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24 T HE MAGIC OF AUTOMATION 28 H OW TO GO OPEN 33 THE HARDWARE ADVANTAGE 2018 // Issue 20
INNOVATION TELCO INNOVATION REPORT
REPORT SPONSOR ANATOMY OF AN OPERATOR: THREE /// NETWORKED WORLD: INDUSTRY & MANUFACTURING
In a world of ubiquitous connectivity, everything changes. People and objects are connected to each other seamlessly, by networks that dynamically, intelligently optimize. The challenge of connectivity disappears, and new capabilities, business models, and possibilities emerge. This is The Living Network, and weâ€™re helping create it.
ISSUE 20 // THE INNOVATION ISSUE ////////////////////////
Editor Keith Dyer and Report Sponsor InterDigital explain the purpose of the Telco Innovation Report.
Dean Bubley of Disruptive Analysis examines how and why telcos invest and support tech innovation.
Keith Dyer analyses how AT&T, Orange and BT approach innovation – from internal to external funding models.
InterDigital’s Robert DiFazio says telcos face a crucial decision of when and how to invest in technology innovation.
ETSI has been working all year on a host of changes to the operational model for NFV.
How to go Open? One company has made a “massive bet” on Open. What does that mean, in practice, and will others follow?
For all the talk of software defined networks running virtualised functions, what is the hardware advantage?
Making magical realist thinking about the network more real - with a crossagency approach.
Intro & Foreword
How to Open Source
The Magic of Automation
Networked World: Manufacturing and Industrial
Country Profile: Spain The country is recovering from a deep economic crisis, to leverage Telefónica’s leadership in NFV and SDN for 5G research.
Anatomy of an Operator: Three Group This operator has moved from a challenger position in Europe to acting as a force for consolidation.
This first instalment of our two-part MWC18 Issue carries Part I of our Telco Innovation Report. You can read more about why we have taken on this project, and what we hope to achieve, on Page 10. Elsewhere, we establish the key themes of MWC18 from a network operations perspective. These will be - in our opinion and of those we spoke to as we planned these dual issues - the move to an operationalised NFV, the move to Open Source and the reality (if not the magic) of automation. We will add more themes in our Second MWC18 Issue. Clearly, as this is the first MWC that is post5G NR NSA specification at 3GPP, for many this will be the first true 5G MWC. Yet instead of treating 5G as a separate “other” - a strange technical living lab and an economic cure-all for policy-bereft governments - it should from here become part of an operator’s overall approach to a business model transformation. This transformation requires a flexible, high performance and intelligent network. 5G - as it extends to a new radio network and an evolved core - is part of that overall transformation, rather than a mere technical check-list. Adopting this way of thinking about 5G would be an important shift of mindset. That said, we still expect to see the more superficial “5G as a label” approach dominate MWC. Those who go deeper, however, will be those truly leading the conversation.
Commercial Director: Shahid Ramzan // firstname.lastname@example.org Editorial Director: Keith Dyer // email@example.com Creative Direction and Design: Deanna Watkins // firstname.lastname@example.org © 2018 TMN Communications Ltd.
Keith Dyer email@example.com
FEATURE: ANATOMY OF A MOBILE OPERATOR
Three times a winner? What this challenger operator looks like now may surprise you It’s the upstart challenger with 130 million customers. The 14 year-old industry challenger that has now outlasted many of its larger rivals. Its unique footprint spans Asia and Europe. It’s Three, Drei, Tre. How much do you know of its operations? In Hong Kong, CK Hutchison holds a majority interest in Hutchison Telecommunications Hong Kong Holdings Limited (HTHKH). HTHKH provides its mobile services in Hong Kong and Macau under the Three brand. In global markets, Hutchison Asia Telecommunications (HAT) holds 6 TMNQUARTERLY
CK Hutchison’s interest in mobile operations in Indonesia, Vietnam and Sri Lanka, while Three Group Europe operates businesses in Italy, the UK, Sweden, Denmark, Austria and Ireland. Its operations now comprise a range of mobile, mobile broadband and Wi-Fi services. In Europe, Three is particularly known for its data-heavy and content-related offers. It was the first to integrate so-called “OTT” services, such as Skype, within its bundle and has continued to lead with a content-first approach. This, in turn, has necessitated networks built
FEATURE: ANATOMY OF A MOBILE OPERATOR
for capacity and throughput. In markets such as Ireland and Austria, this perennial challenger has changed status to become more of a pack leader, acting as a consolidator rather than consolidee, merging with the national entities of Group operators Telefónica and Orange. In the UK it has been denied a similar opportunity by competition authorities, following a proposed offer to merge with Telefónica UK (O2), and it remains number four in a market dominated by three other group operators. Despite its longevity, financial muscle and role as part of the establishment, the operator continues to portray itself as part of an upstart mobile operator cadre. Its foundation myth, the story that it tells itself about its origination, is that of the pioneer and the explorer. On its tenth anniversary, the company said of itself that its ambitions necessitated “building the highway before there were cars to drive on it”. In the UK, where it can legitimately claim to be different from other vendors, this outside mentality has resulted in a legal challenges to the regulator’s plans for 5G spectrum auctions. Three, which holds less spectrum than its rivals, has proposed an overall spectrum cap for operators, to avoid one or two operators dominating the resource. So far, its proposals have been watered down by Ofcom and its legal challenges dismissed by the Courts. In Hong Kong too, the Group has expressed its irritation with some delays to assessing and freeing up 5G spectrum. Chief Executive Cliff Woo Chiu-man said the company has moved ahead in “trying out a lot of technologies provided by suppliers” as the industry awaits fresh spectrum. That has involved working with Huawei on technologies such as 5 component carrier aggregation and
field-testing massive MIMO. Having already re-farmed its 900 MHz spectrum for 4G last year, Three Hong Kong had a target to complete the re-farming of its 2100 MHz spectrum for 4G services in the second half of 2017. By that time, all five bands of spectrum it holds - 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2600 MHz - will be available for 4G. To provide the necessary higher bandwidth, Three Hong Kong will combine 1800 MHz, 2100 MHz, 2300 MHz x2 and 2600 MHz spectrums with Frequency Division Duplex (FDD) and Time Division Duplex (TDD) 5CC CA technology, along with 4 × 4 MIMO and 256 Quadrature Amplitude Modulation (QAM) technology. With compatible terminals that support the relevant technologies, customers will be able to enjoy data download speeds of over 1.2Gbps Chiu-man said, “In addition to using CA technology with 5CC, we have conducted research and carried out trials for various technologies, such as small cell installations, network cloudification, network function virtualisation (NFV) and Massive MIMO towards the 5G era. These efforts will enable the timely launch of services to meet market demand as soon as the 5G standard and Hong Kong’s spectrum plans are confirmed.” Elsewhere, the company has moved into market-leader status. In Austria, the company has said it will be the first to deploy massive MIMO capability in the market. In Ireland, the company has secured 100MHz nationally within the 3.6GHz band giving it the largest spectrum holding for 5G services in the sub 6GHz area (Vodafone has 105MHz in the cities, but 85MHz in rural areas). Although it retains its original spirit, this “challenger” is now far more than a pioneer upstart with a penchant for cheap all-you-can-eat data deals.
Drei acquires Tele2 Austria: with this merger, Austria’s largest alternative telecommunications provider emerges, with a total of roughly 4 million mobile phones, landline and Internet connections (revenue generating units) and future sales of just under one billion euros. The acquisition price is 95 million euros. Three UK reaches an agreement to acquire UK Broadband Limited. UK Broadband Limited provides broadband access to 15,000 customers in the UK and would become a wholly owned subsidiary of Three UK. The transaction is subject to the fulfilment of a number of conditions before completion can take place.
Wind and Tre merge in Italy to form Wind Tre.
The European Commission approves Three’s acquisition of the Telefónica O2 business in Ireland. The merger brings Three’s market share to 37% and bring subscriber numbers to over two million active users. The two companies had combined revenues of €736m in 2013, which compares to Three’s revenue of €180m in 2013 on a standalone basis.
Three Italia and Telecom Italia have very preliminary exploratory contacts on a possible combination of their businesses but decide against. Hutchison 3G Austria completes its acquisition of the whole business of Orange Austria from its previous owners Mid Europa Partners and France Telecom-Orange, becoming the largest Austrian MNO. TMNQUARTERLY 7
FEATURE: ANATOMY OF A MOBILE OPERATOR
Three Group Europe’s active customer base of 45.2 million as at 30 June 2017 was a 69% increase over the same period for the previous year following the formation of the Wind Tre joint venture in November 2016.
Three, which merged with O2 following its acquisition in 2015, began a €300 million network upgrade that was due to finish in 2017, that included 225Mbps LTE-A capabilities across the country.
With just 9.9 million customers, Three claims 36% of the UK’s mobile data traffic. Key new products include Feel at Home, a roaming offer that allows customers to use their phones in 60 countries around the world at no extra cost. Go Binge is a zero-rated product and open platform offering Three UK customers on selected plans the freedom to stream Netflix, TV Player, Deezer and SoundCloud, by removing data charges on those services. On 6 February 2017, Three UK entered into an agreement to acquire UK Broadband for a total consideration of £300 million. This acquisition provides Three UK with additional mobile spectrum, which may be used for a future launch of 5G services, and also allows Three UK to pursue a new segment opportunity in home broadband.
The first mobile operator in Sweden to launch a 3G network, Three now operates LTE-A capabilities across the country and has doubled the number of its base stations in the country over the last five years.
In September 2017 it concluded its purchase of Tele2, a fixed and business comms provider in the country. That followed the 2013 purchase of Orange Austria, which was a landmark consolidation deal in the European sector. Its data network is the densest and most widely used LTE network in Austria, accounting for a data market share of around 60%.
HUE GLOBAL MVNE
Hue, the Three Group’s global mobile enabling solutions provider, is partnering with Google to provide international data coverage for U.S.-based users of Project Fi, a Google program to deliver a fast, easy wireless experience. This partnership provides Project Fi users with high speed, international connectivity when visiting countries in Europe. Hue was established in 2015 to offer innovative and flexible solutions to the growing global Mobile Virtual Network Operator (MVNO) market. Hue acts as a single point of entry for MVNOs wanting quickly and easily to create global coverage by leveraging the Three Group’s networks across Europe and Asia.
