Big Interview

The challenges of an on-demand culture

Angela Partington talks to Will Hughs, president and CEO of Telstra International, Americas, about the unpredictable loads that social networking places on the networks, and asks what service providers should be doing to tackle the problem.

We're just starting to digest the conversion from a broadcast culture to an on-demand culture. We're still in the adoption phase, and it's challenging to predict where it will end." So says Will Hughs, president and CEO of Telstra International, Americas, when considering the massive, and erratic, increases in data traffic which are currently causing such challenges to the wholesale telecoms industry.

When explaining the reasons behind this huge growth in data traffic, Hughs refers to a recent global mobile data traffic study by Cisco. Smartphone users, it claims, generate 10 to 20 times the traffic of their non-smartphone using counterparts. Mobile-connected tablets generate five times the traffic of the average smartphone user; while mobile-connected laptops generate 22 times the traffic of the average smartphone user. In effect, Hughs believes that "the telco networks are being asked to do what the traditional broadcast networks have done, but in an on-demand fashion which makes the loads unpredictable and huge."

An unpredictable phenomena

The "phenomena of online videos" is an excellent example of these challenges and opportunities, says Hughs. "YouTube was the early indicator of the impact of video on the network, and how it has made capacity demands skyrocket." With online video bandwidth growing in Asia by as much as 140% per annum, Hughs claims that the telecoms network could soon be feeling the strain of such growth in demand. "If a video goes viral and all of a sudden everybody wants to see the same dance generation video, and they're all firing it up at the same hour of the day, you can imagine the load that it puts on our                                                                                     networks. You just have to do the maths."

It is this unpredictability which is the greatest challenge. "You will never be able to predict viral activity, so we should plan to take advantage of it and try to calculate the potential loads on the network," says Hughs. "We need to look at actual consumer sales of devices, in order to understand the actual consumer screen real estate that's connected to a network and the power associated with that real estate."

Such increases in data traffic and changes in consumer behaviour are clearly having an effect on the market, both in terms of infrastructure development and, Hughs believes, the functions of the key players. "Google is probably the largest consolidator of video content but it is also participating in cable consortia and is selling high-speed consumer internet services in the US. Netflix is using Comcast internet to stream its own content. Many people now look to Twitter for the most up-to-date news. All of our old models of who provides telecoms services and who is a broadcast company no longer make sense."

But social networking is what appears to hold the real fascination for Hughs. "These social networking companies are in hypergrowth and are displacing many of the functions the traditional communications networks have provided in the past. We call it a social network but the essence of social networking is communication in multiple forms. That's why the social network was created."

Capitalising on growth

A threat it may be, but social media also presents an opportunity that Hughs is keen to exploit. Wholesale divisions, he says, must now work with their counterparts in the consumer divisions in order to enable them; to play with them, not against them. "The value of a wholesale network will be to support as much traffic in an efficient method as possible." The future, Hughs believes, will lie in creating "a synergy that will capitalise on the growth of this next generation: our Web 2.0 players."

Telcos and social media providers need to develop a closer working relationship. He refers to this partnership approach as "part of my holistic approach to social media." Hughs' desire is to have a telecommunications company that develops creative alternatives to increase the end users' ability to access social networking services. In Australia, for example, there are metered data services, requiring users to consider whether they wish to purchase data packages and possibly limiting their consumption of data services and their use of social networking sites. Telstra has created social networking portals where mobile customers with prepaid cards can use their mobile to access major social networking sites for free. While these portals can only provide access to scaled-down, text-only versions of these sites, they have raised customer awareness and interest in increasing data service usage and are already generating significant uptake of upgrades and bundling packages. "We need to keep track of activities like that in our home market in order to determine the true growth potential."

To be able to predict and manage such explosive growth, Hughs speaks about the importance of looking at traffic drivers holistically, "all the way from the devices that consumers are using, to the radio network, to the IP network, to the international transport network." Too many telcos are, Hughs believes, currently taking a siloed approach. "In wholesale, I think that the players that will succeed will be those who take into account the totality of their assets."

Improving performance

Hughs talks particularly about the importance of improving performance and providing an unsurpassed user experience. Solutions need to be built into the network, he argues, such as localised cacheing services. This will lower the amount of international bandwidth required to service these accounts, thus ensuring that latency and delay is mitigated and minimised. "If we integrate cacheing services, people will be able to see their friends' photographs faster than on a competitor's network. If a video goes viral, it can be cached locally in a variety of places so it doesn't place a huge streaming load on the entire network." As well as tackling the unpredictability of viral activity, such solutions can reduce the cost of demand by at least 20%, Hughs believes.

Key to Hughs is the move away from being "just the pure international pipe." Instead, he believes that telcos should focus on developing solutions and applications to improve the experience of people who use social networking sites. "Our networks are being refit for purpose now," he explains. "Telcos need to accept the fact that Facebook and other social media are not going away. We need to take an integrated approach to enhancing the user experience and start working together more closely." Hughs' conclusion might be straightforward, but it has radical implications for the perception of the telecommunications industry. "The overall theme is this transition from a broadcast culture to an on-demand culture. The whole means of the distribution of content is changing and I think in the end it's all good news for telcos. Fortunately, this traffic is all going over the telecommunications network."

Social networking and the deployment of smartphones are the two major factors which, according to Hughs, have resulted in the on-demand culture we enjoy today: "The upgrades to the mobile networks, the deployment of smartphones, and the huge uptake in social networking are all intertwined with each other. What comes first? The social networks or the smartphones that allow people to use them even more?" This may be an abstract question, but Hughs believes that both elements have a very practical impact upon the world of telecoms, and will bring both great opportunities and great challenges to the telecoms business.

Telstra International

History: Telstra International is a division of the Australian Telstra Corporation and provider of global telecommunications services and solutions to business customers. Telstra International was established in 2002 and specialises in delivering network services over transmission fibre.

MD: Tarek Robbiati is the group MD of Telstra International.

Customers: Telstra International provides services for businesses across Europe, Asia-Pacific and the Americas. Telstra International is an Asia specialist, operating one of the largest networks in Asia-Pacific, with particular strength in enabling multinational companies to expand into the region. Including offshore subsidiaries and international investments, Telstra International serves over 200 of the world's top 500 companies.

Network: Telstra International has the largest network in Asia-Pacific, as well as operating licences and landing rights in major Asian markets, the US and EMEA. It facilitates access to over 1,200 PoPs in 230 countries and territories.

Products and services: Telstra International delivers a range of telecommunications services, including network solutions such as global Ethernet, global IP VPN and international private lines.


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