What are the network operators, the telcos and cable companies, going to do over the next three years? What should they do? Any questions like that, however important they may be, are necessarily difficult to answer because the future is never really clear. But we have to try, and what I propose to do is to assemble what I’ve learned from 81 telcos and cable companies worldwide. My contacts are mostly in what I’ll call “senior staff” roles, but about a fifth are CxO types and another fifth are in direct operations roles. What I’ll try to do is drill down based on their comments, and on my own experience in the space and analysis of conditions.
First, they aren’t going to do anything radical. Only 19 of the 81 suggested they would “more than likely” undertake new and significant projects to raise revenues, reduce capex, or reduce opex. However, 64 of the 81 thought it would probably be better if they did. What should they have done? The answer to that shows why there’s such a disconnect on the would/should side; they didn’t have a clear idea. Business transformation requires a goal, and as yet there’s no consensus—within or across operators—on what the goal should be.
A part of the problem, IMHO, is that for almost a decade operators were in the throes of 5G modernization. All the major telcos and most of the Tier Two operators had 5G budgets in play for a minimum of the last five years. This was the sort of thing they loved, a nice standards-driven supply-side renovation. And if you believed the media, it was going to create a whole new profit source, where not only could you sell to people you could sell cell service to “things”. But it didn’t work that way. 5G budgets are now largely expended, and while there are a few (17 out of 81) who seem to believe that 6G is the next big thing, the majority have no idea what comes next. They don’t even really have a process like mobile standards that could be expected to create it.
Of course, not doing anything radical isn’t the same as doing nothing. Even the telcos aren’t totally static, but they aren’t exactly mobile either. So they’re following their inertial paths. The two key words here are “inertial” and “paths”. Inertial, because lacking any specific ideas of what comes next, they’re continuing along. Paths, plural, because they have multiple things underway and they’re all rolling along on their own momentum.
The path that has the greatest momentum right now is the CIO’s OSS/BSS path. There’s no question that to the outside world, “OSS/BSS” is sort of saying “the Jurassic”. We think of it as the old and anachronistic brain stem inside what makes things whole and human. Well, a lot of telco people think the same thing, but despite that we have to consider a basic truth. Every enterprise values its core applications the most, and OSS/BSS is the core application of telcos. Even cable companies have a rough equivalent, though my cable contacts tell me that this particular path doesn’t have quite the credibility it has in telco-land.
Almost exactly a decade ago, the majority of telco planners I knew were telling me that there was going to be a radical change on their OSS/BSS strategy. About half favored “modernization” and the other half thought that OSS/BSS would be gone. Even the OSS/BSS people themselves were seeing big changes. And we sort-of got them; today only 21 of 81 said that their OSS/BSS systems needed modernized or replaced. The reason for this progress is the determination of OSS/BSS vendors to actually “modernize”. This, according to the telcos themselves, hasn’t been reported much in the media because there’s no glamour in the OSS/BSS topic.
Another path that’s got some momentum is open-model networking, which is sometimes a superset of Open RAN and sometimes a parallel development, depending on a number of factors. It’s those factors we need to look at. The first is obvious; you don’t care about Open RAN if you don’t care about mobile services in general and 5G in particular, so open-model networking is the only track in town. The second is complicated, and the third is even more so.
The second factor is the breadth of interest in “wireline” modernization and expansion. Open-model networking, meaning building networks based on generic switches/devices (“white boxes”) and open-source software is an unlikely step for an operator to take unless there’s a pretty significant drive toward modernization. Since the access network is the place where that’s likely to start, having a major expansion planned in the non-mobile part, what was called “wireline” before fiber became more common, is the most likely thing to create the drive.
There’s also a recent level of symbiosis involved. Fixed wireless access, or FWA, is a variant on the old fiber-to-the-node (FTTN) model, which originally ran copper for the so-called last mile. The problem with it was that while it shortened the local loop to the point where digital-subscriber-loop technology (DSL) would work, it couldn’t shorten it enough to create commercially competitive broadband, particularly if someone else had CATV cable, like the local cable company. FWA is usually combined with mobile 5G in the real world, and in many cases 5G mobile service and FWA end up using the same towers and technology. That broadens the mission, which broadens the amount of infrastructure that might be impacted, which increases open-model network interest.
The last of the factors is whether there is an explicit commitment to a shift to open-model networks, and a budget to back that shift. Right now, only 15 of the 81 operators say that this is their situation. Only 9 have actually started with a real investment, and the reason for the low number in both cases is that an open-model shift is essentially a massive vendor shift, which is something that’s difficult to finance these days.
Of the 81 operators, 61 say that they believe open-model networking would save capex and would also, in the end, result in better profits. That suggests that the motivation for open-model networking is there, and the barrier is in fact purely one of how to justify writing down what’s there, buying new stuff, training staff and redoing procedures in operations and support…a lot of baggage, in short. It’s the sort of thing you’d need an explicit budget to cover, and few operators have taken that step in a decisive way.
Introducing open technology as little islands within a vast proprietary sea is a chancy proposition too. Operators say that any mixed-vendor situation results in finger-pointing, which is one of the reasons why so many are abandoning their best-of-breed, competing-vendors, model of buying. Not only that, 73 of the 81 operators said they believed that finger-pointing and integration issues are more pronounced with open-model technology because vendors fear that even more than fearing a competitor.
There are little this-and-that places where new operator spending is possible, but they’re little backwaters and not major opportunities. If you want to sell telcos something today, it’s better to be able to ride a wave than to surf a ripple. And, especially, it’s better to sell into a strong position you’ve created with PR and marketing than to send salespeople out with little more than a hope of success. None of this is going to change much in the next three years, according to the operators themselves.
