This LightCounting report examines the broad changes taking place in telecoms as the communications service providers (CSPs) embark on transforming their networks. The CSPs began this move a decade ago in response to their inability to exploit new opportunities due to the rigidity of their networks. A broader wave of technology innovation is taking place that is both unsettling for the CSPs but also promises new services and revenue-growth opportunities.
The figure below shows a history of network transformation. Telefónica was already working with Intel over a decade ago testing the feasibility of implementing network functions written in software code running on general-purpose microprocessors. In 2012, the seminal ETSI white paper on NFV was published, authored by 13 leading operators (including Telefónica). Another notable milestone was AT&T’s Domain 2.0 program which started the virtualization of its network and signaled that leading operators were changing forever how they design and build their networks.
Since the start, AT&T has been an industry driver in network transformation. It was one of the authors of the original ETSI NFV white paper, signaled its intentions with its Domain 2.0 program, contributed its huge ECOMP code to the Linux Foundation, trained its staff in software programming, initiated numerous open networking initiatives, and has been the loudest proponent of white boxes. In 2020, after years of work, AT&T reached its milestone of virtualizing 75% of its network. The company also announced a deployment of white box core routers in the end of last year.
Yet signs suggest AT&T has relinquished its leadership role. First, John Donovan left AT&T in October 2019. Chris Rice, who played a key role in AT&T's SDN, virtualization and cloud efforts, followed last August. During that period, there were job losses at AT&T, but what wasn’t reported were cutbacks in research and some of the open networking projects that AT&T had initiated. And its active blog detailing its latest network transformation developments is largely about open networking developments it is involved in with other companies, rather than its own initiatives.
Could it be that AT&T set too fast a pace and the industry pack caught it up? Or is greater financial pragmatism needed to tackle its debt following its two huge media company acquisitions in recent years? Many leading CSPs are pursuing network transformation, in addition to AT&T, but the industry has a few visionaries and AT&T until recently served this valuable role.
Despite the setbacks, the network transformation process will have to continue. Its basic promise is to deliver operational savings, enable far quicker service introductions and, by increasing the vendor ecosystem, increase innovation and reduce capital expenditure. Transformation also promises networking capabilities that will open up new markets for the CSPs. While there has been progress in these areas, a notable impact on the CSPs bottom line is still to be seen. Much work is still to be done.
In its report, LightCounting argues that CSPs have just completed phase one of network transformation. The next phase extends the cloud to the network edge and embraces cloud-native software practices for network functions. 5G is the catalyst for Phase 2.0. 5G has code-based network functions and SDN built in, and it brings capabilities that will enable new services and applications, so its rollout is a natural point to introduce new technologies. The opening up of the radio access network–Open RAN–which includes 5G, embraces all the techniques associated with network transformation.