Following the completion of the Three Italia and WIND acquisition, as at 30 September 2017, WIND Tre had 29.8 million mobile customers, with an internet customer base of 19.4 million. Mobile ARPU was flat YoY at €11.3, while data ARPU rose by 6.2% to €5.9.The switch to the new unified and strengthened network has already taken place in some Italian cities and leading to “an excellent performance in terms of coverage and quality improvement.” In September Wind Tre and Open Fiber signed an agreement to extend their partnership to develop ultra-broadband connectivity services in Fiber To The Home technology for a total of 271 Italian cities. Wind Tre and Open Fiber also started 5G testing in the cities of Prato and L’Aquila.
FEATURE: ANATOMY OF A MOBILE OPERATOR
Hutchison Asia Telecom (HAT) comprises CK Hutchison’s mobile operations in three fast-growing Asian markets - Indonesia, Vietnam and Sri Lanka. As of 30 June 2017, HAT had an active customer base of approximately 75.3 million, with Indonesia representing 86% of the base. Total revenue decreased 4% from same period last year to HK$3,829 million, as Indonesia was only able to offer competitive LTE price plans upon the LTE network launch in May 2017, while other incumbents have offered aggressivelypriced LTE services since the beginning of the year. As at 30 June 2017, the Indonesian operation had approximately 14,000 LTE cell sites and continued to expand its LTE network in the second half of 2017. Network rollout and enhancement plans in Vietnam and Sri Lanka will also continue and are expected to allow the businesses to offer services at the most competitive prices in their respective markets.
As of 30 June 2017, the Group was serving approximately 3.3 million customers in Hong Kong and Macau (31 December 2016: approximately 3.2 million), of which the number of postpaid customers was approximately 1.5 million (31 December 2016: approximately 1.5 million). Mobile business revenue for the first half of 2017 amounted to HK$3,117 million, a decrease of 10% compared with HK$3,472 million for the first half of 2016. More than 90% of the decline in mobile revenue was the result of lower hardware revenue following weaker demand for new smartphones.
Since the commencement of its operations in 2007, Hutchison Asia Telecom’s Indonesian subsidiary H3I has expanded and rolled out a network with close to 40,000 total BTS sites in almost all populated areas across the five main Indonesian islands of Java, Sumatra, Kalimantan, Sulawesi & Bali, covering 86% of the nation’s population. H3I’s 3G network carries 37K TB, or one-third of Indonesia’s wireless broadband traffic, and most of its subscribers are the younger generation and early adopters of digital technology.
Vodafone Ireland and Three announce strategic network sharing partnership. This strategic partnership is the first of its kind in Ireland whereby the joint venture company will manage the rapid roll-out of a consolidated portfolio of shared network sites and infrastructure.
Vodafone and Three agree JV that will lead eventually to Vodafone taking over Three brand in Australia.
Denmark: Three customers become the first to watch TV on their mobile Hong Kong: Launches video conferencing service on 3G video mobile phones Ireland: launches service in Ireland Australia: Telstra 50/50 partnership begins, spinning off 3G radio Austria: First mobile ISP prepaid card in Austria
HAT, in partnership with Hanoi Telecom, currently provides a nationwide GSM 2G service with 3G in the main cities through Vietnamobile. Vietnamobile has a mission to connect Vietnamese, particularly the younger generation, to the world’s knowledge, news, sports and music via mobile internet in the most convenient and affordable way.
Sweden: First with free calls on net, mobile video dating, mobile reality shows and mobile positioning service
Hutchison Telecommunications Lanka (Private) Limited is a 100% owned subsidiary of HAT. Hutch Sri Lanka provides digital mobile communication services operating both GSM and advanced 3G HSPA+ networks nationwide.
Australia: Reaches 1,950 base stations UK: Launches UK’s first live mobile video news and entertainment channel Hong Kong: First 3G network in Hong Kong, with over 99% coverage Hong Kong: World’s first to pioneer 3G coverage in subways and elevators
Three launches in: Australia, Austria, Denmark, Italy, Sweden, United Kingdom TMNQUARTERLY 9
THE TELCO INNOVATION REPORT
Sponsor's Foreword Enabling and supporting telco-led innovation InterDigital has been at the forefront of technology innovation in wireless and mobile technology since the company’s foundation – indeed, since the start of cellular wireless. Having played a leading role in the development of successive generations of standards, we appreciate more than anyone how innovation and R&D are the lifeblood of the industry that enables so much of what we do today. The role of telcos in driving that forward is central. As telcos build platforms that will deliver 5G and IoT services, their influence in shaping, investing in, encouraging and accelerating technology will be a primary determinant of what shape elcos cannot innovate and cannot work with innovative companies. They don’t understand customers - too one-size-fits-all and remote. They don’t move fast enough - too obsessed with “telco grade” and testing everything to destruction. They don’t encourage the right culture internally - too hierarchical and afraid of change. They are terrible partners - too controlling and aloof. Ever heard this? Ever nodded it through as though it were a selfobvious truth? After all it explains why GAFA and SnapChat and Telegram and WeChat and Weibo and Slack and Stripe and Monzo and even Uber have all, all of them, designed businesses around aspects that telcos have a play in. Things like knowing your location, identity, behaviour, security requirement, financial details, social networks (before it meant Social Networks). Telcos have long known
they have a “role” here, they see many of these as of strategic importance. But they have been beaten to the punch. Well, we at TMN thought it was time to test the hypothesis. Why? Because telcos are making bets, very big, structurally essential, life-changing, bets on developing networks, platforms and capabilities that will put them at the heart of the next change in our world - something they term for want of a better word, digital transformation. As they do so they have the opportunity to foster and benefit from innovative services and technology that can exploit these new network capabilities. They can become engines and agents of innovation, both internal and external. This report asks: What are the innovation networks that telcos have built up around them? What programmes do they run internally and
our world of tomorrow takes. Whether it is to build more efficient, flexible and dynamic networks, or to develop services and applications that can deliver new consumer and industrial experiences, telcos are uniquely placed to encourage innovative technologies and companies that impact on communications experiences. This report, which seeks to understand best practices in innovation and quantify the results of innovation programmes, provides a tremendous understanding of the role telcos play in fostering partnership in research. We understand that value as well: at InterDigital, in addition to our own research, we’re involved in over a dozen research projects around the world, bringing together a partner network of more than 75 companies, universities, research institutes and public authorities. InterDigital’s focus on and fascination with the processes of innovation means that we are excited to partner with TMN on its Telco Innovation Report.
externally to foster, incubate, fund and accelerate technology innovation? What areas are telcos interested in working in? Can telcos genuinely be drivers of, act as organising hubs of, innovation? And if so, how do we model and measure success? The Telco Innovation Report, published in two parts in this issue and the next of TMN Quartlery, will be followed by a project to map and evaluate the innovation arsenals of major global telcos. We are very pleased to have secured the major support and backing of InterDigital, a company that knows a thing or two about innovation itself, to enable us to invest in the reporting and research required to take this deep dive into the telco innovation landscape. Keith Dyer, Editor The Mobile Network
INNOVATION REPORT: ANALYST VIEW
WHY INNOVATE? Before examining the possible paths for telcos to innovate, it’s important to first consider the motivation. What are operators hoping to get from the innovation process? In reality, this varies broadly, based on each service provider’s resources, risk-profile, local market conditions – and maybe the individual visions and responsibilities of the leadership team. There may be as many as 10 reasons to undertake research or open-innovation efforts:
TMN is partnering with Disruptive Analysis on researching and assessing the innovation process in telcos, especially mobile operators and converged carriers. Here, Dean Bubley, Founder, Disruptive Analysis, asks why telcos innovate in the first place, looks at some innovation methodologies, and identifies some recent telco-led innovative
New service creation: At the core of telco innovation is a desire to create – or incubate / resell – unique new product offerings. These can ideally be monetised directly, either adding to existing customers’ spend, or creating entirely new markets. Ecosystem / industry refresh: Either independently or jointly, mobile operators pursue innovation efforts to accelerate and trial future versions of network technology, or create broad industry-wide momentum in new service/application areas, such as commerce or identity. Influence over standards: While new standards often tend to be largely driven by vendor-dominated bodies, telcos can exert pressure on the process in several ways – for example, through early trials or semi-proprietary deployments creating “facts on the ground”. Customer experience: Some innovations do not feed directly into new revenues, or new network technologies, but manifest in “softer” form through improved interactions for user – perhaps improved userinterfaces, new forms of pricing and billing, or mechanisms for self-care.
