Are You Ready to be a Software Telco?

PUBLISHER'S OUTLOOK

Are You Ready to be a Software Telco?

By Rich Tehrani, CEO, Group Editor-in-Chief, TMC  |  April 29, 2013

Virtualization has made the IT world much more efficient and cloud technology allows applications to scale up and down at will in a far more cost-effective manner while requiring little to no capex. There is hardly an industry that hasn't been affected as software and hardware vendors have worked together to make sure they are ready for this new world where a single server can run multiple instances of an application on servers that are flung far around the globe. Even the PBX (News - Alert) world has gotten into the game with many vendors - especially those doing business with Fortune-class companies supporting virtualized software communications servers.

In a recent conversation with Steve Gleave and Carol Daniels of Metaswitch, I learned the company is taking the move to virtualization seriously and that the company’s product launch of 19 months ago involves an SBC that was developed to run in such an environment. Expect the Metaswitch you know as the application server, gateway and SBC company to still do all these things but in software, running in virtualized environments on bare-metal servers. Their goal is to sell these solutions to you in order to turn your hardware telco into a software telco.

Gleave further discussed the industry's proactive push toward Network Standards Virtualization through the ETSI working group by the same name. The backers of this initiative are the largest global carriers, such as AT&T (News - Alert), BT, Deutsche Telekom, Orange, Telecom Italia, Telefonica and Verizon and 52 other vendors. They joined together to support this initiative this past January. Obviously there seems to be a huge push to shake up the way comms systems are designed.

The benefits of this evolution are obvious: Carriers will be able to utilize the same virtualized technology they use in their data centers in their networks and purchase it in a far more flexible way. Moreover, their services will run on bare-metal servers and will scale far more rapidly. This means they can take advantage of public clouds, virtual private clouds, private clouds and hybrid clouds - all the amazing choices a typical enterprise has today. Security, cost and capex versus opex decisions will likely drive their decisions - again, just like they would an enterprise or data center decision-maker.

One other crucial benefit of this move is there will be more choice for carriers looking to deploy solutions from the more innovative companies in the market. Typically, these are the players that do the most interesting things, but they quite often run out of money before carriers deploy their solutions and subsequently they go under. For me it’s been about 30 years spent meeting the principals of these doomed entities - early in my career at trade shows such as TCA, Supercomm, ICA, Computer Telephony and NATA which took place in the eighties and nineties.

The large-scale euthanizing of innovative telco suppliers (and many of the events they attended as a side-effect) has created a cycle of uncertainty where carriers want to be sure their solution partners are going to be around for the long haul. Moreover they want them to be there to scale rapidly and service what they sell. In the world of hardware this means a new vendor has to have very deep pockets to be able to sell to large carriers.

What has become common in the market is for CSPs to wait for the larger players to emulate what the smaller guys are doing and just buy from the companies with which they are used to doing business. Or, in other cases, the smaller players would be coerced into agreements with large equipment providers who would take part of the revenue from the sale and provide the gravitas, relationships and support needed to keep the large carrier happy. This is how Acme Packet (News - Alert) got its start, for example, and in doing so, took out the competition in the SBC space in the last decade.

The point is, now hardware players will become software companies, which means the bar for purchase from a large telco while still high, has dropped down quite a bit. This was the goal, by the way, of the ATCA modular communications initiative last decade from Intel (News - Alert) where hardware vendors could all write software on a single hardware standard. But the Intel division certainly wasn't pulling its own weight as evidenced by the fact it was sold off to Radisys in 2007 for $25 million.

This time though the chicken-and-egg problem may finally have eroded, allowing current carriers to be far more flexible in the new services they offer and upstart carriers can rapidly scale and compete with incumbents without having to purchase massive amounts of central office equipment to get started.




Edited by Stefania Viscusi
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