Mobile services rule, that’s a fact of life for the operators. For decades, they’ve been more profitable than wireline services, and increasingly they’re being used to make customer relationships sticky, pulling through wireline broadband in a competitive market. Comcast, for example, has long had an MVNO relationship with Verizon and uses its mobile offerings to buoy up its cable broadband. Recently, they’ve started to deploy their own 5G technology in high-traffic areas to reduce their MVNO costs, but that doesn’t address what’s perhaps the major mobile challenge. It’s the first service that operators have to compete in that requires major out-of-region presence. It won’t be the last.
One of the biggest challenges of “advanced” or “higher-layer” services is that few candidate services can be profitable with a limited service footprint. Business services, which is the segment most credible higher-layer services would address, are almost necessarily at least national in scope, often continental, and sometimes truly global. What do operators do to address this? There several options, and all of the pose challenges.
The simplest approach is the “segment-and-extend” model. All higher-layer services are “higher” in that they’re overlaid on connectivity. Operators typically have agreements to extend connectivity out of their home areas. For mobile services, they could use tower-sharing or MVNO relationships, for example, and for wireline they could simply have a resale agreement with other operators to provide connectivity, or even ride on the Internet. This connectivity could then extend the reach of the over-the-top elements, essentially backhauling the services’ higher-layer requests to one of their own hosting points.
The problem with this approach is that service quality may be difficult to ensure, and variable across the market geography. Not all operators have resale agreements with others, not all areas can be covered by these agreements, and the agreements are often for a limited term, to be renegotiated regularly. If the “data dialtone” of the Internet is used, there are obviously issues with QoS and security that would have to be addressed, though these could perhaps be mitigated at least in part by linking the higher-layer services to an SD-WAN.
A second possibility, one that can be seen as an expansion of our first, is federation, meaning the creation of a pan-provider mechanism for sharing service features in a specific wholesale/retail framework. This concept was actually attempted about 15 years ago with the IPsphere Forum (IPSF), and gathered significant international support at the time, but gradually lost focus through a combination of vendor wrangling and competing standards initiatives. A federation approach, like IPSF, would have to create both a mechanism for the exchange of service components and a mechanism for composing services from components. I participated extensively in the IPSF and I can testify that this is no easy task, but it is possible.
The Nephio initiative launched in 2022 might be a path toward a federation strategy based on Kubernetes, but it’s so far focused largely at the composing of services through software orchestration and (so far) not on standardizing a mechanism for creating and exchanging components among operators. I think it’s possible Nephio could be augmented or extended, but the process isn’t underway at the moment and I can’t say when and if it will be launched.
The biggest problem with federation is that it would require some form of formal coordination and cooperation, something like a standards body. In the telecom space, these bodies are common but their operational pace is usually glacial, which means that it would be difficult for a federation approach to be formalized in time to respond to market conditions. As a means of adding higher-layer services, given that there are no initiatives underway to do what’s necessary, I suspect federation would take too long.
The third option is the “facilitating services” option, espoused by AT&T for one. The idea here is to offer OTTs a wholesale service set that would allow them to build higher-layer services at a lower cost. The EU JV on advertising/identity services is an example of this. I like the facilitating services idea, but it’s taking a different slant on the problem, one that cedes higher-layer service primacy to the OTTs and thus limits operator profits and customer ownership.
The big advantage of facilitating services lies in this limitation, because operators in general are awful at being OTTs. Providing truly relevant facilitating services would let them dodge this issue and all the issues associated with the other two options. Each operator would be deploying facilitating services so there’s no need to coordinate, right? Well, maybe.
The problem with facilitating services overall is that OTTs have the same, or greater, need to deploy their services across a broad footprint. How do they do that if all the operators within that footprint don’t offer facilitating services, or choose to offer very different selections of services? Facilitating services are great where there’s a natural geographic boundary to what they’re intended to facilitate.
You can see where we’re heading here. For operators to be able to offer credible higher-level services across a broad geographic footprint, they’d need to work some bilateral deals with other operators for connectivity, or they’d need to ride their services on or over the Internet. That would make the operator an OTT, and if they want avoid that (which most surely do) then they have to look at facilitating services, with an eye to creating a set that’s intended to facilitate things within their own footprint, meaning without suffering from a lack of support from other operators.
Doomed, then? Well, there may be one more option. There are industry groups that are primarily aimed at OTTs, and even open-source projects. If an operator were to build a service strategy based on one or more of these, they might then enjoy a shot at a broader footprint by promoting the approach to other operators who, after all, have the same issues.
I offer as an example the Open Metaverse Foundation. I don’t think that this initiative is looking at the metaverse in as broad a way as they need to, but something like this could create a kind of “federation by proxy” or “commutative federation”. Things equal to the same thing are equal to each other, as they say in geometry or algebra, so if two operators base their strategy for either OTT or facilitating services on an open body like OMF, then those operators should be able to federate their services across their combined footprint.
Operators need to recognize that they let the federation issue lie fallow for too long, and so they need to figure out how to play catch-up now. The only viable approach appears to be jumping on the bandwagon of some open-source or industry group that’s filled with representatives who know how to make progress, and make it quickly. Otherwise, developments in the service and infrastructure markets are going to make it much harder for them to escape commoditization in the future.