A good example is the “community” built up MVNO GiffGaff Internal process and cost improvements: A growing amount of innovation effort focuses on operations – for example, automation and optimisation of various tasks. This is a prime focus for MNOs’ work on machine learning, as they use cognitive computing tools to improve the efficiency, performance or energyconservation of networks, or improve human resources such as deployment and skillsets of engineers. Financial: An “exit” from an innovating spin-out group, or venture shareholding, could give a direct monetary return. Even holding on to an existing stake can give an uplift in telco valuation. Publicity: While it may seem slightly cynical, many mobile operators are well-aware that “cool” innovations are good for their media profile, and thus indirectly their appeal to new recruits or even investors. Social responsibility: Many mobile operators are paying much greater attention to social issues. Innovation efforts play into areas such as connecting the unconnected, aiding after natural disasters, education or improving energy efficiencies. Skills and situational awareness: Merely being involved with innovation processes, startups and advanced projects may be beneficial to operators. Their employees and management may get better-tuned, “radar” alerting them to fresh market trends. They may also find it easier to adopt principles such as “agility” by observing fast-moving partners and influencers. Regulator & Governance: A number of innovation projects by operators are aimed at informing / influencing their regulators, either directly or indirectly.
advances. TMNQUARTERLY 11
INNOVATION REPORT: ANALYST VIEW
Pathways to innovation There are two main models for innovation in telcos: Internal R&D efforts, including work done in dedicated in-house labs, as well as additional work on product/ process innovation in specific business and operational units. In some cases, operators may contract-out private development work to third parties. Some work may be pure “blue skies” research, while other efforts may be more commercially-oriented or aimed at improving internal systems and processes. Open Innovation, which involves operators working with external sources of innovation, such as startups, foundations or open-source bodies. This includes a broad set of options, including telco-run venture funds, accelerators, incubators and various efforts around “ecosystem building” such as hackathons and partnerships with local universities and entrepreneurs’ forums. Several operators have set up outposts in Silicon Valley and other hotbeds of innovation. Many operator groups conduct innovation in multiple ways – SKT in Korea has four research “institutes”, while Telefónica operates internal labs (called I+D), fosters “intrapreneurs” on secondment from their day-jobs, and has seven different open/external innovation efforts. Many operators participate in open-source projects, for example around NFV and SDN, or the more recent Facebook-led Telecom Infrastructure Project. Many countries’ governments or universities have set up national 5G or cybersecurity research labs, in which MNOs are often, unsurprisingly, prominent participants. Another trend seen in telecoms 12 TMNQUARTERLY
mirrors developments in the Internet and networking sectors – direct investment, or outright acquisition, of technology firms. This essentially “buys in” innovation – a model well-proven by companies like Cisco, or allows operators to identify leading startups and both get early-access to new technologies, and perhaps generate outsized returns from an “exit” or liquidity event. For instance, Telefónica acquired video-platform specialist TokBox in 2012, while Telstra has made a more speculative long-term investment in 5G radio-waveform innovator Cohere Technologies. Perhaps the best example of all is SoftBank, which bridges telco and technology worlds, with investments in 100s of companies – and the notable recent acquisition of UK chip-design firm ARM.
Financial commitments Despite their huge scale, revenues and cashflows, few mobile operators dedicate more than a tiny fraction of their overall spending towards innovation. R&D intensities in the range of 1-2% of revenues are quite common – and many operators spend even less than that. Very few operators surpass $1bn R&D budgets – and many are well below $100m, with allocations shrinking in recent years. And while they may have venture funds scaled in 10s or maybe 100s of millions of dollars, they are still rarely in the top tier of sources of private equity for technology innovators. By contrast, other mature technology companies in sectors such as network equipment, web properties, devices or software frequently allocate 10-25% of revenues to innovation. Numerous firms such as Huawei, Samsung, Intel and Alphabet/Google dedicate sums in the $5-15bn range to R&D, often with many thousands of engineers involved.
Amazon was the 2016 leader, with a $16bn budget. Even other capitalintensive sectors like automotive outspend telcos on research, at perhaps 5% of turnover. While expenditure isn’t the only important factor here, it is nonetheless a telling indicator. It is hardly surprising that MNOs struggle to compete at a strategic level in the Internet and IoT age, when they are being out-spent by 10x or 100x by their suppliers, peers and new rivals. To a rough approximation, Amazon alone spends the same as the entire telco operator sector on innovation. It should be noted that not all telcos report their R&D spending in their accounts – and a number use vague terminology like “innovation and transformation” that makes it hard to compare and contrast data, and seems to include normal network-upgrade capex or other irrelevant components. That opacity is itself quite telling - most Internet, software or network hardware companies are keen to champion their R&D spend, and this suggests that telcos are either less-focused on R&D as an important metric, or even embarrassed by its comparative paucity or declining budgets.
Innovation vs. Interoperability Perhaps one of the reasons that telcos have relinquished the R&D baton to their vendors and Internet/IT peers is that they have relied on industry-wide standardisation for so long. While in some senses it “pools” innovation efforts and removes duplication of effort, it also means that a lot of core work is outsourced. Disruptive Analysis has long been critical of parts of the telecoms industry which seem to put “interoperability” on an undeserved pedestal. While clearly it is essential inside the operators’ infrastructure – devices and network elements
INNOVATION REPORT: ANALYST VIEW
Despite their huge scale, revenues and cashflows, few mobile operators dedicate more than a tiny fraction of their overall spending towards innovation. obviously need to work together – it is less-relevant to the application layer than in the past, and may even be an obstacle to innovation. Essentially, “service innovation by committee” doesn’t work well, especially where that effort is made up of competing providers and bureaucratic overseers. Failed efforts such as GSMA’s decade-long RCS messaging project, several attempts to standardise telcos’ API platforms, or various NFV talking-shops all bear witness to this. A notable trend among the more successful equipment and Internet firms is a well-considered balance of proprietary and open innovation – with a focus on “control points” such as operating systems or silicon design, coupled with shared or open platforms or marketplaces. So for instance, Apple relies heavily on open web and radio standards – but focuses huge R&D efforts on everything from iOS and Siri’s voice recognition, to the materials used in its device casings. As an industry, telcos (and their vendors) have innovated in controlpoints like SIM/eSIM authentication, but very few individual operators have successfully differentiated in similar fashion. AT&T had a good attempt with its eCOMP framework for NFV, but eventually needed to transition it to an open-source initiative under the Linux Foundation. Perhaps less-ambitious, but maybe with greater potential, is Telenor’s new WorkingGroupTwo cloudbased mobile core network – which
includes collaboration with Cisco, plus a spin-out structure which incentivises staff in the manner of a startup.
Are fixed/cable operators better at innovating than MNOs? Conventional wisdom often holds that the mobile industry is faster-moving and more-innovative than the fixed communications world. Certainly, the onward march of smartphones, 4G and 5G networks, IoT connectivity and mobile content and commerce seems to bear out that assertion. Yet it is not obvious that it is the operators that are the source of much of the innovation in cellular or other wireless domains. Network and silicon vendors like Ericsson, Huawei, Nokia & Qualcomm tend to dominate mobile infrastructure R&D. Device vendors and Internet application companies like Apple, Samsung, Facebook, Google and SnapChat have huge innovation efforts on using-facing aspects. MNOs may set requirements for 5G, participate in trials and test labs, or operate as go-tomarket channels for new devices and applications – but they rarely create the new technology elements in-house. By contrast, some of the fixed and converged operators are responsible for their own creations. Perhaps the stand-out example is the cable industry’s central body CableLabs,
which itself does much of the heavy lifting for new versions of its DOCSIS cable broadband technology, as well as other enablers such as set-top boxes, security technology and applications for TV and content viewing. This perhaps reflects the fact that the world’s cable networks generally don’t compete head-to-head in any given region, or for any specific household. Individual cable companies are also important – notably Comcast in the US, which is reported to spend around $1.8bn on R&D, and which has pushed into various markets such as the connected home, with proprietary technology and devices. Once again, interoperability is less of an issue – one cable operator’s set-top box doesn’t need to work with another’s content services or remote-control units or domestic IoT devices. Fixed operators (or the landline parts of converged groups) also tend to have more heritage in areas such as enterprise and government networking, which tend to allow for more independent innovation, without the burden of multitelco interoperability. Some older operator groups like Telecom Italia were originally Government-owned monopolies, which evolved with a labs function from the days when telecoms was much more national-oriented, and less-standardised. Often, these groups have focused on areas such as security technology, optical connectivity – and, more recently, blockchain and quantum computing/communications. TMNQUARTERLY 13
INNOVATION REPORT: ANALYST VIEW
Telco Innovation examples: good and bad It is fairly tough to single out examples of good and bad practice in telco innovation – apart from anything else, the multiple possible motivations means it is hard to measure success against a single set of criteria. Moreover, the timespans involved – and the lack of counter-factuals about what would have happened without the efforts – obfuscates any objective analysis. Some internal innovations aimed at improving costs and efficiency often go unpublicised, to avoid handing tips to rival. These are questions which this research effort should help to answer - we can return to draw conclusions after it concludes. That said, in recent years, several operators have attempted internal innovation projects around virtualised networks. In tandem with industrywide work on NFV and SDN standards, specific operators such as AT&T and Telefónica have created their own platforms. The results have been variable – while they have catalysed a lot of thinking, partnerships and prototypes, none has yet really allowed an operator to take a leading position. Instead, we have seen various company-specific efforts blended with broader open-source projects – notably AT&T’s eComp, which is now part of the ONAP project within the Linux Foundation. Given the original intent of ETSI’s NFV project to reduce reliance on vendors’ proprietary boxes and benefit from the scalability/agility of virtualisation, it is hard to call the domain an unequivocal success. 16 TMNQUARTERLY
In terms of acquisition-led strategy, Singtel has amassed a number of providers of applications and online marketing, enabling a set of new consumer-targeting capabilities, including outside its own network footprint. From a corporate venturing standpoint, Telstra has made some good progress, including over generating over $100m of revenue and experiencing seven exits from investees thus far. In terms of business-process innovation, UK MVNO GiffGaff has had notable success in self-care, reducing costs by creating a sense of “community” amongst its subscribers. It could also be that “blue sky” innovation has more upside than mainstream network innovation, as it potentially opens up completely new areas of differentiation and value. Operators are becoming prominent in several new “hot topic” areas of technology, which lie adjacent to the main thrust of networks and personal communications: Blockchain is a hot topic for several operators – Disruptive Analysis has seen efforts and partnerships from Verizon, BT, Orange, Du, Telstra, Swisscom, SoftBank and others, for both internal applications and potential external, customer-facing verticals. SKT has developed a Quantum KeyDistribution secure-networking service, which it is initially pitching to domestic Korean users. Verizon acquired Skyward, a droneas-a-service operator, in February 2017. While it is still very early for that market, it is definitely a brave move towards what may be one of the future’s new industries, and should yield insights and experience, even if the initial service model needs rework.
Many operators have been working on AI and deep-learning applications, and to a lesser degree on the core technology and algorithms. Interesting examples include: 1.
BT’s work with the University of Essex on operational efficiency, for instance improving the work rosters and distribution of maintenance engineers. It has improved productivity and fuel consumption of vehicles, and is being further enhanced with efforts around augmented reality.
