this discussion is collusion under the new regulations.” That was the end of the meeting, the end of the project, and the end of free and open discussion of advanced service topics.
About three years later, another Bellcore project came up, relating to the creation of specialized communications services for the financial industry. The project had two phases, one relating to fact-finding research into how the industry used communications, and one that would then identify service targets of opportunity. In the meetings relating to the first phase, the project manager made it clear that “communications services” couldn’t touch on service features above the network. I’d been involved with Electronic Data Interchange (EDI) projects at this point, and I wondered if the use of a structured “data language” like EDI could serve. No, I was told, that’s the wrong level. It has to be about connection and not data or it’s an “advanced service” and has to be done via a fully separate subsidiary.
Fast forward to the decade of the 2000s, and I was a sort-of-de-facto-CTO of the IPsphere Forum (IPSF). This body was created to build what would be the first model of a composed, multi-element, multi-stakeholder, service architecture, with “services” made up of “elements”. The group was making great progress, with full support from Tier One operators globally, but one day representatives from the TMF showed up. Some EU Tier One operators had been told by their lawyers that they couldn’t be in the IPSF any longer, because it wasn’t “open” enough to be acceptable under EU telecom regulations. The IPSF had to be absorbed by the TMF, a body that was sufficiently open. It was absorbed, but there was no real IPSF progress after that.
When the Network Functions Virtualization (NFV) initiative came along, it was created as an “Industry Specification Group” or ISG under ETSI. It had significant industry support, much as the IPSF had, but the telecom members seemed content to advance the body’s work through a series of PoCs (Proof of Concepts), and these were put together by vendors.
I’d fought to have the IPSF model be based from the first on prevailing cloud standards, with no new “standards” at all. The telecom people believed their application was unique, demanding extraordinary (“five-nines”) reliability, for example, so they rejected that approach. The NFV ISG is now trying to retrofit cloud-native to NFV, of course.
Cutting through all of this is a truth I came upon by surveying telecom players for four decades. There’s a very stylized way of selling to the telcos. You engage their “Science and Technology” group, headed by the CTO, and they launch a long process of lab trials, field trials, etc. Of all the lab trials launched, only 15% ever result in any meaningful purchase of technology.
So what do my own experiences seem to say about telecom innovation? Let’s review.
First, regulations have hamstrung innovation from the first. At the dawn of “deregulation” and “privitization” in telecom, when innovation was the most critical, the regulatory bodies threw every obstacle they could into the game, with the goal of ensuring that prior regulated monopolies couldn’t benefit from their past status. They succeeded, and the industry didn’t benefit either.
Second, people who run companies with their hands tied can only learn to punt. Regulations prohibited innovation, so regulations created a culture that innovators would flee, and what was left was a management cadre who accepted and thrived on legacy. The companies who gave us some of the most significant inventions of modern times became just “buyers”, and buyers don’t design products; vendors they buy from do that. Telecom innovation was ceded to vendors, and those vendors represented legacy services and not innovation.
Third, lack of understanding of cloud technology, created by ceding innovation to vendors, hamstrung any telco attempts to define innovative services or exploit innovative technologies. The first two points above have made telcos a less-than-promising place for innovative cloud-native technologists to seek a career. There are plenty of vendors who will pay more, so those vendors (to the telecom space, new vendors) with those innovative cloud-native technologists would have to promote their new technology ideas to the telcos.
Finally, the innovative vendors don’t see the telecom space as their primary markets, and some don’t see that space as a market opportunity at all. A telecom sales cycle is, on the average, four times as long as the sales cycle to a cloud provider, and two to three times as long as to an enterprise. Telecom sales, 85% of the time, don’t result in any significant revenue for the seller, only some pilot spending. Add to this the fact that there are few (if any) people inside the telco who would understand the innovative, cloud-native, thinking required, and you have little or no incentive to push new ideas into the telcos from the vendor side.
Increasingly, telecom is mired in legacy-think, because they’re staffed with legacy thinkers in order to maximize profit per bit from services whose long-term potential is nothing other than slow decline. Their hope of redemption, by the vendors who support and profit from that myopia, is way less than “speculative”. The fact is that neither group are going to innovate in the space. That means that the future of network innovation is the cloud, and that’s going to establish a whole new world order of vendors and providers.