Shervin Gerami, CEO of TeleWorld Solutions, attended the Mobile World Congress in Barcelona Feb. 22-25, an annual gathering for the telecommunications industry. Shervin and Oleksiy Shevchenko, our senior infrastructure engineer, shared some thoughts on trends that were discussed at the show and will undoubtedly shape the industry this year, including software defined networking, network functions virtualization, and the Internet of Things.
In our last post, we wrote about three technologies and market trends that are reshaping the telecom space and were heavily discussed during Mobile World Congress – software-defined networks (SDN), network functions virtualization (NFV), and the Internet of Things (IoT).
While SDN and NFV have been promoted as the next big things for operators, as often happens in the tech world it has taken a while for the products to catch up to the hype. They have finally, however, matured enough to allow telecom providers to improve network efficiencies and reduce costs. Now, it is up to providers to move away from proprietary, hardware-based network equipment and invest in NFV and SDN, so they can capitalize on their benefits.
SDN is a mature technology that has been standardized and formalized and is actively used in cloud and data centers. It allows for the creation of network abstractions, separates control and network forwarding functions, and uses centralized management. It’s the right answer for today’s new business models.
NFV was created by a consortium of service providers attempting to speed up deployment of new network services. It aims to address the problems of using various proprietary network appliances by leveraging standard IT virtualization technology to consolidate many network equipment types onto industry standard high volume servers, switches, and storage units.
NFV can significantly reduce CAPEX and OPEX for telecommunications providers through high resources optimization and flexibility. NFV can support SDN by providing the infrastructure upon which the SDN software can be run.
In addition to discussions surrounding NFV and SDN, much of the chatter at Mobile World Congress was focused on another major technology development that has implications across a wide range of industries. That would be the emergence of IoT, a trend that has gone from futuristic idea to reality in a matter of a couple of years.
Currently, almost all wireless connections provide a best-efforts approach to communications, which means the availability and quality of the service are subject to various factors. These include interference, network load, radio transmission quality, and more.
In contrast, a managed-communications solution allows the operators to provide guaranteed reliable service, opening the door to customer applications that demand reliable real-time or near-real-time connectivity over long distances. On the downside, managed solutions can be comparatively expensive to develop and operate.
In an IoT world, telecom providers will be tasked with connecting millions – possibly billions! – of new IoT-enabled devices carrying both sensor data and sensitive information. In this setting, the biggest challenge for the telecom providers will be a need to shift from an environment in which they charge based on volume of traffic and connections to one in which they charge based on level of performance.
These operators will have to take on the risk of creating networks in which they can guarantee a particular data communication will take place every time with the latency, speed, and error rate that customers have demanded. This represents a major shift, since today, even in managed networks, providers either set the bar low on performance guarantees or make only limited, aggregated performance promises.
Providers also face a major technological challenge that makes high-level IoT applications function. They must collect and process information from multiple sensors and devices and standardize it, even as technologies continue to evolve.
In order to do this, providers will need to implement SDN and NFV technologies. This means driving customer loyalty and differentiating their services based on performance, rather than aiming to lock customers into a proprietary interface. Thus, everything comes full circle.
In general, each individual IoT device generates a limited volume of data traffic, so the capacity of the pipeline is less important than assurance of the quality of the service (QoS). The revenue growth seen in charge-for-traffic models will be less than those carriers might hope. Thus, charging for QoS performance and delivering on performance guarantees creates a mechanism by which providers are able to grow revenues and sustain investment in their networks.
Something for providers to think about: As IoT spreads and operators implement SDN and NFV to handle it, they will need to consider centralized managed services and IoT applications as a way to link the communications network to end-user applications. This was a huge topic of conversation at this year’s Mobile World Congress, and that conversation will continue well into next year!