2. Telefónica’s use of satellite imagery of dwellings in Latin America, combined with network usage data, to spot mobile coverage gaps. This was discussed at the recent Facebook TIP conference – along with the initiation of its AI and Machine Learning working group, which Telefónica is heading up, along with DT. 3. KT’s discovery that applying machine-learning to its long haul transport network (which generates 50TB per day of operational data) can not only self-optimise and predict imminent faults – but can even be trained to spot earthquakes as the fibres flex. It is also using voice recognition to create its own Siri/Alexa-style personal assistant technology.
INNOVATION REPORT: ANALYST VIEW
The sweeping generalisation that “telcos cannot innovate” is not true.
One interesting aspect to this type of work, is that it is not dependent on lengthy cycles of standardisation and interoperability before implementation. If it demonstrates value, it can be submitted to bodies like TIP or IETF or others later, in order to refine it - but it’s not mandatory. Indeed, many such innovations may remain proprietary and internal to telcos, allowing differentiation at a process or performance level.
CONCLUSION The sweeping generalisation that “telcos cannot innovate” is not true. There is a fair amount of basic research, coupled to an array of smart engineers. That said, often network operators under-fund and underresource their R&D functions, and are still too reliant on their vendors. Moreover, there are often cultural or political bottlenecks that inhibit risk-taking and the commercialisation of good ideas. Disruptive Analysis is aware of numerous interesting proofsof-concept from telco labs that could not get traction with conservativeminded business units, which often have times working to avoid any risk of cannibalisation – irrespective of the potential for future growth and external threats from Internet players. It seems that at present, the external innovation path can yield more upsides
– although it also dilutes the impact for any given telco. Partnering with (local) innovators & developers at least helps to nudge the culture and understanding in the right direction, and sometimes affords ability to onboard novel incremental services. But there have been few really big wins. Perhaps participation in open-source projects, and especially “aligned innovation” in industry groups like TIP and CableLabs is the key – without the bureaucracy of 3GPP- or GSMA-type interoperability wrangling. The cosy relationships between big MNOs and a few vendors are starting to break down as well – more telcos want to take control of innovation, or encourage newer and more flexible vendors (and hence costs and revenues), even if it brings the risk of new entrants by “democratising” complex network build-outs. After all, successful niche entrants can always be acquired – few are likely to become existential threats. Overall, it is clear that operators are trying to stay active in creating – or at least understanding – what’s coming next. But for all that, it is less clear that there are well-proven strategies for winning, rather than a few happy accidents. While “throwing money at a problem” is not always a good option, it’s hard to ignore the industry underspending on R&D by a factor of 5-10x compared to other peers and rivals.
NEXT ISSUE In Part II of the Telco Innovation Report, TMN will examine more operator strategies, and determine winning methods and investment models. TMNQUARTERLY 17
The Ins and Outs of Operator Innovation Keith Dyer looks at how top tier operators structure their innovation activities.
Orange’s innovation efforts can be broken down as follows: investment via direct and external funds, a startup accelerator programme and an internal entrepreneurship pathway. The Orange Digital Investment arm has three activities. Orange Digital Ventures (ODV) is a corporate fund run by the operator itself. The company also invests in external funds – for example the Paris Saclay Seed Fund (tied to the Paris-Saclay meta university) managed by Partech and Kurma Ventures. The third prong is Digital Corporate Developments, where the company actually takes strategic investments, with examples ranging from IoT provider Actility to content player Deezer. The operator has also made a strategic investment in Jumia – an e-commerce and cloud platform provider that is “Africa’s first Unicorn”.
Digital Venturing The EUR100 million Orange Digital Ventures fund was launched two and half years ago and is structured as an orthodox venture fund with an allied strategic objective for Orange. “We have to anticipate disruptive innovation and build a portfolio of companies with the benefits we seek” for the Group. ODV has also recently launched a new programme called ODV Africa, dedicated for African startups or those targeting the African market first – in areas such as FinTech, the Internet of Things, energy and e-health. With a strategic aim to explore new models or markets with a synergy with Orange’s business, the fund has made 15 investments – including its first exit with company KissKissBankBank 18 TMNQUARTERLY
moving to Banque Postale. The aim is to keep to early stage investing, most of the time in Series A or B ranging from EUR500,000 to EUR3 millio euro as a first investment. The Fund will either act as lead investor or follow another lead. Investments have also been interlinked with startups involved with Orange’s startup accelerator, Orange Fab. “The [Fab] networks enable us to increase our sourcing capabilities and out of 15 investments a few have been sourced from Fab alumnis.”
The Fab fourteen So what is Orange Fab? Put simply it is its seed accelerator, putting startups in touch with corporates and vice versa, and giving advice on funding, etc. There are 14 Fabs around the world – from San Francisco to Tokyo – although most of them are in countries where Orange operates. Alongside Fab Orange also has a business grouping called Technocentre – which brings together marketing and design people in charge of all product development for the group. “The big challenge is to be quick to market with the right innovation. Maybe we can do it with internal resources and competencies. But if we cannot leverage what is outside the group then we are missing something. We have organised a dedicated scouting team that is close to the innovation team to do that on a worldwide scale.” The main Fab offer is access to Orange’s business and operational units to do co-innovation or to form commercial contracts with operational entities within Orange. That goes alongside support and mentoring as needed – depending on the maturity
of the startup. There’s also access to Orange’s large network of enterprise customers. Then, when startups are mature enough to go international Orange can give them offices and contacts where they have other Fabs. So far the Fab has worked with 300 startups. A final element is that Orange is opening more and more infrastructure through APIs to startups. The API could be to a data platform, IOT platform, or its operator billing systems. In fact, API usage is one key metric of Orange’s success in engaging with external innovators. Orange has expanded the approach to working jointly with other operators on some key investments. It has formed the GoIgnite Alliance with DT, Telefónica and Singtel to work on accelerating the same startups together, giving that company a larger potential customer base and network. One example is Orange and DT working with the same home assistant – Djingo. Another example is investing in intelligent startups in the network field – with a specific acceleration programme for network technologies. A final programme is Orange’s internal prathway – where every “season” employees can propose a business idea, saying what problem they propose to solve and how, why it is innovative and different, why it is good for Orange. In the current round there are 80 candidates, with a selection of 10-15 going forward into a bootcamp. Here they will be given some methodology, how to do a project, lean design etc and help with structuring their projects for evaluation. At the end a jury takes pitches and selects candidates. The deal is that employees leave their current job to go full time on the project, joining the fab studio, with Orange providing resources and coaching. Currently Orange has six live projects that have come through this route.
Cultural change Can operators innovate? “Of course there are still challenges to work with telcos as there is to work with any company of this size. However I think it is getting better. Clearly most of the superiority complex that may have existed is now long gone. We’ve already faced some disruption ourselves and I think telcos have realised the hard way we have to change mentality and innovation processes. Our CEO is very engaged and holds an annual innovation keynote – ShowHello – which is unique in Europe. Our investment in innovation is 1.8% of turnover. And we have changed the way we do things, working with more agility to bring competencies together – marketing, design & technology. This way of working is now part of our culture.”
The measure of success With venture capital there are the usual financial models. But other metrics are around the way innovation itself works: how many projects were started and/or killed quickly when they didn’t work out. Orange’s first KPIs are around usage, is it stimulating usage in new products? Also its tracks traffic on its APIs. “Are we really creating an ecosystem around platforms for startups?” “Our main focus is to recognise that we are exploring things, and to do it very quickly. Nobody can predict what will happen but the only thing is to be on the wave and be very fast in exploring, then amplifying what works and killing what doesn’t – that’s our focus.” Keith Dyer was in Conversation with Bertrand Rojat (Deputy, Technocentre & Open Innovation Officer) and Yann Kandelmann (Director, Orange Digital Ventures).
Operator Innovation Vehicles ORANGE • Orange Digital Ventures:
a EUR100 million corporate Fund
• Investment in external funds • Corporate and strategic investments • Orange Fab • Employee Intra-preneurship programme
BT • Silicon Valley and tech hub scouting network • Half a billion pound R&D programme • Innovation Hub around Adastral Park near Cambridge • Internal employee competition
AT&T • Foundry innovation centres – 5 in USA, 1 in Israel • Internal TIP employee crowd-sourcing programme • Code and software placed in Open Source and external programmes
SUPPORTING TELCO INNOVATION 1
Telco Innovation Report sponsor InterDigital is an innovation leader in its own right. TMN speaks to Robert DiFazio, Vice President, InterDigital Labs – Future Wireless, InterDigital, about InterDigital’s own processes, and how the company works within the telco innovation landscape.
We’re tracking telco innovation processes. As a technology company, how does InterDigital itself go about innovation as a process?
We look at innovation projects by their time horizon. Specifically, we look at three horizons: the next few years, three to five years out, and beyond five years. Picking successful projects for beyond five years depends on the experience of our technical and business staff, and follows an idea collection and vetting process. Our engineering staff likes to stay involved in new technology, and we work with universities that naturally have a longterm view and provide seeds where we can bring a business perspective. For three to five years, we have a pretty good sense of where the industry is going, and try to decide which problems are real and need solutions that can benefit from our expertise. Being so involved in industry standards, for example 3GPP for cellular and MPEG for video, we understand what is on the horizon and can pick and choose those technologies that need innovation and are likely to be deployed. A large part of our business is contributing to standards. The 3GPP working groups and MPEG expert groups are addressing near-term problems needed to complete specifications that can be implemented soon. All sorts of problems are identified that need quick solutions by experts who are engaged in those collaborative efforts and fall into the “next few years” time frame. Talking to our customers, to operators, and to small businesses is another great way to see what services or new features need more than a quick engineering solution and require some deep wireless expertise. Once the juicy problems are defined, the attack plan is well known – a combination of analysis, simulation, prototyping, and field testing. 20 TMNQUARTERLY
Can you give us some examples of successful outcomes of your innovation processes?
