“I would like to be able to launch 500 services per year,” a VP at Telecom Italia told delegates at an industry forum in Madrid last week. She was one of the speakers in a session dedicated to the future of the telecom network and, more specifically, network transformation and “cloudification.”
While a number of operators – AT&T, Korea Telecom, Deutsche Telekom, and Telefonica to name a few – have started to talk with growing conviction about their rollout plans for technologies such as SDN and NFV, there has been little discussion in public forums about what the telecom business will look like once the transition from hardware is complete.
Technology vendors are, increasingly, promoting the benefits of SDN and NFV in terms of creating a “superior production environment” and decoupling the network from the service layer. Service providers often talk about how long it takes them to roll out new services, and they see this as one of the main advantages that Internet companies have over them.
So this implies that telecom operators want to launch many new services – as per the aspiration of the Telecom Italia VP. The question then arises as to what these new services might be and how telcos will compete with each other and with the wider world of digital service providers.
When technology vendors talk about service creation in the context of SDN and NFV, they are largely referring to the enterprise market. Their vision is for telecom operators to expose their network capabilities to the end user – much as Amazon developed Amazon Web Services by making the infrastructure behind its online retail business available to third parties. But they are not specific about what the new telco services will be.
The telco business is evolving into a pipe business – dumb and smart – and the “value” that telecom operators provide is, increasingly, around speed, bandwidth, and quality of experience more broadly. When it comes to service innovation and creation, most activity by telcos involves bundling third-party services rather than attempting to build their own products and services.
The VP at Telecom Italia acknowledged that of the 500 services she would like to launch every year, probably only 50 would generate revenues. She wants Telecom Italia to embrace a “fail fast” culture, with the ability to create and launch a service in five days, and accept that not all services will be successful.
But do telecom operators have the right culture – the right DNA – not to mention the software skills to build new services themselves? A more likely scenario is that the transition to software-based networks, and embracing the API concept, will allow operators to bundle in more third-party services.
Mark Newman is chief research officer at Ovum. For more information, visit www.ovum.com/