As telco technology, services and business structures have evolved rapidly, operations environments have faced increasing challenges from siloed operations systems.
To date, conventional technology from traditional vendors has had difficulty responding to the challenges. While small, innovative companies are starting to emerge, telcos have not had a lot of experience dealing with small, innovative companies. Therefore, with the prospect of increasing competition from OTTs on the horizon, partnerships between small innovators and large vendors are emerging.
One theme running through telco financial reports the last several years is the challenge of controlling operations costs while facing pricing pressure. In large part, this is due to the silos of highly manual operations that have evolved. But now events on the horizon may turn up the heat.
For example, Apple and Xiaomi have started selling phones directly to consumers on a monthly installment plan. Xiaomi has gone a step further in creating an MVNO in China such that customers can buy a phone and service from Xiaomi. Thus, Xiaomi can negotiate with the operators in China to get the best pricing, playing one off against the other.
Similarly, Google's Project Fi service is currently available by invitation only to maintain high quality while they scale up the service. They have been working in this mode for more than two years. Google has MVNO contracts with both Sprint and T-Mobile. The service works in conjunction with a Nexus phone that senses instantaneous quality of service (QoS) from both operators and automatically switches between them to get the best service at the moment.
If Google rolls out this service, Apple decides to combine its phones and a service in a similar fashion and/or Xiaomi takes its service international, pricing pressure for traditional mobile operators will become much greater. At the same time, QoS will become even more important. Network problems in a specific area will not just result in frustrated customers who have to consider contracts and the hassle of changing providers. Instead, impaired QoS will result in a loss of traffic and a concomitant loss of revenue. This raises today’s potential cost of siloed ops from the current up to $5 Billion per country net.
Thus, if Google, Apple and Xiaomi roll out their services on a wide scale, the current siloed ops problem may become an existential problem for many telcos. The danger is -- just as a frog in a frying pan doesn’t react to slow changes in the heat of the pan -- telcos slowed by not-so-agile traditional vendors and competing internal camps have been reacting too slowly to the recurring incremental changes. (See Capturing the Promise of Virtualization.)
There are many interesting and challenging "streams" in today’s telco world -- operators, vendors and standards development organizations (SDOs). Throughout this ecosystem there are often competing camps vying for attention and resources. Sometimes they are hitched to different streams. Other times they have different approaches to the same stream.
Some operators talk of "transformation." Some vendors have tried bringing enterprise solutions to bear on the telco ops silo problem, but the scale, geographic distribution, long useful life and constant change in telco systems makes the telco ops silo problem fundamentally different from challenges in other enterprises. Many of the standard streams, such as NFV and 5G, interact with the already technically challenging silo problem and are technically/operationally challenging by themselves. The recent Multi SDO Information Model Workshop is a welcome sign. It points to a possible meta-model that can be very helpful. (See The Quest for the NFV Über-Model and Conversation Starter: SDO Collaboration.)
What underlies all this is the fundamental fact that traditional vendors facing technical and business challenges have not been able to solve the silo problem. This leaves the telcos getting hotter and hotter.
The solution to the ops problem may only be able to come from small, innovative companies -- an area in which telcos have not had a particularly successful track record. However, it appears that successful telcos will find a way to work with these small, innovative companies and confront the ops silo problem head on. One possible way forward is for small, innovative companies with breakthrough technology to partner with larger vendors. This provides assurance to the telco that there will be reliable long-term support and at the same time delivers the breakthrough technology needed.
— Mark Cummings, CTO, Orchestral Networks, and Jayanta Dey, CTO Media & Telecom Business Unit, Wipro, special to The New IP