The telecoms industry is at the heart of the ‘Fourth Industrial Revolution’. The digital transformation has led us from TDM to IP, from fixed line to mobile, and from voice to data, in less than two decades. Yet, despite all this disruption, the way our sector operates has not changed very much.
How we design networks; select, test and commission infrastructure; and roll out services is fundamentally the same as it’s always been. This also applies to the relationship between service providers and their suppliers.
Now the transformation from physical to NFV/SDN infrastructure is throwing the industry a curveball: virtualization is not only disrupting network technology, it is shaking up the operator-vendor dynamic.
Shifting the balance of power
In the past, service providers were dependent not only on vendors’ proprietary network equipment, but also on their customization and integration services. Beyond some standardized APIs, equipment was essentially a ‘black box’ which only the vendors themselves could make changes to.
Deploying a new network element involved a virtually endless ‘dance’ between the vendor and the service provider to integrate and troubleshoot before the function could be commissioned.
This translated into high costs, a great level of vendor dependence, and high barriers to switching. It also discouraged service providers from selecting ‘best of breed’ products from a number of suppliers.
With the advent of NFV/SDN, it became clear that these dynamics could jeopardize some of the key benefits NFV promised to operators, such as cutting costs and gaining greater agility in creating and delivering services.
Do operators hold the reins?
Innovation is accelerated once a technology has been standardized and commoditized – you just have to look at the electricity grid, television and the ‘cloud’ for proof. Rather than building networks from a pool of proprietary solutions – and continuing the ‘dance’ – operators realized that it would be critical to achieve a high level of standardization.
Taking a page out of the cloud textbook, they started looking at the open source community and its track record for standardization in the IT world.
Unlike the established telecoms industry bodies, open source offers a faster, more collaborative and transparent route to developing industry standards. Not only does the transparency of open source code put an end to the operator-vendor ‘dance’, participating in open source projects also gives service providers greater scope to shape technologies that will eventually come onto their networks, rather than being tied to vendor roadmaps.
Are vendors getting left behind?
Clearly, this represents a big shift for technology vendors.
The need for integration will reduce dramatically as a result of standardization and transparency of code. Ongoing maintenance – another important source of vendor income – will largely be provided by the open source community. In addition, suppliers will have to wave good-bye to long tie-ins with operators as standardization will bring down the barriers to switching.
Add declining hardware sales due to virtualization, and these developments make for an explosive mix that could have a devastating effect on vendors’ revenue base.
Opening the door to creativity
However, when one door closes, another opens.
Integration and maintenance have never been sources of innovation. Vendors need to embrace open source as a way of freeing themselves up from the mundane so they can put more resources behind service creation and tap new revenue streams.
What’s more, creating standardized platforms does not eliminate the need for customized solutions. Open source software development is managed by a technology committee, and not all functional requests to the committee will be successful. Consequently, there will still be a sizeable market for solutions which meet those operator needs that the open source process cannot cater to.
Why should vendors get involved?
Some vendors will spot the value in these opportunities and throw themselves into open source projects like ONAP. Others will be dragged along kicking and screaming.
If you are in the latter camp, consider the following.
Service providers will want to partner with companies that drive open-source development rather than with bystanders. It’s another way for them to influence the direction that a particular technology is taking.
Also, to secure a share of the NFV/SDN services pie and create differentiated services, you need to know the underlying platforms from the inside.
Finally, don’t forget that NFV/SDN is still an emerging technology: industry adoption has been held back by a lack of standardization and a fragmented product landscape. If this stumbling block cannot be removed, virtualization in telecoms will remain a pipe dream and a market predicted to reach nearly $12 billion by 2019 will crumble.
So, it’s a leap of faith worth taking.
This blog is part of our ONAP Insider series, which takes you behind the scenes, offering a more in-depth look at the workings of ONAP, how it is changing business models, simplifying network design and untapping new business opportunities for service providers, content developers and end-users. Go to ONAP Insider.