Sure. Our business is based on licensing our innovations which are used in every smartphone in the world, and many other electronic devices. That portfolio is a collection of many of our success stories. But we also look for opportunities to turn the technology into businesses and collaborate across the industry. Chordant™, our Smart Cities-focused business, offers a standards-based Smart City IoT platform that was created from our early IoT R&D. XCellAir, Inc., a commercial initiative based on our R&D, provides a software solution that automates the deployment and operation of HetNets, integrates radio resource management and self-organising network technology, and is a platform for the delivery of value added services to wireless operators. The EdgeLink™ solution is a millimeter wave (mmW) system that includes a software-defined network (SDN) control structure and mesh network that followed from our early mmW R&D and now is a cornerstone of much of our 5G testbed projects, enabling features such as dense small cell deployments using wireless fronthaul and backhaul.
From your perspective, do you think telcos/operators are natural hosts and enablers of tech innovation?
Yes, absolutely. I’d say the “host” part is stronger in that once prototype technology is available, telcos and operators are very willing to test and provide feedback. As far as “enablers,” sometimes I believe operators have difficult decisions in balancing a desire to recoup capital investments in deployed technology versus full speed ahead on the next great thing. On the other hand, if they don’t embrace new technology then someone else may, and successes can ultimately threaten their business or cost more in the longterm to acquire what they need.
Do you have advice for telcos as to how they can derive greater benefit from their innovation activities – in terms of service commercialisation and also financial value?
Consortiums, testbeds, and small companies are a great way to evaluate new technology before having to commit big dollars. We had a project in our UK office called oneTRANSPORT, funded by InnovateUK, with a long list of university and industrial partners that finished up in October 2017. We demonstrated transport-related Smart City capabilities at venues like the Silverstone Formula 1 Race weekend in Northamptonshire, England where thousands of cars come in and out over the span of a few days. This established the capabilities of a standards-based IoT approach, which is part of the Chordant platform, which in turn includes many more Smart City features. The project is an example of a low-cost way to develop and evaluate a technology which can be turned into a new service or revenue stream.
How does InterDigital work with telcos, and the telco space in general, in their innovation efforts?
The answer is similar to the previous question – consortiums, testbeds, and technology demos. In December 2017, for example, we took part in the Deutsche Telekom Technology Innovation event in Bonn, Germany. We demonstrated our FLIPS technology (Flexible IP-based Services), a next-generation internet concept. It is part of a worldwide initiative to move towards Information Centric Networking (ICN), where data streams are requested based on what they are rather than where they are. It reduces latency and, via intelligent multicasting, makes better use of network bandwidth. Another example is the EU funded H2020 project called CrossHaul, that is led by University Carlos III of Madrid (UC3M), and includes several operators – Teléphonica, Telecom Italia, and Orange. We used our EdgeLink platform during a demo at U3CM to show multiplexed millimeter wave transport of fronthaul and backhaul traffic types and also at an event in Berlin. Here in the US, we’re active in NYU WIRELESS a university-led consortium including operators AT&T and Verizon along with over 15 other wireless R&D companies, equipment manufacturers, and tower companies. We’ve been working with NYU for years, decades in fact, and were one of the first members of the consortium. At the moment they are studying the performance of our EdgeLink platform and we plan to engage in additional research around Edgelink’s software-defined networking capabilities.
What are some key areas where you think innovation opportunities lie right now?
Lots. There are the 5G use cases that are in the near future, for example, V2X for safety and driver assistance; continuing cellular IoT connectivity improvements for extremely long battery life; and mobile operation in the millimeter wave bands. The video technology that drives the need for extremely broadband connectivity has many innovation opportunities, for example, 360-degree coding and point cloud compression. Then there are the 5G use cases that are further out in time: fully autonomous driving, support for high speed trains, integration of drone command and control with cellular, and bringing satellites into the 5G system for IoT and broadband coverage in under-served areas. There are also new technologies that are widely discussed but have yet to find a home in the wireless ecosystem, machine learning and artificial intelligence being a good example.
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“We do actually invent things”
What is notable about BT and innovation is that the company is not hitching its wagon to any recent trend – instead it notes nearly two centuries of innovation right back to Wheatstone & Cooke’s 1837 patent for the first practical electric telegraph. That tradition continues today with the company’s half a billion pound annual R&D budget. It frames its effort these days as “purposeful innovation”, fusing science with “real curiosity-led” research and practical engineering to do something useful. That means engaging with the worlds of science and universities to get new capabilities and insights. BT’s PHD-level researchers are allowed to continue learning, becoming active researchers – publishing and patenting. In the UK, BT is in third place for patent filings annually. “We do actually invent things”. However, that focus doesn’t mean BT is closed off to what is going on outside its boundaries. “We want to avoid the not invented here syndrome”.
Scouting for toys Efforts to benefit from outside efforts have focussed on a global tech scouting effort that includes a small team in Silicon valley, where BT has had a presence for 20 years, plugged into the Valley world of innovation and VCs. There are also staff members in the Boston cluster – a 15 year presence – and scouts in Israel and the Far East. Common to all of them is “to find innovation external to BT that we think benefits our customers.” Other external layers take BT into
Universities in the UK – with research links to Surrey, Bristol, Cambridge, Kings College London, Essex, Lancaster and to Beijing and MIT among others on a global basis. The carrier also “engages” with clusters such as London’s Tech City and via its Infinity Lab. It is creating a local cluster of its own – using the gravitational attraction of its Adastral Park research centre. It has run a series of competitions with the winners being given accommodation within Adastral Park, working with customer facing units. “If you are a startup it is a rare thing to see where you fit – and what are the non-obvious requirements of that marketplace.” Adastral Park has served as the home of its research for 42 years. Here BT has its prime global customer innovation showcase centre, its national operations centre, and the largest test and operational facility in Europe. Over the past few years a tech cluster has emerged here, with just under 100 other tech companies of all sizes employing 900 people – a number BT would like to see double or triple. Proximity to BT can help those companies hone and define their products/services in a way that would benefit BT... “whether that is a product we find that we then effectively incorporate into a proposition or a brilliant bit of innovation that we can help form and turn into a product.” There are 50,000 non BT visitors each year to Adastral Park, and BT does try to encourage that footfall to engage with the tech companies in the cluster.
Standards BT also sees that its engagement with the world’s standards development organisations (SDOs) gives it a presence
in global innovation as well as a role as a national champion. “Standards are generally vital in terms of getting to the cost points for equipment we will purchase. We take that very seriously.”
Gauging the returns: So how does BT measure its success? “There’s no perfect way of doing it. Research funding is the most patient money in the business… and patient money is a scarce commodity.” But BT does create metrics, which it says are more to to with good operational discipline rather than a straight NPV call on investment. The company tracks the articles it publishes in peer-reviewed journals as a way of measuring its own research quality – “if you are a lab you should be able to get into a journal” – and also sees awards as evidence of external recognition by peer groups. It does also “have a go at looking at financial return” – for instance tracking business cases when an idea from the lab or its scouting network has got to point of delivering to a customer. But some things are harder to evaluate. For instance a change that BT has won to international standards might change the roadmaps of its equipment suppliers in line with BT’s requirements, but that’s hard to evaluate financially. “So we metricate and put pound signs where we can but do it with a nuanced eye. In reality the benefits can unfurl over a decade.” Keith Dyer was in conversation with Tim Whitley (MD of Research & Innovation) and Paul Crane (Head of Mobile, Wireless and Network Services).
AT&T has six Foundry innovation centres, with five locations in the US and one in Israel opened over the past six years. The idea of these is to create an ecosystem where AT&T can work “shoulder to shoulder” with developers and startups, and be in a position to stream that technology and innovation into AT&T. These centres work in various technical areas, anything round network transformation and networking, edge compute, AI and operational efficiency. The operator works on having constant relationships with VCs, meeting to understand and see 500 products a year through its process. “That’s pretty significant and you can’t get to this number unless you are really embedded into the ecosystem.” The key is being able to work not just as an accelerator, or a VC, but in looking at those startups to see if there is anything AT&T might be interested in for its customers and network. Then it evokes a process to embed the innovation within the Foundry, move to a prototype and if results are good get that into the company quickly. The idea is to create a mechanism for a really large enterprise to connect with young, small startups so that everyone feels comfortable. One example of a Foundry success is a Cooler company that has recently announced that it has a million coolers connected with AT&T. That started as a Foundry project.
Internal moves On the internal side is a programme called The Innovation Pipeline (TIP). It reckons this is the largest enterprise
crowd-sourced ideas platform for ideas. Already operational for 6-7 years, the platform has registered 130,000 employees, and AT&T claims 50% of them are actively participating on a monthly basis, submitting ideas. Ideas are submitted and then rated by others on the platform. The best rated can then be progressed within the company. Typically the Foundry team will help take the idea forward, with the person having the idea “staying connected”. One example is Number Synch - an idea to have the ability to twin a customer’s mobile phone number to any wearable device. Relying on an API capability in the network, this idea is now being used by several OEMs for their wearable devices.
together to innovate and understand the right characteristics and offloading mechanisms. That will bring the 2018 launch of an Edge Computing Test Zone in Silicon Valley to work with developers to understand and develop the architectures to support those industries.
Innovation in context:
“The chief way we measure ourselves is how many of our projects have reached the finish line.” That tracks something from signing a deal with a startup, through commercialisation to the creation of a service on the network, measuring the the level of impact that has created for the business. “We always ask ourselves how what are we working on aligns and Telco innovation culture integrates with the strategic initiatives Even the word telco is somehow of our key businesses - so that we confusing if you look at the businesses innovate in context.” That helps us to we are in: content distribution, TV, prototype and engineer and find the wireless, enterprise, IoT, security. “We right solutions. “So we are not sitting are participating in so many areas back and saying, what did we invest in order to be competitive, and that and what are the revenues? But we means being innovative, thinking like a are absolutely making sure that the tech company. We are proud to be part outcome of our work is helping us to of this and think AT&T is the leader in close businesses and launch this sort of thinking in our space” new services.” That extends to making an external Another aspect which is softer to impact, such as the way the company measure has to do with how innovation took its internal e-COMP operational investments are helping with cultural software forward into an Open change, to create the DNA of rapid Source project - known as ONAP. prototyping, 12 week projects, the “That tells you how we think about the failing fast mentality. These are the ecosystem, about how we infuse and operational principles of the innovation put foundations together that allow unit, and one long term test is how everyone to come and innovate much these are also infused into with us.” the company. Another example is Edge Compute, which AT&T believes will foster new Keith Dyer was in conversation with business models in verticals like AR/ Igal Elbaz, Vice President, Ecosystem VR and autonomous cars. So for AT&T the challenge is to bring the ecosystem and Innovation, AT&T TMNQUARTERLY 23
As the industry has its head turned by Open Source projects and releases designed to provide a swifter, more iterative path to NFV operation than the standards processes, work to define NFV operations continues apace within ETSI.
