Future Telco Production Model
by Jesús Portal, Salman Ali, Enrique Moral
How core revenue decline is driving new production architectures

Given the speed of technology cycles, new flexible production architectures are a prerequisite to driving the pace of product innovation and transforming operations. IP networking combined with network function virtualization (NFV)/cloud and software-defined networking (SDN) are emerging as enablers of this new design. Industry thought leaders have shown that onboarding these technologies allows the creation of agile, functionally richer, open infrastructure platforms, as well as driving significant improvement in operating costs, through automation and centralization. It is time for telecom operators to articulate a clear vision, that aligns with the new technology and innovation reality, and mitigate and overcome the risk of being left behind in the new era of communications.

Through the use of NFV, cloud and SDN, the telco services and production platform is evolving from multiple silo stacks to a programmable, cloud-like service and infrastructure platform akin to web-scale players. It is widely expected that the emerging design will enable both richer infrastructure services and the ability to scale out services on demand to respond to ever-changing customer needs. The expectation is that these technologies will allow carriers to dramatically increase their pace of innovation, and perhaps one day even narrow the gap in terms of time to market and cost of services with web-scale players.

The shift is reaching beyond customer real-time self-order, real-time provision, and self-service enabled by automation and programmability. We expect it will trigger wider and web-like collaborative relationships between carriers themselves and their suppliers:

  • Applying Network-as-a-Service,
  • Redeveloping retail and enterprise product portfolios,
  • Enabling altogether new B2B2X offerings.

The new production architecture is challenging because the changeover is not trivial. It will require transformation of the production environment, as well as many hard-coded operating processes in the Operations Support System. To make it happen will require profound changes in organizational structures, technology skills and, above all, mindset – and perhaps even business models themselves.

A handful of carriers are both legitimizing and leading the change towards the future, through formal network transformation programs and targets. Despite their efforts, a one-size-fits-all design has not yet emerged. Operators such as AT&T and NTT are looking to meld cloud, network infrastructure and security into a single, coherent platform. By contrast, Deutsche Telekom is using these technologies to drive mass-cost reduction through centralization, whereas Telstra wants to use virtualization to expand its operating footprint. But no one has yet articulated answers to the most pressing questions of the move to software-based network architectures:

  • Where to begin onboarding these technologies while telecom standards works are still under development?
  • How to transform operations on a new, virtualized infrastructure requiring software capabilities?
  • How to build the business case for change?
  • How will operational savings and new revenues from flexible services overcome the evolution of the current roadmap?