I’ve noted several times in recent blogs that AT&T is at a disadvantage versus rival Verizon because of the sharp difference in their demand densities, the effectiveness of infrastructure to address opportunity in their service areas. That’s not a good thing, to be sure, but it has given AT&T the incentive to do something that few Tier One operators globally have even considered, and that is to restructure itself away from the regulated monopoly it grew from. It could be that AT&T is the most important telco on the planet, because they’re the only one testing the murky waters of the future.
Light Reading did a nice piece on AT&T’s recent investor/analyst conference, and it quotes AT&T in expressing what can only be called highly impressive insights about the network services market. That makes it a great place to start in trying to dispel some of that murk.
Our first quote is “The AT&T story will be written in two acts. Today we’ll focus on the first act, and that is taking our current asset base and delivering competitive returns.” Shedding what the article calls their “troublesome media business” lets them focus on being a premier broadband provider. That’s the core issue for any telco, any network operator. You’re in the connection business. You have billions of dollars in network infrastructure, and you can’t let all that sunk cost end up supporting a loss leader. You have to clean house in connection services.
What is the second act? “On what I refer to as Act Two, we are doing a lot of work today that is enabling us to open up aspects of the network for others to come in and start at offering value-added services associated with it.” This, to me at least, suggests that AT&T is saying that it will build service value “upward” from connectivity, through partnerships with others who have specific capabilities and incumbencies. Carrier cloud seems sure to be a casualty of this, and partnerships with public cloud providers seems sure to be the big winner.
The unification of these points can be found in this quote: “I’m talking about moving up the stack to do things with our network that allows us to refer our connectivity, because it will work better with people who are running more sophisticated software on top of that stack.” We need to parse that statement to see whether we can discover what path AT&T will take, and what might be the path for all network operators eventually.
“Moving up the stack to do things with our network” obviously means taking on things that are not part of pure, limited, connection services. AT&T is not proposing to let others do this moving; those others are the ones AT&T is going to be working with. They still see themselves as a provider of “that stack”, meaning the set of communications services from which value-added players will compose things.
All this is interesting, but it begs the question of just what AT&T proposes to add when they move up the stack. This quote provides a couple hints: “How do we begin instantiating software that can add these features back into the network that allow us to put value add on top of it and sell those managed services or capabilities back into the core connectivity that we put in place?”
Parsing this quote yields some insights, I think. First, the “features” that live “up the stack” are features that relate to the use of and value of connectivity. They’re not talking about OTT stuff here, but about things that are related to, and potentially enabling for, connectivity. Second, managed services are a specific target offering, the only such offering called out in the article and quotes. That, friends, is very significant, and it ties into the opex blogs I’ve just completed.
Opex is the bane of everyone’s existence. To make technology more useful, we need to expand how we use it. To expand how we use it, we need to add features and elements, and every additional feature and element is something that has to be managed. Creating successful tech in an organization means expanding complexity and expanding management challenges, whether you’re a network operator or a service user. I pointed out in this blog that enterprises are facing major problems in service and network management, not only for wide-area services but for the LAN.
Managed services, meaning managed connection services, would be the lowest of the apples to pluck, from the perspective of the sales process. Arguably, services like MPLS VPNs are a form of managed service because they replace an IP network built from transit trunks and routers with an IP service whose interior behavior is the responsibility of the provider. You can see why a telco like AT&T would like the managed service idea.
There is, however, another perspective to consider; the perspective of realization. To make managed services work, first and foremost, you need management economy of scale. You need a very low management cost, far lower than your prospective buyers could achieve, low enough to allow you to tack on a nice profit margin and still be better/cheaper than not only the buyer’s self-management, but also other managed service competitors.
This is where that past blog series on service lifecycle automation comes in. Here we have the telcos like AT&T, who have historically been stuck in the mud with regard to lifecycle automation because they’ve been unable to modernize OSS/BSS systems or to shed their device-centric NMS strategy, something that just does not scale to provide the economies they need for managed services to work.
Managed services need two technical layers to be effective. The first layer, the “consumption” layer, has to present an entire feature collection as a network-as-a-service offering. The buyer cannot be aware of the details of a service you’re going to manage, because that defeats buyers’ desire to unload responsibility. The second layer, the “production” layer, has to be able to focus management on the “feature SLAs” of each service feature the consumption layer exposes.
IMHO, this is the perfect picture of a hierarchy/intent-modeled service view, the focus of yet another of my blog series recently. Putting things another way, one aligned with semantics as much as technology, managed service success demands management by analysis and not management by synthesis. You don’t build up from devices to services the way the old OSI management model required (synthesis), you build down from services to the devices that create them (analysis).
AT&T hasn’t said what its plans for modernizing lifecycle automation might be, and in fact hasn’t really signaled that the recognize the step is essential if managed services are to succeed as revenue generators. There are a lot of questions that need to be addressed in a realistic initiative to do that kind of modernization. We still have to balance the value of “self-organization” or “adaptive” management against explicit management and traffic engineering. We have to work out what role AI and machine learning might play, and we have to figure out how to evolve from what we have to wherever we believe we need to be. It’s going to be a long, exciting, and frustrating journey, I think, for AT&T and for all the network operators.