Although the noise coming out of Open Source projects is dominating, these ETSI reports show that the body continues to work on specifications for the operation of NFV. Release 2 work has been ongoing through 2017 since the NFV#17 Plenary that took place in February. Perhaps the most significant milestones have been the completion of three work items defining the VNF Packaging and the APIs of interfaces produced by the VNFM (VNF Manager as defined in the NFV Architectural Framework).
RELEASE 2 UPDATE As part of NFV Release 2, the ISG NFV specified functional requirements for the VIM, VNFM and NFVO functional blocks composing of NFV Management and Orchestration (MANO) of the NFV Architectural Framework. The NFV Release 2 also specifies requirements applicable to the reference points identified in the same framework, as well as requirements, interfaces and information models related to capabilities such as VNF lifecycle 24 TMNQUARTERLY
management (LCM), Network Service (NS) LCM and virtualised resource management. One of the main milestones with respect to NFV Release 2 has been the republication of NFV Release 2 specifications after the first round of maintenance work was completed, also referred as 1H2017 maintenance. Around 150 change request (CR) contributions were approved in the 1H2017 maintenance period. A similar number was expected to be completed in the second half of the year. The other key milestone related to Release 2 has been the completion of a set of specification that detail the REST APIs between an NFV Orchestrator (NFVO) and a VNF Manager (VNFM), and between a VNFM and a VNF or its Element Manager. These specification were completed in July 2017. Additional specifications of the APIs exposed by an NFVO to other Operations Support Systems (OSS) will be completed by the end of 2017. An OpenAPI representation of the specified APIs will also be made available.
NFV RELEASE 3 PROGRESS
Currently, the NFV Release 3 Definition is comprised of 23 features. Many of these features are seen (with feedback from the NFV ISG Network Operator Council) as critical for NFV to become a reality at the operational level. ETSIâ€™s plan is to start delivering some Release 3 specification results as early as in the summer of 2018, and the remainder by the end of 2018. Among the Release 3 features some address very important aspects for making NFV truly operationally ready, including (but not limited to) license management, support of cloud native approaches, network slicing, and multi-site deployments. Operators requested many of these features because they are seen as being critical for NFV to become a reality at the operational level. As well as bringing Release 2 specs forward into Release 3, ETSI has created three new work items to deliver completely new specifications. These three additional new work items will handle Release
3 features such as “multi-site connectivity services”, “multiple administrative domain interfaces”, and “management of NFV-MANO”. The three most notable features to be added to NFV Release 3 Definition are: NFV support for Network Slicing, NFV reliability and availability, Identity management. It is also worth highlighting the plans to collaborate with ETSI MEC ISG experts on handling the feature of “MEC in NFV environment”. This feature will enable network operators to leverage a common NFV Infrastructure
indicate the need to perform additional normative specification work in terms of interface, functionality, descriptor, security, and reliability. Specifications for RESTful protocols and data models (also known as RESTful APIs) enable multi-vendor interoperability between VNFMs and the VNFs of which they manage the lifecycle and between VNFMs and the EMs associated to these VNFs. ETSI specifies a set of RESTful protocols and data models (also known as RESTful APIs) fulfilling
NFV architecture: VNF, MANO and NFVI-VIM. The resulting deliverable will provide a collection of detailed test descriptions that validate the interoperability of components for VNF lifecycle management, onboarding, NS lifecycle management and other functionalities of NFV. Furthermore, it provides a test implementer the methodology, the preconditions, test steps and expected results as a full test plan. All of these updates are intended to give operators, vendors and developers the tools to
and enable reuse of the ETSI NFV-MANO components to deploy MEC applications as VNFs. The NFV-EVE012 analyses use cases related to Network Slicing as defined in SDOs and industry fora, and describes how these use cases could be mapped to current NFV concepts and supported by the ETSI NFV Architectural Framework and NFV-MANO Architectural Framework. The report provides a set of recommendations which enable Network Slicing features with the NFV constructs. The recommendations
the requirements specified in ETSI GS NFV-IFA 007 for the interfaces used over the Or-Vnfm reference point. This enables multi-vendor interoperability between an NFVO and the VNFMs to which it delegates the management of the lifecycle of the constituent VNFs of a network service. There are also definitions for a standard way for VNF providers to deliver VNFs to service providers as a file archive. This enables VNFs to be interoperable with independently developed NFV management and orchestration systems. The VNF package specification leverages the TOSCA YAML CSAR archive format, adding all necessary integrity and authenticity features. Similarly, for the interfaces exposed by an NFVO over the OrVnfm reference point, specifications will enable multi-vendor interoperability between an NFVO and independently developed operation support systems. There will also be Guidelines on Interoperability Testing for MANO outlining an interoperability test plan for the main components of the ETSI
develop multi-vendor networks between NVF-I, MANO and the VNFs themselves. Although there are increasing attempts to complement or work around the standards-based process. But ETSI’s NFV ISG has made strides in 2017.
OPERATIONAL MANY OF THESE FEATURES ARE SEEN (WITH FEEDBACK FROM THE NFV ISG NETWORK OPERATOR COUNCIL) AS CRITICAL FOR NFV TO BECOME A REALITY AT THE OPERATIONAL LEVEL.
ETSI NFV: Since Release 2.0 in September 2016:
• 19 Group Specification (GS) and Group Report (GR) deliverables
• Around 300 change
requests approved on R2 in 2017
• Two new work programmes completed on APIs
• Release 3 progress:
first specs in summer 2018, completed December ‘18
FEATURE: HOW TO GO OPEN
What does it actually take to go open?
endors are now doing more than paying lip service to going Open. But what does it actually mean to make the commitment to Open? It certainly entails more than paying some fees to any or some of the huge range of Open Source networking alliances. For vendors, it means a complete change in the way they monetise and earn revenues for their product development. While that brings opportunity for some, it spells danger for others. What do operators want from Open Source solutions? At heart, the ability to deploy their own VNFs, those of third parties and also third party services over a network that is made up of and controlled by elements that can work together. Meeting that goal means breaking down internal proprietary interfaces by which vendors stitch together functions. An example currently being assessed is the link between the Baseband Unit of a base station and the Remote Radio Head supplied by that BBU. “Upstart” cloud RAN players such as Mavenir think that they can radically lower the cost of radio networks by opening that interface. One company which has made a huge bet on Open Source is Radisys. Radisys sees the opportunity to move from being a provider of technology
within the supply chain to acting as a systems integrator within the new Open environment. Radisys believes that it is essential for system integrators to be fully open in order to leverage the mix of open standards, open and proprietary components, and customisation needed to meet each service provider’s specific deployment requirements. “Open” is not just delivering combinations of white boxes and other off-the-shelf hardware solutions into a customer’s location. For “Open” to fully develop in Telecom, it will require systems integration expertise necessary to solve complex deployment challenges, while giving service providers accelerated service delivery innovation through open platforms and DevOps methodologies to transform their networks, eliminate vendor lock-in, reduce complexity, and lower costs. CEO Brian Bronson says, “We made conscious decisions to outsource key pieces of technology and capabilities, which has been a huge bet for us. As a relatively small company we are spending in ONF, BBF, TIP, and spending R&D resourced to see ONAP deployed into networks. And our assumption is that with that mentality we are different from closed TEMS. We have no legacy to worry about” Bronson says that Open Source in the network is “at adolescence”. ”Operators are embracing us and know what we have to offer. But at same time there are not material POs being typed yet. We’re in the middleground of how to bring this to market. But over the next year when we see that first R-CORD PON box implemented or somebody takes OpenStack or decomposes the network arch and commercially deploys it, that will tell us we are making progress.” “We are trying to be the RedHat or Switzerland of telecoms infrastructure. But that means business models change, so we are not putting a bunch of money into R&D, waiting two years, getting an RFQ, then potentially getting
FEATURE: HOW TO GO OPEN
the high margin business after a long time. It’s about embracing open building blocks, some ecosystem proprietary blocks, bringing the solution pod together and getting paid along the way. A little bit like a professional services and a SaaS model, abstracting from the hardware layer, to subscription. One initiative that is certainly gaining increasing operator support is CORD. The latest 4.1 release from CORD is aimed at transforming the edge of the operator network. CORD says that the edge, which includes the telco central office, the cable operator headend, and the fixed and mobile access networks, represents upwards of $300B in annual capex spend by operators. CORD make possible the wholesale transformation of the operator edge infrastructure, turning it into an ‘edge cloud’. Commodity white box hardware can be used to build the physical infrastructure. This includes servers and switches, but also white box access equipment like OCP XGS-PON and TIP RAN BBUs. CORD then provides the base platform software needed to assemble these ‘peripherals’ into a cohesive solution leveraging SDN, NFV and Cloud methodologies. CORD is Open Source, so there are no license fees associated with its use. CORD’s proponents expect that large segments of this existing $300B operator capex spend will shift to deploying CORD and its associated peripherals, and to other ecosystem players who can provide custom integration and service creation services. For vendors and system integrators, CORD provides a baseline platform upon which they can build their own specialised offerings. CORD reduces R&D costs and speeds time-tomarket, letting vendors focus on their unique specialized innovations. One telco that has invested resource and time into Open Source initiatives, such as CORD and Facebook’s Telecoms Infrastructure Partnership, is Telefónica. Patrick Lopez of Telefónica says, “The Edge Computing platform
is one of the most ambitious. We have built a platform from scratch using Open Compute architecture released by the AT&T playbook. To build multitech edge computing platform that is convergent for fixed, mobile and enterprise that is completely Open Source. We have built our own VNFs and support 3rd party VNFs, and are about to open to 3rd party services as well. We have deployed Akamai and Amazon Lambda and are about to connect to commercial clients in coming weeks. So it’s pretty different from Telefónica’s core”
So what does the rise of Open Source mean for standards? Lopez: “Standards do not fit exactly our reality all the time. The Open Source movement is not a spectator sport any longer. You cannot take a standard and write an RFP against it. The best way to find a technology is to play with it so you can understand the level of maturity and then you can buy in a more intelligent manner. And if you have scale and ambition, there are some parts that you should own because you want to be in control of the network and to do that you need developers to develop on top of that technology. So standards are no longer the only way to do a technology roadmap for network operations.” Radisys’ Bronson says that there will be a role for both. One warning is that Open Source still needs to provide commonality, and it may be here that the Standards bodies still have a role to play. “Standards will stay play an important role; how much will they lag in topology alignment. There still needs to be a commonality, there are dangers in “OS du jour”, for example “which SDN controller do you use?” And just being “Open-centric” means proprietary solutions incorporated with Open Source solutions - so those organisations still need to drive scaleable Open Source solutions.”
