For any service provider, the desire to lead the pack into new territories of network transformation is low. Many feel that in the quest for the ultimate range of efficient voice, video, data, cloud and yet to be discovered services, it’s always better to follow someone who has already faced critical challenges, experienced the pitfalls and corrected them. That way, they can take the optimal path forward, avoid unnecessary costs and reach a successful outcome faster.
But is this always the case?
A closer look at the recent activities of North America’s top four operators shows excellent examples of the lead/follow routine. Each has invested heavily in wireless spectrum over the past few years, with the ultimate goal of delivering peak download speeds near 50Mbps from their new long-term evolution (LTE) network.
AT&T and Verizon were first to make the investments, with T-Mobile making an $8 billion investment to catch up this past year. This investment included the cost of 1,500 US wireless licenses in the 600MHz range.
Though T-Mobile was later to the LTE game, the lower frequency spectrum purchases actually make for better coverage inside buildings and further from base stations. It may be playing catch up, but it is building what may end up being a stronger network than AT&T or Verizon in some ways.
Here’s the issue: the LTE investments allow T-Mobile to catch up and avoid any mistakes made by its competition, but AT&T and Verizon made big investments several years ago. They now have strong LTE networks and are already looking to 5G as the next technology to expand their capabilities in voice HD and 4K video, data and cloud services.
While leading the market requires boldness, service providers must also consider these important issues:
A carrier that wants to achieve leadership with its new network must lead across the entire organization, not just from an outside network perspective. Carriers must shift the focus of IT from fighting the old to building the new. IT should lead the network transformation by delivering new capabilities, technologies and processes that free the business to focus on growth.
To meet that mandate, IT needs a focused, pragmatic plan that yields tangible value and moves its company forward with clear business benefits that leverage the newfound capabilities of the network and its services. This plan should be able to:
- Execute new business models rapidly
- Engage partners and ecosystems
- Automate the business’ operational environments
The heightened goals and demands for networks mean that network management is becoming increasingly complex. The introduction of new technologies like network functions virtualization (NFV) and software-defined networking (SDN), coupled with increasing fragmentation with technologies driven by 4G LTE, Wi-Fi, small cells and widespread fiber adoption, demands new approaches to managing this complexity.
Meeting customer needs
But, it’s not just the network infrastructure that’s evolving; it’s the whole business, and it’s every customer. Consumer and enterprise customers, in a way, want the same thing. They want secure, on-demand access to a growing number of digital services. Beyond that, they want these services easy to buy, easy to use and easy to manage. Any successful digital service must meet these basic requirements.
The hybrid effect
For providers using hybrid networks made up of physical and virtualized components, the decision to lead or follow must be based on the analysis of investment, usage, short-term payback (in terms of efficiency) and long-term return on investment. Operators must make investments based on the short-term impact of SDN/NFV from a commercial perspective.
As we look at the rollout out of SDN/NFV, the leaders have made themselves known. AT&T claims its network will be 55 percent virtualized by the end of 2017, and NTT claims 75 percent will be virtualized by 2020. However, there are different demands for adoption in Asia (outside of Japan) versus the US and Europe. For the most part, the US and European regional operators have been more optimistic about the benefits of SDN/NFV, helped in part by past investments, desire for digital transformation and desire for a greater competitive position.
Integration, integration, integration
Do new network investments mean a paradigm business shift away from the ‘old’ and immediately toward the ‘new’? Any IT manager will tell you that is certainly not the case and a bad idea to pursue. New network investments cannot be made at the expense of poor integration with existing networks and services, organizational bottlenecks or back office deficiencies. All must be integrated together, as the figure below illustrates.
Network Transformation leadership cannot succeed without IT and organizational transformation
The end goal for the leaders is to build, manage and monetize the new digital value chain, launch new virtual services more quickly, create more innovative service bundles, enabling new business models in partnership with third-party ecosystem players. Capitalizing on this, however, will be difficult without a diligent business strategy, revenue and go-to-market planning that encompasses the entire organization.