The pace of transformation in the telco system over the last few years has increased manifold. Such telco digital transformation is due to the adoption of delivery based on Network Functions Virtualization (NFV) as opposed to traditional custom hardware for custom network function models, which dominated the telcos for decades.
In the traditional world, network functions were built and run on custom hardware powered by custom software and controlled by very select ISVs and OEMs. One release or upgrade in such an ecosystem used to take one year. It was like mainframe (locked-in) architecture— new technology releases were limited, as it was controlled and driven by a handful of suppliers.
During that time, the industry was making 80% of its revenue from voice and the rest was coming from value-added services (VASs) such as SMS and MMS. New digital revenue streams such as OTT services were just picking up.
The last decade has seen unprecedented traffic growth and an increasing customer demand for new high-quality network services. At the same time the revenue for this industry has shrunk by 20%.
The VASs which were seen as a game changer at their peak were now fighting for their survival; soon these became overheads for the telco operators. The next-generation digital services and platforms (such as: Facebook, WhatsApp, TikTok, Netflix, YouTube, Snapchat, Twitter, Instagram etc.) brought in a new wave of digital services which are ‘data-driven’. These needed high-speed internet at the helm to live up to the millennials expectations and bandwidth demand that skyrocketed every time a new OTT player joined the market.
Upgrading traditional telco infrastructure for this scale required massive CAPEX and planning. Complex day two operations and lifecycle management were only adding to the woes of CIOs everywhere. Looking at the success and agility provided by virtualization in the enterprise space, telcos started to finally embark and embrace the power of NFV. In the world of network functions virtualization, telecom network functions are run on top of commodity servers.
Upgrading traditional telco infrastructure for this scale required massive CAPEX and planning.
Every ambitious move is a gamble; sometimes it pays off and sometimes it does not
Concerns of achieving carrier-grade network performance with low latency, high throughput, and high availability to guarantee the quality of experience (QoE) for customers with virtualized network functions was one of the primary reasons for delayed transformation in this space. However, once the falcon called network functions virtualization took off, there was no stopping, as by then, the telcos had mastered the art of managing the ecosystem.
Innovation brings acceleration- The new world brought significant standardization, simplification, automation, and agility that was missing with previous deployment models. This gave telcos the courage to take the next step in this direction and started an era of containerized network functions (CNFs). CNFs, by virtue of their nature, brought the concepts of CI/CD/CT in telco operations and made them more IT-aware than ever. Now, telcos do not have to wait for long maintenance windows and approvals, and have started doing things in an agile way.
Earlier the Gs (2G, 3G, and 4G) were majorly focused on delivering two currencies— speed and through-put. However, 5G is being looked at more than just a consumer technology and is designed to deliver eight currencies (speed, throughput, latency, concurrency, mobility, velocity, reliability, and efficiency). This needs architectures that can adapt as per the user need and patterns dynamically. Virtualization in telco enabled dynamic network slicing. Modular software and datacenter design enabled telcos to scale up the capacity and availability at the click of a button. Lots of ICT experience, learning, and engineering efforts of system integrators helped telco players leapfrog in the new scheme of things.
Faster innovation means faster disruption– The telco world was all rosy until the new players challenged the status quo and built the future stacks on ‘open-architecture and next-generation server-less platforms’. With these new technologies and platforms at the nucleus, the service providers are able to bring up the new radio network up and running in 30 minutes after it is installed. This also allows them to upgrade thousands of radio sites simultaneously (zero-touch and fully-automated). Previously, no one dreamt of doing it.
Thus, the new services are rolled out in minutes as opposed to months, giving the partner ecosystem more power to innovate and adapt to a ‘fail-fast vs fail-last’ dictum. Increase in service velocity has been made a reality in telco with these architectures. Concept of far edge -> edge -> central DC is becoming the new normal for telcos.
5G will not live to its promise without edge- Traditional telco players are finding it difficult to grapple this change and are looking for ways to compete against the new players from the commercial and user experience points of view.
Adding to the misery, with forced exits of Huawei and ZTE from select countries (due to the United States clean-pipe, clean-network initiative), some telcos will have to do a forced migration to new platforms due to regulation changes. As per IDC’s recent survey for worldwide ICT spending, communication service providers spend is expected to reach $254 billion by 2022. With this forced change, the spending is expected to increase manifold.
Yesterday is not ours to recover; tomorrow is ours to win or lose– Future telco networks will be built with three main characteristics— containerized and virtualized radio and network functions, automated and intelligent operations, and open hardware and software standards.
Today, the new telco players are positioning themselves as transformation OEMs. There is lot of excitement in this space as the existing telco companies are not open to competition in their ecosystem. They also do not want to party with the incumbent service providers as the cost of embarking on a transformation journey with them is way within budgets. This creates a huge vacuum which can only be filled by SIs such as HCLTech as our rich heritage and pedigree in complex network and infrastructure transformation, integration, and management bundled with our robust strategic partner ecosystem makes us stand apart from the herd.
