If you go to the website of a big vendor who sells a lot to the network operators, or read their press releases, you see something interesting. The issues that these vendors promote seem very pedestrian. We hear about things like “customer experience”, “unified services”, “personalizing usage”, “traffic growth”, “outages”, and even “handset strategies”. Where’s the revolutionary stuff like the cloud, SDN, and NFV? Or, at least, why isn’t that stuff getting highlighted?
The popular response to this is that it’s because of that bad old carrier culture thing. These guys are dinosaurs, trapped in primordial sediments that are slowly fossilizing around them while the comet zooms in to generate mass extinction. Others are playing the role of the mammals—small, fast, scurrying over the traps and destined to survive and rule. You probably realize by now that it’s not that simple, but maybe not why that’s the case.
The vendor website that’s filled with these pedestrian terms isn’t trying to sell to the dinosaur population, they are trying to sell to the buyers with money. Equipment is generally purchased by operations departments, and these people don’t have a mission of innovation. That’s the “science and technology” or CTO people (who, by the way, don’t have much money at all). The operations people think in terms of service benefits relevant to current sales situations, and that’s why all those pedestrian topics come up.
Imagine yourself as a carrier sales type. Your customer bursts through your door (virtually or in person) and shouts “I demand you fulfill me using SDN or NFV!” You’d probably call the cops. On the other hand, a customer demanding you accommodate traffic growth, unify their services, or control outages is pretty much the norm.
At a high level, this explains the business case issue. We can’t sell technology changes to buyers of service, we have to sell the impact of technology change on those buyers’ own businesses or lives. That’s what a business case must do. But we’ve talked about business cases already, and I want to open another dimension to this. What are the “priority attributes” that any element of network infrastructure will have to deliver on?
The CFO of every operator is the star of the company’s quarterly earnings call. All the people on the call—meaning the CFO and the financial analysts—see networking as essentially a zero-sum game. Revenue gains by me are revenue losses by someone else, which means that “new revenue” is more likely to be someone else’s old revenue than something that’s never been spent before. Cost reductions have to target large costs with low-risk approaches.
Zero-sum revenue games mean you have to differentiate on something that 1) the customer values and 2) the salesperson can convey quickly and convincingly. Simple technology changes fail on both counts, which is why that initial list of what might look like ancient clichés is so ubiquitous on vendor sites. It might not be as obvious, but truly new services fail the second test. How much time would it take for a salesperson to convince a buyer to adopt a different service model? A long time, and it might never happen, and sales success is the real prerequisite to any revenue gains.
Interestingly, cost reduction discussions often end up sounding like new-revenue discussions. The reason is that the largest operations/administration cost element is customer acquisition and retention, running 12 cents per revenue dollar. When you consider that capex is only 20 cents you can see the point here. This little fact is why wireless companies like T-Mobile can offer unlimited video streaming, eating the data costs. Sure it costs them some access capacity (which they can reduce through efficient use of CDNs) but if a little additional capex can make a big difference in the acquisition/retention cost, it’s worth it.
Let’s take this simple truth and run with it. If the largest benefit source for a new technology is its ability to reduce acquisition/retention charges, then what matters about the technology is how well it does that. It’s not easy to make a connection between virtual pipes or virtual firewalls and better customer traction or lower churn. You can assert that there is, or could be, one but most vendors would admit they have no idea how to prove it. Worse, they could never construct a technology trial to validate their assertions.
This is why a bottom-up approach to both SDN and NFV was such a problem. In a real, logical, technology project you start with the benefits you’ll need to harness to get what you want, and you define specific requirements and features that will deliver them. You build downward then to implement or standardize these features.
What about IP convergence, you might ask? Well, the fact is that the IP revolution came about because of a fundamental change in demand. We had two forces in play, in fact. Enterprise networking was built around host-centric architectures like IBM’s Systems Network Architecture (SNA). We had no consumer data service potential. Routers offered enterprises a cheaper way to push data traffic, and the Web offered a consumer data service model. And so off we ran.
This is why the focus on the service status quo is a problem for SDN and NFV. If we reproduce what we already have as our only revolutionary mission for new technology, we cut ourselves off from the only kind of benefits that has ever created a network revolution. We are forced to rely purely on cost savings, and as I’ve pointed out in prior blogs it’s difficult to muster a lot of cost savings when you deploy a technology incrementally.
How much do you save by transitioning one percent of your network spending to SDN or NFV? Clearly less than 1% in capex, since you’ll still spend something. On the opex side you may save nothing at all because your SDN and NFV pearls are trapped in a lot of legacy seaweed (swine?) that still requires exactly the same practices for operations and management. And without new services you’re back to the problem of proving customer acquisition and retention savings is possible.
I’ve noted in past blogs that the Internet of Things was something that could drive technology changes. That’s because it’s a service-level change, something that like IP could be transformative because it transforms what the top-of-the-food-chain buyers spend their money on. However, just as our conception of SDN and NFV has been shortsighted to the point of being stupid, so is our IoT conception. Cisco thinks it’s all about more traffic (therefore, it’s about more router spending). Verizon and other operators think it’s all about LTE-based sensors (therefore, about more mobile service spending). It’s not about either one.
I’m going to be talking more about IoT in future blogs, but talking about what it really can be and not the stupid stuff. Along the way, I’ll show how it can transform the network, the cloud, and how it could then pull through massive SDN and NFV investments.
We did dumb things with our current revolutions, and in doing so have almost killed their chances of being revolutionary. I’d sure like us not to muck up IoT.