ONAP AMSTERDAM One of the highest profile Open Source efforts has been ONAP the The Linux Foundation initiative formed out of AT&T’s eCOMP and the Open Orchestrator Project. In November 2017, ONAP announced the availability of its first platform release, ONAP “Amsterdam,” which delivers a unified architecture for end-to-end, closed-loop network automation. ONAP claims that 55% of the world’s mobile subscribers are supported by its members - a number boosted in large part by China Mobile’s membership. The release supports multiple versions of the NFV technology stack - from Virtual Infrastructure Managers, clouds and NFV Infrastructures. Taking a modular approach, Amsterdam provides verified blueprints for two initial use cases, with more to be developed and tested in future releases. The first is VoLTE, where by virtualising the the core network, ONAP is used to design, deploy, monitor and manage the lifecycle of a complex end-toend VoLTE service. The second use case is Residential vCPE. The modular blueprint approach is designed to make ONAP easier to adopt in stages, rather than involving a massive ingestion in one. “Amsterdam represents significant progress for both the ONAP community and the greater open source networking ecosystem at large,” said Arpit Joshipura, general manager, Networking and Orchestration, The Linux Foundation. “Amsterdam is the first step toward realization of a globally shared architecture and implementation for network automation, based on open source and open standards.” The second release, Beijing, is scheduled for summer 2018. TMNQUARTERLY 29
FEATURE: NETWORKED WORLD
: G N I R U T C A F U S T N N A E M M & E Y R I R U T Q S RE K INDU R O W T E N E MOBIL MANUFACTURING Remote maintenance and control optimising the cost of operation while increasing uptime. 3D virtual reality requires capacity to facilitate video-supported remote maintenance, from any place in the world.
AUTOMATED WAREHOUSING AND DELIVERY
VEHICLE AND ASSET TRACKING: Upgrades, analytics, communication.
LOGISTICS Seamless intra-/inter-enterprise communication, coordination of cross value chain activities and the optimisation of logistic flows.
FEATURE: NETWORKED WORLD
KEY ENABLING TECHNOLOGIES: • Private LTE and 5G networks in licensed and unlicensed spectrum
• Cellular IoT - LTE-M, NB-IoT, 5G MMTC and URLLC
Grid backhaul and grid backbone. Smart analysis of renewables capacity matched to demand.
• LPW: LoRAWAN, SiGfox, others.
• Automation protocols
• Analytics platforms at network edge (MEC/OpenFOG)
SMART SUPPLY CHAIN MANAGEMENT: “Edge manufacturing” mirroring product development from cloud platforms.
RENEWABLES: SMART FACTORIES: Time-critical process control, automation, remote control, robot-based manufacturing processes, incident-detection.
Secure and efficient operation of wind farms requires participants to have remote access to components such as sensors, actuators and networking devices.
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advantage What is the hardware advantage? Does it lie in architecture, performance, or an ability to enable the open software system it must support? TMN looks at some recent developments in the hardware platforms that support industry moves to the edge, NFV and open networks.
A new set of challenges will require a re-think of the telco infrastructure, and of its underlying platforms. We hear much about the move to cloud-based, and edge-cloud platforms within the network. Facilitating that switch will be foundational silicon design combined with industry partnerships to push ahead on high performance, cloud-based telco platforms.
Open integration As an example, Kontron’s SYMKLOUD MS2920 platform features two modular, redundant, hot-swappable 100GbE switches based on Broadcom technology. Each switch is designed with management and serial ports plus three front I/O connectors each capable of 40G or 100G QSFP28 inputs. Traffic is split between 4x 10GbE data plane traffic and 1GbE control plane traffic to each independent server/ processor across any of the MS2920’s nine modular nodes.
Kontron and Inocybe Technologies are co-operating to bring fully integrated ‘out-of-the-box’ Open Networking platforms to the enterprise and service provider communities. Kontron will market the platform fully integrated and ‘out-of-the-box’ with the Pica8 PICOS network operating system for both autonomous L2/L3 and software defined networking (SDN) deployments. For wireless operators, this alleviates any heavy lifting with regards to bare metal switching integration with SYMKLOUD hardware. This is of special interest for service providers seeking to deploy virtualised multi-access mobile backhaul services using SDN and NFV technologies. The SYMKLOUD MS2920 can be used in multiple use cases across access, edge and certain core network functions but, more specifically, it’s ideal for vRAN applications that need to support very high density, multi-access service areas that require 100 GbE TMNQUARTERLY 33
connectivity. In this use case, SDN can be a means to reduce complexity and provide better control via automation across multiple data centers and/or central offices.
To the edge Differentiation can also occur at chip level. Cavium and China Unicom have tested 5G target use cases on M-CORD SDN/NFV platform by using Cavium silicon-based white box hardware in M-CORD racks populated with ThunderX ARM-based data center COTS servers and XPliant programmable SDN Ethernet switch-based white box switches. Cavium and China Unicom demonstrated Multi-access Edge Computing (MEC) use cases developed through previously announced collaboration with China Unicom utilising the ON.Lab M-CORD (Mobile Central Office Re-architected as data center) SDN/NFV platform. This M-CORD SDN/NFV software platform and hardware rack are fully integrated with virtualised and disaggregated mobile infrastructure elements from the edge of the Radio Access Network (RAN) to distributed mobile core and the ONOS and XOS SDN and orchestration software. The solution is a full Cavium powered rack combining the ThunderX ARM based data center servers with the XPliant Ethernet leaf and spine SDN switches. and XOS SDN and orchestration software. The solution is a full Cavium powered rack combining the ThunderX ARM based data center servers with the XPliant Ethernet leaf and spine SDN switches.
HTCA at the edge Another hardware player, Lanner, is also targetting the edge platform with an appliance aimed at optimising vRAN performance. Its HTCA-6200 is designed with dual CPU blades and dual network I/O blades. Each of the CPU blades is empowered by two Intel Xeon E5-2690 v3/v4 CPUs and sixteen
DDR4 R-DIMM sockets. To efficiently control and allocate load-balance, the system is built in with a BCM StrataXGS Trident-II BCM56854 Switch Fabric with 720Gbps. Optimising servers for NFV workloads is where the market leader has been Wind River’s
Titanium server Wind River has been providing software-defined infrastructure to allow for the adoption of virtualisation into carrier networks. Its Titanium Core is a virtualisation platform that guarantees full carrier grade reliability and accelerates virtual functions in a manner that has been 3-4 years quicker than if developed through an open source community – still all open standards and ecosystem. It says that telcos tend to use the initial box they have in the data centre which is not a big deal for Proof of Concepts, but that production deployments see the requirement for a different engine for those applications. Based on open software standards, Titanium Server includes Linux, realtime Kernel-based Virtual Machine (KVM), carrier-grade OpenStack plug-ins, Data Plane Development Kit (DPDK), and accelerated Virtual Switching. All those profiles have optimised Intel architecture. China Telecom has been using the platform for a vIMS proof of concept. It said it us using third-party NFV infrastructure vendors to achieve “three layer decoupling,” rather than a vertically-oriented NFV solution. Additionally, China Telecom needs a commercial, carrier grade NFV Platform that delivers significantly higher performance than a vanilla opensource Cloud Platform when running a vIMS Virtual Network Function (VNF). Third, China Telecom was encouraged by the wide range of products from industry-leading partners that have been validated through the Titanium Cloud ecosystem, like Huawei’s vIMS used in the PoC.
The carrier says, “Our testing requirements demanded ultrareliability, robust and real-time forwarding performance in which high availability is a chief consideration concerning NFVI. Titanium Server helped us explore whether the hierarchical decoupling of the NFV infrastructure could be feasible. It also delivered on the key need for a commercial ready NFVI platform to be the foundation for our demanding test scenarios.”
In the Core – Silicon DIY: The Nokia 7750 Service Router (SR)-s series provides the industry’s highestdensity routing platform that can support a 144 Tb/s configuration in a single shelf. In addition, the company introduces a petabit-class router, the new Nokia 7950 Extensible Routing System (XRS)-XC. A leap for Nokia’s core router family and the industry, it is the world’s highest-capacity router to date. It scales to 576 Tb/s in a single system through chassis extension, without requiring separate switching shelves. The new Nokia platforms are the industry’s first capable of delivering terabit IP flows, a 10x improvement over the existing 100 Gb/s links used to construct the internet backbone. The foundation of these new systems is FP4 silicon, a breakthrough networking chipset. FP4 features the world’s first 2.4 Tb/s network processor – up to 6x more powerful than processors currently available – opening the door to clear-channel terabit speeds and petabit-class routers. This innovation is the result of years of engineering and research and leverages the latest advances in silicon including 16nm FinFET Plus and multi-dimensional design. The FP4 design also delivers many architectural innovations, including novel Nokiainvented intelligent memory, that enhance performance and efficiency, all while minimising package size.
