Telcoms.com Intelligence recently published an interesting white paper titled “How SDN and NFV can help prepare operators for 2020”.

Being embedded in the SDN/NFV space, I found this white paper very interesting.

“Like SDN, NFV (along with a robust and flexible orchestration layer) promises reduced total cost of ownership, faster service delivery and the ability to create new services faster. All of which, theoretically, should result in increased profit margins for operators.” – Telecoms.com 

There is no doubt that SDN and NFV capabilities innately help operators become more efficient operationally as well as in bringing new products to market. Certainly SDN/NFV better prepare Telco Operators for the future (i.e. 5G) as well and as this white paper correctly indicates.

What About the Telco Operator Consumers?

In addition to the insight provided, I think there is the question of what the Telco Operator’s customers/consumers are looking to gain from SDN/NFV technological capabilities that are currently being brought to market and how does that impact the operators? Frankly, I believe enterprise customers are looking to do the same thing to network and network services that is being done to infrastructure/storage/compute. They want to commoditize these services and they want ease of portability avoiding vendor lock-in. From the perspective of an enterprise customer, I no longer want to build a network to my peak needs – I want to expand it when I need it (and of course only pay for the time for which it is expanded). I no longer want to pay for “always-on” network services which I may only need once per week. I may not put into place a complete back-up network, but rather be prepared (pre-designed, pre-tested, pre-built) to quickly turn up those emergency links, but only as needed, in minutes rather than months. From the perspective of a consumer, I want to treat network like electricity or water – I “plug in” and I expect it to be there.

If I take the perspective of an enterprise customer, I know that the technology is there to allow me to throw up a link one day and tear it down the next (barring last-mile issues) or to get capacity on demand. I want liquid bandwidth and liquid services. These capabilities are what the consumer wants for the simple reason that they’re looking to reduce their costs. It’s a double edged sword for Telco Operators in that particularly the early adopters can offer these services and win new customers with these new Products, but it has the potential to cannibalize their existing revenue streams. I predict that we will see middle tier telco operators begin to cut into the big providers revenue streams by offering these services directly to their customers and eventually the big providers will have to provide these services that at the end of the day will commoditize networks and network services.

So what are Telco Operators to do?  Honestly, I think it’s coming.. like it or not, so the smart thing to do is to get in front of it to provide a controlled transformation. They should begin now by exposing these capabilities to their customers and begin to productize and monetize these capabilities so that when the market forces the inevitable to happen (just like storage and compute), they’ll already be there and understand how to remain profitable.

We’ve done this at CloudSmartz for other clients and are happy to discuss.