At a panel at Futurenet World, three operators outlined the pain of their current circumstances. But they also put their shoulders back and proposed how they could use new network capabilities to innovate, partner and monetise their way to a more profitable future.
Vodafone UK’s Chief Network Officer Andrea Dona repeated the by now sadly familiar trope that operators find themselves in a place where their network ROI is lower than cost of capital. That means operators need to “inject a new business model” to take money making opportunities beyond connectivity.
“We’re battling inflationary pressuures, energy price rises, interest rate hikes – if we don’t find those business models we’re not going to survive,” he said.
BT’s Group CTO Howard Watson said that operators need to provide ubiquitous connectivity that “democratises access” to meet growing user demand and the rise of new technologies such as AI and different virtual worlds. “I’m not worried about drivers for connectivity. My worry is that £10-15 per month [subs revenue] is not enough for the world we describe,” Watson said.
Orange’s Laurent Leboucher, Group CTO & SVP Innovation Networks, said that to find new ways to monetise, the operator needs to become a platform – a bit like the hyperscalers.
“But this is not to give the impression of being arrogant. We need to change the way we create and expose network capabilities. The network used to be a bit invisible. We need to make it more visible and show its rich attributes. The turning point today is the progress of AI and Gen AI. We also see cloud-native becoming real. It took us longer to embrace it than it could have but it is now becoming real. So we are at a time where we can unleash capabilities: but we shouldn’t be naive, it’s hard.”
Vodafone’s Dona said that simplifying the network, stripping out legacy, whilst investing in new technology to keep up with others, is “tough”. “I’d love to have more money to address legacy quicker so we could unburden ourselves and drive new capabilities,” he said.
It will come good… there is real light at the end of the tunnel
BT’s Watson was more positive that the sector is about to emerge from a period of investment into a period of monetisation.
“I do agree that we are in a period of toughness, the challenge is expensive and at BT we are investing more than £5 billion a year. Remember, though, that we are an industry that goes through cycles of investment and monetisation. The problem is the investment community has forgotten that [second] piece.”
Watson said that BT is well over half way through its latest access network refresh, with 5G and fibre to the premise already well rolled out.
“It will come good, provided we as technologists have discipline in how fast we want to refresh. That’s why you will hear me say let’s make 6G a 2032 thing and not a 2028 thing. We do need a period of time to monetise the investments that we are now making.
“There is real light at the end of the tunnel. For the first time in 40 years we will have removed the access bottleneck. We have also built a converged, cloud-native core on an all IP network. That has simplified the network and now we have the opportunity to use those investments to get to the point of launching new services at lightening speed, using our true cloud-native telco cloud capability – with network functions built onto that. I’m really optimistic about the second half of the decade when we will see payback on this investment,” he concluded.
For Orange, Leboucher outlined a tiered way that operators can adress this “tough” situation and monetise their investments. The first is to address the basics of the network cloud and network automation, by making sure that network vendors are aligned with the operator’s own vision. He also urged operators to leverage the activities of their industry peers, leveraging initiatives from bodies such as TM Forum, CNCF and the Linux Foundation’s SYLVA and Nephio.
Finally, he counselled a change of mindset in designing and meeting use cases. Telcos should define certain use cases where they are wiling to spend energy, make a bet, and scale. Then they provide the network capacities. This is a reversal of the usual technology-led process. But of course it also relies on telcos identifying those use cases. But Leboucher said that he sees possibilities in areas like offering ID verification to businesses as areas where telcos can make plays without requiring huge changes to the network.
Leboucher also mentioned the willingness to partner. Orange is using Google to drive AI use cases within its network operations. And it is partnering with AWS to site network functions in AWS’ public cloud to meet private network use cases. These use cases might benefit from bringing network connectivity at the same place with compute and AI in a place where everything is simple to consume.
“Assume you are a developer for an industrial company and security, control, low latency, edge compute, connectivity – all that is a toolbox that you can get easily at the same place. That’s what we want to build. But we cannot do it alone – we need to do it with others.”
As for the underlying infrastructure that enables these capabilities,Watson counselled that operators will also have to continue to be clear on how to leverage their cloud-native compute environments for networks.
“A few years ago we were talking about softwarisation of the network. The assumption was we could take what IT had been doing and spray that on the network. We tried that – didn’t work. What we realised is that build network workloads, with six and seven nines reliability, on top of a network cloud using x86 and OpenStack orchestration was so hard. Now we’ve got through that and it’s brilliant that we have – but it’s not as simple as taking that IT discipline and putting it in the network. We had to learn how difficult it is to get general purpose compute environments to work for network workloads. And we will continue to have to learning as we work through this.”
Leboucher said that this is one reason he backs SYLVA, for its abiliy to deliver a horizontal, common cloud platform for the situation where Orange needs to run its own cloud – for instance where regulations mean it must host its own core network functions and data. But he also sees partnership with Google Cloud Edge, and with AWS as mentioned, as being part of that cloud platform environment. Plus those companies can bring a developer partner platform that is three orders of magnitude greater than carriers can offer.
Vodafone’s Dona agreed that partnering with public cloud companies should be “horses for courses”.
“Don’t make all your contracts the same. Some will have knowledge of certain verticals where they partner strong and deep. Don’t partner with a jack of all trades, get your press release and media attention and then nothing actually happens. Go deep, define up front the positions where you will play, and who will deliver.”
