Telco 2025 : Who will be the Titan ??


Do you really want to know who will dominate the Telco space in the next decade ? Who will be a Global Telco Titan ? If you do then you might want to track the activities of the Data Centre Titans . Every quarter, cloud giants Amazon, Microsoft, IBM, and Google collectively spend billions of dollars on servers and other hardware for their cloud services and data centers around the world to house all that gear. Cloud service providers consistently say that data center spend represents the biggest portion of their capital expenditures. Microsoft, for example, spent $1.5 billion in the last quarter to support demand growth for its cloud services. Amazon has 11 regions around the globe where it has datacenter capacity.

Amazon scales up the capacity in each availability zone by adding whole new datacenters. AWS designed its own network routers and went to original design manufacturers to build the hardware, and put together a team to write the networking software stack on top of them. Today all of the AWS network is using this custom network stack. And Amazon has a HYPERSCALE ambition that should scare some Vendors and SP’s out of their wits !!

Now what you my ask is all this Data Centre expansion to do with Telco industry ? How about everything !! To get some ideas you might want a peek into Bell Labs Future X Network Vision. It talks about the new cloud-integrated network ( CIN ) which is comprised of two related and essential architectural elements: the edge cloud that is embedded in the network; and a re-partitioned access and aggregation network that delivers ultra-high bandwidth and ultra-low latency to and from this edge cloud. In turn, this distributed cloud connects to the centralized cloud that hosts less performance-sensitive applications, over a similarly adaptive core network.

The global competitive landscape will change dramatically because of Cloud and Data Centers. Expect the emergence of a new global-local duality of new service providers with either global or local focus like maybe approximately 10 global service providers, that offer global connectivity, cloud and contextualized control and content (C&C) services. Then a set of approximately 100 local cloud-integrated network providers that offer domestic, hyper-local connectivity, edge cloud and contextual C&C services and the formation of a global-local alliance framework that connects and interworks the local and global service providers, similar to that of the airline industry.

We will see the emergence of new virtualized enterprises, which are completely location-independent, and enjoy automated connectivity to and between any process or person or thing, with the ability to scale to meet any demand. And how about the rise of new digital commodity exchanges that redefine existing businesses, by leveraging the global-local cloud infrastructure and dynamic connectivity to allow the facile exchange of digital goods or digitally-connected physical goods. This new innovation continuum, which Bell Labs call continuous disruptive innovation, in which the technological separation between sustaining innovation (by incumbents) and disruptive innovation (by new entrants) disappears.

You can bet your last penny that the Web Giants like Amazon have factored in the above assumptions into their Data Centre expando strategies. They know that a massive amount of Data will be gathered because of IoT , Analytics and stuff.  Data needs a safe and secure home right ?  Which brings us to the role of Telcos in the new world of Cloud and Big Data. We already know that breakthrough technology advancements of the recent years (e.g., SDN, NFV, big data, All-IP) will change the way networks are being constructed and managed. These changes will enable the development of a highly flexible infrastructure that allows cost-efficient development of networks and associated services as well as increased pace of innovation.

One of the operator’s key assets is infrastructure.Infrastructure usually is used by an operator to deliver own services to the end-customer. However, especially in the wholesale business it is common that parts of the infrastructure – so-called assets – can be used by a third party provider. Assets can be different parts of a network infrastructure that are operated for or on behalf of third parties resulting in a service proposition. Accordingly, one can distinguish between Infrastructure as a Service (IaaS), Network as a Service (NaaS) or Platform as a Service (PaaS). Another dimension of asset provisioning is real-time network sharing that refers to an operator’s ability to integrate 3rd party networks in the MNO network and vice versa, based on a dynamic and context dependent policies (e.g., congestion/excess capacity policies).

The big question is : Should the Telcos invest more in connectivity infrastructure ( 4G , 5G , Ftth etc ) or the data centres ( EPC, SON , Cloud  ).If the likes of Amazon , Rackspace  , Google are already throwing in billions into data centre capacity would it be more economical to collaborate with them ? Like it or not you will require massive data centres all over the world especially when the cloud and software is eating up the network. Well Deutsche Telekom ( DT ) does not want to collaborate because last week their Open Telkom Cloud went live. Deutsche Telekom claim that its cloud will be a much cheaper platform than that of Amazon Web Services !! Aaah yes…your data is secure fellas so let us house it for you real private  No danger of Yanks snooping into your data.

That is a brave and proactive move from a Telco ( DT ) that wishes to be a Titan not a pygmy in the next decade . Its called strategic positioning in a world that will be swamped by petabytes of data.Unfortunately not every Telco can achieve this since their capex priority is connectivity infrastructure and data centre is just an ancillary cost to deliver the content / apps and manage the connectivity network. But then ….not every Telco CEO has a Global Vision at Hyperscale a la Google , Amazon , Facebook…or the slightest clue about what is about to happen especially when 5G blasts us into light speed…well some of us anyways !!

By the way DT is one company that has made the Open Source Cloud as the centrepiece of their global services strategy. By employing the cloud service brokerage strategy, Deutsche Telekom has become the cloud partner that its millions of business customers are looking for.Deutsche Telekom enhances its set of cloud technologies with OpenStack. The open source cloud operating system makes it easy for software partners (ISVs) to integrate their cloud applications in the Deutsche Telekom infrastructure and its new Business Marketplace.

DT’s aspiration is for €2.5bn in additional revenue by 2016 built on a track record of being among the first to bring leading-edge cloud innovation to customers in Europe covering domains like end user computing, enterprise networking and data center. DT is not afraid to innovate on its own behalf; indeed, it develops many of its applications and platforms in-house. It is, however, become very open to working with partners if they can either speed up time to market or add brand credibility.

This futuristic vision of light speed connectivity supported by the Cloud and Data Centres would, on the surface, seem to be the stuff of science fiction, rather than rational technological thinking but we are at a tipping point in time. Its all about Outliers and Black Swans now. Meaning what you think does not exist and some competitor out of the Cloud can blow you out of existence if you are careless.

The so called CIN ( Cloud Integrated Network ) will blur the lines between application, device and network functionality by linking together device software functions with application functions and network functions in dynamic service chains, on demand. The Telco Industry’s 5G network with seemingly infinite capacity will be created, and it will blur the line between the cloud and the network, as the cloud becomes distributed within the network for the required low latency performance.

So if you “ get it “ you might succeed as a Master of the NEW Game…and if you dont’t..well you can still aspire to pick up business just like those opporturnistic birds that fly into the mouth of a basking crocodile to on scraps of food and leeches attached to the jawline and tongue…Guten Appetit !!

Sadiq Malik ( Telco Strategist )




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