Investing in automated networks has been under way for many years as carriers have realised the potential for improved efficiency and simplified management that fits their customers’ needs to use more sophisticated communications services that are tightly integrated with other applications and services. So far, activity has been largely focussed on isolated areas in which cost can be saved, rather than on addressing the complete picture of automated networks enabling the wider digital value chain from which new revenue streams will come.
“We need to understand what automation means for customers,” says Peter Terry-Brown, the unified communications and connectivity director at Vodafone Business. “It could just be about making back-end systems work more efficiently to get an instant quote or more efficient billing – but that by itself doesn’t deliver what customers are looking for. The goal of automation should be to make the network completely invisible, so it can be consumed as a single entity without making customers choose which bearer network to use – because most of the time they don’t know which they prefer and all of the time they don’t care.
“We believe there is a real opportunity to move away from bandwidth pricing or even selling quality of service (QoS) to selling application performance, but the only way to do that is to make networks appear seamless via application programming interfaces (APIs),” he adds. “Automation will remove all that complexity from the device to the cloud, but unless you have everything working together, you can’t enable customers to pay based on application performance.”
Andy Tiller, the executive vice president of member innovation at TM Forum, which is working to set standards for open APIs that include security by design, agrees. “You need everything to be automated and that’s why it has taken so long,” he says.
“None of the concepts of automated networks and open APIs are new, but we haven’t seen them enter into the real world until now. Automation will be the enabler of much simpler provisioning of complex enterprise services, which makes them much lower cost to offer. That, in turn, increases the profitability of existing services but also makes offerings that would previously not have been viable into revenue-generating propositions.”
Carriers have been at a disadvantage because they operate regulated services in a market with a long heritage of focussing on network performance above all else. This focus hasn’t gone away but now needs to be augmented and integrated with the other aspects of the value chain.
“Carriers have been, and will always be, challenged by the demand to keep pace with expectations that are set by the speed at which cloud-based services can be instantiated and perform,” confirms Martin Phelps, vice president of EMEA connectivity at Interxion. “Network automation creates two categories of opportunity for carriers: the ability to monetise the enhanced capabilities through service offerings with unique product feature sets such as QoS or route definition; and the ability to enable innovation at the edge by supporting faster access to data, which drives higher traffic volume and revenue.”
Speed is one challenge that is being solved via automated networks; a parallel challenge is openness. The IT industry now relies on open architectures, and this is being replicated by carriers in their new network architectures. However, as Phelps emphasises, many in the telecoms industry find it hard to trust others.
“In any open architecture there has to be a level of trust,” he says. “That trust is underpinned by the mutual benefit that the platform, in this case the network provider and the service developer, accrues by being part of the ecosystem. These benefits should ensure that the carrier platform is not abused, but it’s prudent for carriers to take reasonable precautions, which they generally do in the form of a terms of service (ToS) or service level agreement (SLA).”
Being part of a more open ecosystem will enable new revenues, and Terry-Brown says Vodafone Business is already opening APIs to partners. “The way we are connecting our networks is API-led and all our 5G infrastructure is built like that, so it’s not a massive step, given the architecture is in place, to think about the commercial elements of making it available to the ecosystem.”
Tiller doesn’t think that will involve carriers attempting to charge directly for using their APIs. “Monetising APIs has been tried but it’s not a viable model,” he says. “APIs can be charged for indirectly, though, and most of the industry sees opportunities for revenue growth in offering end-to-end services for global, vertical markets such as healthcare, automated cars and factories. These bring the carrier into the sell side alongside IT and AI algorithm vendors, but to offer global services – even for connectivity – you have to make your offer as part of an ecosystem.”
Terry-Brown agrees. “The real challenge isn’t the technology, which is well tested and straightforward; the risk is in the commercial models,” he says. “If you look at the music industry, the content is the same but the model has been totally revolutionised. Most virtual network features will be in the network edge compute (NEC) area but we are not the right organisation to create a media-specific virtual network feature, for example. Someone else will do that; our role is to make it easy for them to work with us and our customers.”
Edge intelligence, whether through multi-access edge compute (MEC) or NEC, has been identified as a clear area in which carriers can harness both automation and openness to generate new revenues. “The opportunities for the carrier community are generally grouped under the MEC and NEC categories,” explains Phelps.
“In retail, for example, the cost of deploying compute-intensive processing capability across tens or hundreds of shops would be prohibitive, but NEC can enable roll-out of applications that use compute power at the network edge,” he adds.
“Examples like this, and countless other as-yet-unimagined services, will drive significant increases in traffic across networks and fuel revenue growth. Network automation is a vital component in ensuring that this can be managed while still meeting the performance expectations of end users.”
