While the pandemic of the past two years brought a nightmarish situation to the world, it nevertheless helped service providers to realize that to keep up with the demands put on their networks, a network transformation is not only necessary, but also urgent and critical.
Though service providers activities have grown in volume, with data traffic increasing more than a hundredfold, this hasn’t led to a corresponding revenue growth. At the 2021 Total Telecom Congress, Johan Wibergh, CTO at Vodafone, stated that the company had a 50% growth in traffic, but saw no matching growth in revenue, suggesting that there was a “need to change” - both in terms of connectivity and digital transformation.
The increased demand for capacity and services in the past two years was driven by a significant growth in over-the-top services (both video and gaming), as well as ultra-high-bandwidth access technologies’ development (FTTH, 5G and WiFi6/6E to name a few). Those were amplified by the global pandemic and the change of work/learn/interact/entertain habits, and have highlighted the need to transform networks. Driven by the need to reduce costs and generate new revenue streams by launching new services, infrastructure change is gathering momentum, with service providers looking to gain the same benefits from the cloud strategy used in data centers, and applied cost-effectively to meet network scalability.
McKinsey & Company highlighted this state in a recent report, saying “In 2021, telcos find themselves at a crossroads: they can either tinker around the edges to achieve incremental gains or make a bold choice to reinvent their value-creation formula and bravely, firmly commit to that choice - seizing the opportunity to create a permanent new role for themselves in a world reshaped by a pandemic that put them at the center.”
So, what can we expect in terms of network transformation in 2022?
#1: Increased adoption of disaggregated, cloud-native networking technologies
Disaggregation is gaining attention as service providers understand how it can simplify the operations of the overall network, enabling simplified service innovation and more flexibility. Tom Nolle, President and Chief Strategist at the CIMI Corp, emphasized that "The virtualization-centric notion of disaggregation and re-aggregation offers an opportunity to build network node functionality and network management visibility almost orthogonally. What the network does and what it looks like don’t have to be congruent. That’s a highly useful concept when it comes to both service features and service lifecycle automation."
Shin Umeda, vice president of the Dell’Oro Group, underscored this vision, saying “Our latest forecasts for disaggregated routers reflect CSP’s expanding interest in this rapidly emerging market. We expect disaggregated routers in which the network operating system (NOS) software is sold independently from white box hardware to see their first large-scale deployments in 2021, for use in both high-capacity core networks and as cell site devices in mobile backhaul networks.”
#2: Hyperscale providers will serve as the model for tomorrows networks
Most service providers have faced limited vendor options, given the monolithic nature of most networking platforms. Many are waking up and realizing that this proprietary solution restricts their ability to efficiently and cost-effectively grow their networks, leaving much of their current hardware resources underutilized.
In a recent report, Yesmean Luk, Telco Cloud Practice Lead at STL Partners, points out that the greatest opportunity for operators is to focus on the impact that hyperscale economics can have on operators' costs and capabilities.
"The value of networks has shifted from the networks themselves to the services that run over them," Luk said. "We are seeing that through the incredible business growth of cloud providers and the huge breadth of cloud-based services and applications that are being rolled out. As operators evolve to more advanced data-intensive connectivity services such as 5G and fiber to the home, they will benefit from the growing demand for capacity and throughput but as their capabilities grow, they will need to manage costs in a more sustainable and optimal way. A cloud-like architecture has been proven to support that and enable new revenue streams from expanded service offerings and the agility to address these. Hyperscale providers serve as the model."
#3: Software-based Networks Will Lay the Foundation of Networking's Future
Iain Morris, International Editor for Light Reading, emphasized that hyperscalers (such as Google, Amazon, Microsoft etc.) brought considerable transformation to enterprises with their cloud-based networking. Now operators are looking at how this may affect them - positively or not - and adapt and evolve their networks to make for a successful future. Morris shared insights from Johan Wibergh, Vodafone's Swedish chief technology officer, saying that “Any value creation in telecom ended about 11 years ago.”
Appledore Research analyst, Robert Curran, elaborates on the potential for this transformation, saying that “The move from closed, custom, hardware-based networks to open, cloud native, software-based networks bring with it the opportunity for disaggregation. It provides an increasing ability to innovate new dynamic and flexible services, rather than the typical static and fixed telco services of today.”
#4: Distributed Disaggregated Chassis (DDC) will be the Best Network Disaggregation Strategy
Deploying a DDC cloud-native networking architecture can address the new demands on the network. This approach offers more capacity, simplified architecture, lower power consumption, best-in-class capabilities with rich QoS capabilities, and improved flexibility both in physical placement and power consumption planning.
A recent edition of the SCTE Standards Journal stated that, “Current IP aggregation architectures are built on monolithic chassis solutions (…) [which may] lead to multiple technical, operational, and business challenges that cable operators are keen to minimize. To address these issues, the Open Compute Project, or OCP, has defined another alternative based on a new architecture: the distributed disaggregated chassis (DDC) white box architecture - developed by Tier-1 service providers, and supported by a wide community of operators and vendors through the Open Compute Project.”
Gorkem Yigit in a recent report from Analysys Mason suggested that “Most disaggregation vendors are currently targeting specific domains and use cases in CSP IP networks such as cell site routing. However, some cloud centric players have a grander vision of disaggregating and unifying all IP domains with a new type of disruptive, distributed network cloud.”
While the option of vertical-disaggregation provides some benefits, Yigit says that only the DDC flavor of disaggregation can provide the desired value and benefits to service providers.
Facing unprecedented demand and running on infrastructure with decades-old architecture, the networking market will need to quickly and radically adapt to address these pressing needs. We expect to see this transformation accelerate and advance, enhancing scalability, while allowing service providers to develop new revenue streams through innovative services, while lowering costs, simplifying operations, and offering a faster time-to-market.
