Even within well-developed telecoms markets which have been open to competition for decades, it is all too common to find that Tier-1 operators still predominate in many service areas, manipulating their status at the top of the food chain. But software-defined networking just might be a lifeline that pulls Tier-2 and even Tier-3 players level, giving them the agility they need to compete on level terms.
It is not hard to see how virtualisation and automation in general and SDN in particular might revolutionise the way Tier-2 and 3 players incorporate new services and provision them more efficiently for customers. A provisioning process that would once have taken any operator weeks or even months to complete can now, with the power of SDN, be reduced to minutes.
SDN and NFV-enabled service providers can create new revenue-generating, differentiating services faster, with lower risk to match their customer needs and accelerate the time to revenue. They can, moreover, steal this lead while their bigger and more encumbered Tier-1 rivals are still stumbling around in the SDN trial phase.
“I believe SDN can allow a Tier 2 or Tier 3 to create differentiation and win business from Tier-1 carriers,” says Mike Capuano, VP of corporate marketing for vendor Infinera. “It is a revenue generating opportunity for them, as it should allow the delivery of all services more quickly, which will allow service providers to beat rivals who don’t have this capability. It also allows new innovative services and business models via the ability to rapidly develop services on top of a programmable network.”
Ben Parker, principal technologist with business intelligence software developer Guavus, sees parallels with the boost given to the mobile services market by the MVNO model 10 years ago.
“When we saw the first MVNOs, there were a number of complications involved with setting one up,” he says. “Now a decade on you can create truly virtual networks that can be implemented differently. There are new capabilities and new cost models, and the operator of a virtual network can now go after new and different markets more easily.”
New types of competitor, well outside the traditional telecoms playpen, can also leverage SDN to enter a market easily at the speed of software, competing with slow, methodical networks. This is forcing a shift in the market that could be bad news for those entrenched in old ways.
“In future we’ll see even more of a shift,” predicts Parker. “But don’t forget that SDN is an opportunity for incumbent types too, with the closed networks of yesteryear now able to open up. We’ll continue to see whole new brand names emerge, changing the way network operators work.”
No more tiers
It is possible to imagine that SDN, in the longer term, is such a game-changer that it renders obsolete the very idea of different tiers within the same ecosystem. As services shift from fixed to mobile and cloud, and from static to dynamic, the need to define tiers arguably becomes less relevant.
Phil Braden, SVP technology and applications with PCCW Global, believes that interplay between all types of service provider is what the industry should be focussing on: “A single carrier or operator cannot deliver end-to-end service in today’s environment,” he points out. “There will always be another carrier involved in the delivery of service, be that the access network operator – which in likelihood will be a mobile operator rather than a wireline operator – or a cloud or data centre operator, or in most cases both.”
For a carrier to be able to deliver end-to-end, on-demand managed services to customers, it needs to be able to extend the dynamic attributes of the service beyond the confines of its own network, into the boundaries of the other networks involved in the delivery of that end-to-end service. For that to happen, suggests Braden, both carrier networks must be programmable, and interconnected not only on the data layer but also on the OSS layer.
“Such interconnection should be standardised and ubiquitous across the industries involved, whether that’s wireline, mobile, cloud and incorporating OSS platform developers too,” he says. “And it can only be achieved through collaborative work within international standards bodies.”
In this way, he believes, the old-school idea of a battle among tiers becomes instead a collaborative effort where all “tiers” have space to breathe and flourish, and all are dependent on each other. If SDN and NFV are to break down hitherto inflexible barriers within the communications arena, then this revolution might be more commercial than technical in nature. It is the basic telco business model that may have to give way.
SDN will allow operators to continue to develop more flexible business models based on elastic services like security-as-a-service and unified communications-as-a-service. Those operators might end up paying vendors on a per-use basis for network functions as they are needed, as opposed to through capital expenditure tied to under-utilised equipment.
“This will open up the market to Tier-2 and Tier-3 players who may not have had such deep pockets needed to develop proprietary hardware,” believes Ravi Kumar Palepu, head of telco solutions with consulting firm Virtusa. “It will allow new carriers to quickly scale and compete, as they won’t have to load up on costly central office equipment to get started.”
In a world of competitors driven entirely by software that do not own a single piece of hardware, new services may be introduced easily, while an operator can create new virtualised sub-networks for premium customers: “A shorter time to market and easier integration of third-party services may provide the necessary competitive advantage against OTT services,” adds Palepu.
Same as the old boss
But not everybody is caught up in the belief that all the old hierarchies that have driven telecoms are set to go overnight.
“We believe that Tier-1 carriers will retain a competitive edge due to their broader scale and extended reach,” argues Antonio Durán Domínguez, wholesale product manager with Telefónica Global Solutions. “Instead I see that with each evolution of technology, new entrants with new proposals will cause disruptive factors, and these creatively drive the market forward.”
Chris Emmons, director, network planning with Verizon, agrees that no evidence yet exists that tiers are a thing of the past and that the future is entirely ruled by tiny software-driven startups: “This is yet to be seen,” he notes. “We have a scale and a coverage that others can’t match. There may be the odd benefit to a smaller carrier in being able to move quicker, yes. But I don’t see how smaller carriers are going to be able to influence the vendor community and drive standards – assuming we’re going to go the standards route and not the proprietary one. Can the small guys go that much further ahead without the big guys developing the standards for them? It’s hard sometimes to be small and a first mover. It’s hard being a first mover at all.”
Matthew Finnie, CTO of Interoute, is likewise cynical about the idea that SDN spells the end for big owners of infrastructure: “I don’t see it as a great leveller at all,” he says. “If anything I see it as exposing differences and deficiencies. Big global networks have got things, like intelligence, that others – like OTTs – just don’t have. But anybody who is saying ‘all I offer is networking’ will be marginalised.”
Even if SDN does not reshape the entire industry, at the very least it has the power to open the door to new types of products and services that a greater range of players can offer. It might even result in on-demand bandwidth, after years of talk. That would be game-changing enough.
