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The Telecommunications Industry
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I don’t know about you, but I can’t believe how much market activity we’re seeing in communications software these days versus the situation of a year ago. It’s enough to drive our engineering and product managers into a synaptic meltdown, given the presales and early project delivery demands. It’s about time. I ran an interesting google trends search this afternoon, which ranks, in simple relative terms, the number of times “telecommunications” has been used as a search term, starting in 2004 and ending today. Search frequency has dropped by about 75% over that period. In other words, the average schmo is about a quarter as likely to satisfy some level of curiosity about telecommunications as he was five years ago. Telecom Search Term Trend Tiger Woods Search Term Trend By comparison, searches for “Tiger Woods” have grown more popular by about 750%. Particularly in the last two weeks. Go figure. So based on our own small sample of interest in things telecom, I’m compiling a list of the top ten reasons why I believe telecom is at an inflection point — a very interesting one at that — and why the google trend curve for 2010-2015 (or whatever replaces it from the google labs) will look much like a mirror image of the 2004-2009 version. I’ll post the first five of these today, and follow up in the next few days with the remainder. Number 10: Mobile data demand drivers will force a business paradigm shift. All-you-can-eat data may be becoming unaffordable (see the interesting article by John Paczkowski in All Things Digital ). It’s going to get worse with video. Someone’s going to have to pay for all the upgrades and new backhaul. The people with expensive unlimited data plans (the kind of people who write news articles and blog a lot) aren’t going to like it. Number 9: The mainstreaming of VoIP and multimedia will force a technical and architectural paradigm shift. The IMS platforms that are rolling out to deliver VoIP and other services work in the lab, but they aren’t ready for prime time operations. The management tools aren’t there yet. Demand for new tools and new methods and procedures is going to fuel innovation and new entrants. Some of the new kids are going to be newsworthy success stories. Number 8: One or more major service provider networks will suffer a catastrophic security breach. It’s going to make big news, spur bloviating politicians to hold Very Important Hearings, and refocus attention on securing the net. The vulnerabilities — either in the internet or in closed service provider networks — are just too glaring to ignore. Some bozo hijacking a Tier I network will make good fodder for 60 Minutes. Number 7: The US industry is ripe for reregulation. The Obama Department of Justice was widely rumored in July of this year to be investigating antitrust violations in US telecommunications. The long silence since then may be an indication that the rumors were greatly exaggerated, but whether in antitrust enforcement or in new net neutrality regulation , the long arm of the law is about to get longer. Lawyers, rejoice. Number 6: The intersection of Google, Apple, and global service providers like AT&T, Verizon, and Vodafone is going to force a restructuring of players and roles. The hunger for content and advertising revenue, the interdependencies among the networks, platforms, and developers, and the extremely capital-intensive nature of the needed new infrastructure will force a historic realignment. The “communications service provider” of 2009 will be unrecognizable in a few short years. to be continued…
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Lately we have been seeing a huge spike in interest for a variety of applications that manage large numbers of widely distributed intelligent devices in a variety of new broadband networks. One of our partners, Accedian recently put a Nakina application into a US wireless carrier to manage turn-up and test for a large rollout of Ethernet NIDs in a backhaul application; in an another, a top equipment vendor has begun implementing a Nakina Resource Optimization (parameter management) solution for a national IMS rollout supporting consumer VoIP. There are a lot of other cases that can’t yet be disclosed publicly, but they all involve management of networks that are undergoing various stages of disaggregation. In the consumer VoIP example, over 20 individual classes of network element (media gateway controllers, routers, access managers, etc.), deployed in multiple instances, replace a single centralized switch. The new architecture is vastly more flexible, and takes advantage of the inherent efficiencies of packet-based transport, but the flexibility and efficiency come at a cost in terms of increased management complexity. Rev levels, patches, parameter settings, backups, and security in the disaggregated environment can’t be managed without new infrastructure and new methods, and these are often improvised at rollout rather than being baked into the plan. ( photo credit: http://www.computerhistory.org/) It strikes me that what we’re seeing among service providers — and in the management systems that support them — has a lot in common with the evolution of enterprise computer and network architectures — in fact, it’s nothing more than a delayed reflection, played out in an industry that has vastly longer investment cycles and vastly slower technical evolution. The movement out of the 1970s mainframe-centric world and into the ‘peer-to-peer’ minicomputer networking world of the 1980s (the origin of the internet) and then further into the evolution of ubiquitous computing in the 90s and 00s, gave rise to a whole new multibillion dollar industry devoted to management support — network management, PC desktop management, server system administration, and so forth. It created an opportunity for rapid development of hundreds of companies, many of which became billion dollar plus players (CA, IBM’s Tivoli, and BMC for example). We’re still in the early days of a massive transformation from a ‘mainframe’ era of telecommunications into a disaggregated era — based on IMS, LTE, IPTV, femtocells, and ethernet transport (to name only a few examples), with content and service originating from millions of endpoints around the network, not radiating out from its center. It’s time for a new ‘operations software foundry’ to start forging the tools and building the machines that will empower that transformation.
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I cut my teeth as a young telecom analyst at the Yankee Group on antitrust and deregulation issues during Judge Green’s forced breakup of the Bell System. So the news this week that Obama’s Department of Justice may be dusting off the Sherman Antitrust Act to go after telecom monopolies merits more than a passing interest on my part. Because I can’t resist being an ‘I told you so,’ I’m going to state right up front that I predicted antitrust action would be forthcoming in the talk I gave last May at Telemanagement World in Nice, and earlier at the November, 2008 TMW in Orlando. The news reports focus on AT&T’s exclusive iPhone deal, and the competitive harm these exclusive deals may cause for smaller carriers. I don’t think that’s the real issue, whether or not it will be the one motivating Department of Justice action (if ever the investigation comes to that). The real issue is that the de-monopolization of US telecommunications that began with the AT&T divestiture, and that reached its apotheosis in the great Internet bubble, must now be regarded by the current administration as a complete failure. More importantly, the telecom industry has become a convenient target for a newly reinvigorated Antitrust Division looking to reverse the prevailing tide of self-regulation. The iPhone issue is a convenient pretext. And one with a pretty influential sponsor in the Senate (see “ John Kerry (D-Verizon) Whines about iPhone Exclusivity “) The Department of Justice is not commenting publicly. The new Assistant Attorney General in charge of the Antitrust Division has, however, left a pretty clear trail of breadcrumbs to indicate her philosophy. In a speech given to the US Chamber of Commerce, AAG Christine Varney traced her lineage in the Division to Thurman Wesley Arnold, who filled the role in the thirties and early forties for Franklin Delano Roosevelt. Thurman was one of the first and most vigorous antitrust enforcers, reversing the prevailing tolerant policies toward trade associations and price collusion. In the wake of the “Great Recession,” Varney wants to end the era of ’self-policing’ industries, and reset the equilibrium in favor of the consumer and the ‘little guy.’ Interestingly, Varney cites the US vs. Microsoft case as a good example for guidance in the application of antitrust law. I’m no lawyer, and certainly no specialist on antitrust issues, but I have to believe that it would be pretty difficult to prove competitive harm in this case. Unless maybe Google were to join the DOJ as an amicus curiae , arguing that Android was being frozen out of the market by hostile exclusionary tactics. Thurman, by the way, was eventually promoted out of harm’s way to a federal judgeship, which he found so stultifying that he left a short while later for private practice, stating “I would rather be speaking to damn fools than listening to damn fools.” Hear, hear.
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I took a several-year-long nap in between the time I was doing Granite Systems and the time that I woke up and started working with Nakina. Somewhere in that interval cell sites stopped being fed by one or two T1/E1 lines, and started being fed by big fat optical pipes at OC-3 rates and up. This is good news for companies like Fibertower , since making adequate backhaul capacity available is going to be an ever greater challenge for wireless operators. I just saw a review of one of the gadgets that’s going to keep driving data throughput up (and hence keep feeding the ravenous demand for faster backhaul). Over at engadget mobile there’s a review of a new “MiFi” device from Novatel that’s being distributed by Verizon Wireless . For a hundred bucks you get a credit card-sized WiFi router that gives access to five devices at EV-DO speeds. Engadget clocked it at about 1.8 Mbit/s down and 0.4 Mbit/s up — more than enough for the usual email catchup and web wandering. The access charges are low enough that for anyone who spends as much time on the road as I do, and gets as ticked off as I do about the absurd charges some hotels levy for net access, this looks like a no brainer. Time to cancel my Boingo subscription…
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The success of Tier 1 service providers is in jeopardy due to the deepening innovation crisis in management and operations technology. Every Tier 1 service provider today relies on the same dual technical and market strategy: Attain lowest cost of service by migrating to a multiservice packet-based network; and, Ensure highest customer loyalty by bundling valuable services delivered through high speed access networks. Yet every Tier 1 service provider’s success is in jeopardy due to the deepening...
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I went through the updated Moneytree figures to rebuild some charts for the presentation I’m doing (tomorrow — it’s never too late!) at TMW in Nice. Yurgh. Venture investment in network hardware and software is on an asymptotic curve approaching zero. Maybe ‘getting ready for the post-voice environment’ really means ‘getting ready to get gobbled up by Google.’ The Tier I traditional telephony providers are going to have a very hard time sourcing the kind of technology they need to get ahead of the innovation curve over the next five years.
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Many, many years ago I was an analyst covering telecom services at the Yankee Group in Boston. In those days of yore, I remember writing an article about Deutsche Telekom’s laughable attempt to develop “bit meters.” They wanted to attach...
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Last week Martin Creaner of TM Forum fame was blogging about the importance of Chinese capital in setting the standards for future wireless networks. The growing muscle of Chinese service providers, who are probably spending about a quarter of all capital...
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That last post is looking a little prophetic after this morning’s ROI column in the WSJ. People may not be paying their mortgages any more, but they won’t give up their iPhones or their Starbucks lattes…
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In an article in this week’s Economist , the author posits the existence of a technology food chain, telling the story of Autonomy . Autonomy is Britain’s largest software firm, and nearly capsized in the technology crash of 2000-2001 but...
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