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Dreams and Magic The automated network is a piece of magical thinking. Or is it?
ew business models, including those enabled by technology breakthroughs such as Network Slicing, are intended to address new markets, but they also impose the requirement for unprecedented operational agility and higher cooperation across network domains. The resulting exponential increase in overall complexity makes automation a necessity. By the time 5G is live, the increasing adoption of encryption by content providers and websites will mean operators may not be able to “see” 80% of the content on the network. 5G will also have to bring with it MEC, SDN and NFV or its vision of sliceable, controllable network won’t work. The network will need to meet extremes of low latency and high availability, and order of magnitude increases in throughput speeds. Backhaul links will need, in many cases, to be deployed over new fibre. X2 links from base station to base station via hub sites will introduce too much latency, so we may 36 TMNQUARTERLY
need direct site to site connections. Distributed data centres will form a low latency edge platform for applications that need location and subscriber ID to fulfil proximity services. This will indeed be a monetisation opportunity for telcos that will give them specific differentiation. A cloud-native consumption model will be required to meet high spikes in demand and very short term events. Operators will therefore be operating a network that could, perhaps should, look like a distributed Amazon Cloud - so it is extremely important that the cloud works.
UBER, but for networks (and with ethics) Here’s an outline of what TMN heard from one supplier of monitoring software recently. This mobile cloud needs to maintain resilience, scale and be widely distributed, but to meet service demand that is outside of operators’ control and, in fact, 80% invisible. The drawback. There is no Network Management System (NMS) that will give operators any idea of what will happen in a platform like that. So now if the network is going cloud native then NMS must go cloud native. That requires software agents that spin up when required in the network, VNFs with affinity monitoring, an orchestrator that knows to associate monitoring to the VNF. Operators trying to get their heads around fully automated SDN control will now also have to get their heads
round reporting this. So automation will require a fog of monitoring to shadow everything in a very transient way. That means a full micro services monitoring platform, and a lot of that has to be OpenSource. Anything in the cloud you cannot control; anything Google gives you as an API is open sourced by Google - it doesn’t want to maintain that. There needs to be an OpenSource movement that allows for OS monitoring to come alive in a way that it can instantiate itself. It has to be an industry aware standard that is also loose enough to adapt to a multitude of use cases. It cannot be standards based because none of the current OS bodies are really relevant now. It falls back into Linux and Apache because of the way micro-services go - and the IT and MEC guys have figured that out
Clearing the Fog This all looks, to be brutal, a little impossible. It’s a list of magical network demands. Or is it? Virtual agents exist in the network. Analytics platforms can, fed by policy engines, decide what data goes where, and what controllers and orchestrators do next. The challenges are of resiliency, responsiveness and flexibility. One body thinks that automated operations will only work properly if they are properly aligned cross-industry. ETSI is putting together a cross-industry group to do that. The ETSI Zero Touch and Service Monitoring ISG will initially focus on the 5G end-to-end network and service management such as network slicing management and will extend to the management for future network generations. The goal is to have all operational processes and tasks - delivery, deployment, configuration, assurance, and optimisation - executed automatically, ideally with 100% automation. The group will define a “new, future-proof, horizontal and vertical end-to-end operable framework enabling agile, efficient and qualitative management and automation of
emerging and future networks and services”. Horizontal end-to-end refers to cross-domain, cross-technology aspects. Vertical end-to-end refers to cross-layer aspects, from the resourceoriented up to the customer-oriented layers. The ZSM group will also facilitate the coordination and cooperation between relevant standardisation bodies and open source projects. “There are many issues that are currently hindering the automation of operations and Network and Service Management functionalities that need to be addressed at an industry level,” says Klaus Martiny, convenor of the ETSI ZSM ISG. “A primary goal of the ZSM ISG is to identify requirements on the necessary management architecture and interfaces to support the end-to-end zero touch network and service management in a multi-vendor environment. It is important as well that existing solutions will be considered”. In pursuing the goal of full Automation of Network & Service Management and Operation (ANSMO), ETSI sees the necessity for
coordination and cooperation among relevant standardisation organisations and open source projects. In order to take advantage of relevant previous results and current industry endeavours, a new industry collaboration initiative should be created and tasked with driving a cross-industry effort on ANSMO. Such an initiative would contribute to the coordination of work on the use cases, requirements, architecture, management interfaces design, and other specifications and recommendations necessary for a fully automated, multi-vendor ANSMO ecosystem (see Figure 1). Such an initiative should reach out to existing organisations in the automated management and operation ecosystem to avoid duplication and conflict, and to leverage existing specifications and solutions created by such organisations. Along with utilising existing specifications and solutions, the new initiative should also seek to address any gaps discovered while considering the end-to-end aspects of ANSMO.
Green solid line: Existing relationships Green dotted line: Delivers contributions to others Purple: New relationships
Open source and commercial implementations
Network and Service Automation Initiative
Figure 1: Network & service management automation initiative and its role in the end-to-end operation ecosystem
THE GOAL IS TO HAVE ALL OPERATIONAL PROCESSES AND TASKS - DELIVERY, DEPLOYMENT, CONFIGURATION, ASSURANCE, AND OPTIMISATION - EXECUTED AUTOMATICALLY, IDEALLY WITH 100% AUTOMATION.
“ETSI considers the following items to be of highest priority to achieving our goal of full ANSMO:” Enabling hybrid networks with end-to-end automated management of new virtualised network elements while supporting legacy OSS/BSS and legacy network and element management - Enabling network and service management of end-to-end vertical resource Supporting a realistic evolution path starting with end-to-end automation of critical aspects and adding automation of additional aspects over time to permit real world deployments Defining an end-to-end network and service management concept including features and capabilities in the context of automation, based on a 5G use case (e.g. Network Slicing) Defining an end-to-end network and service management functional architecture and solutions (within the context of a cloud native architecture), including interfaces, APIs, protocols and information data models Enabling network and service management of inter-domain/ service provider network To achieve the target of full automation, tools and methods based on Artificial Intelligence (AI), Machine Learning (ML) and Big Data analytics should be considered. Standardisation work to enable full automation of end-to-end ANSMO should address the above priorities and address industry barriers inhibiting delivery of a complete set of zero-touch network and service management (ZSM) solutions. Unless the industry can align its monitoring and automated process between standards bodies and Open Source inititatives, it risks missing out on revenues that could otherwise be transformational. TMNQUARTERLY 37
COUNTRY PROFILE: SPAIN
SPAIN ON MOVE TO 5G Driven by Telefónica to a virtual 5G future
Spain has one of the largest mobile markets in Europe, with effective competition from four MNOs and a growing number of resellers and MVNOs. This competition, together with regulated roaming and mobile termination rates, has driven down the cost of mobile calls. The market has seen considerable changes in recent years, including the acquisition of Yoigo by Másmóvil, and also severe challenges on operating revenue, following the macro-economic difficulties experienced in the country, and a large uptake of so-called “OTT” services. Of late, there has been a returning confidence to the sector, while Orange Spain and Vodafone Spain have acquired fixed-line operators in a bid to compete more effectively with Movistar in their bundled service offerings. There have also been growing investments in network upgrades to support LTE and HSPA+ technologies, while MNOs and vendors are also investing in 5G technologies and services. One R&D initiative specific to Spain is
‘5TONIC’, Spain’s leading 5G innovation laboratory. Founded by Telefónica and IMDEA Networks and based in IMDEA’s Madrid insitute, 5TONIC is an open co-creation laboratory in 5G technologies that brings together 5G technological leaders, such as Ericsson, Intel, Carlos III University, CommScope, Artesyn, Cohere and InterDigital. The laboratory promotes technological development as well as the early implementation and penetration of 5G communications in the productive environment. 5G is recognised internationally as an engine of economic development and competitiveness, and as such Governments have been keen to foster national initiatives around the technology. Recent tests carried out at the centre include the eXHAUL Project, a network concept which provides agnostic transport for Radio (Fronthaul & Backhaul) and Fixed Enterprise Access, supporting the current CPRI, eCPRI, Ethernet and future 5G fronthaul interfaces. The project is a collaborative activity
RETURNING CONFIDENCE: Vodafone
2017 H1 Ebitda +10%
2017 revenues +8%
“back to growth” in service revenues 2017
COUNTRY PROFILE: SPAIN
between Telefónica and Ericsson aiming at the identification of concrete use cases, requirements and features, prospecting suitability to Telefónica reference scenarios. Another concept to come from Spain 5G UCNC (user centric and no cell) RAN (radio access network) architecture, was also tested in the 5G Joint Innovation Lab. UCNC is a novel radio access framework evolved from the classical cell-centric access protocol to a user-centric protocol with hypercell abstraction. UCNC can dramatically reduce the over-the-air protocol signalling overhead and the access protocol latency, as well as increase the number of air-interface connection links UCNC also defines the “ECO State” as a new device protocol state for sending short packets directly without the need of over-the-air signalling, thus making users be truly “always connected”. Another key technology is “SCMA-based Grant Free Access”, which can simplify uplink access procedures so as to reduce latency and increase the number of connected devices. According to the results of PoC tests conducted at Telefónica-Huawei 5G joint lab, the number of 5G connections per cell increased by 233%, the signaling overhead decreased by 78%, and the latency decreased by 95% compared with state-of the-art LTE.
Of all the telco virtualisation projects underway, Telefónica’s Unica initiative is one of the most ambitious and certainly has achieved global status. The operator has committed to a digital transformation project across its business. This includes developing NFV-based networks based on SDN technology that can operate across its global footprint. Right now, Telefónica is focused on virtualising its core network functions, and has also carried out trials in virtualising the radio access network (RAN). But the goal remains the same: to build a more automated, software-based global network that will reduce costs, speed up service development and fuel innovation. The other operators are also preparing the ground for 5G with advanced network launched. In mid2017, Vodafone Spain launched a commercial 700Mbps LTE service in parts of Madrid and Salamanca with further deployments planned for other cities, including Barcelona, over the coming months. Although there are few major network vendors headquartered in Spain - with Mobile World Congress based in Barcelona, and the city nominated as Mobile World Capital, the country has seen an increasing momentum in mobile related startups.
2018 Auctions focussed on 5G services 2017 Vodafone Spain launches Spain’s first NB-IoT network Combined MVNOs
Government launches consultation on 5G technologies and services Orange Spain teams up with Ericsson to trial 5G Vodafone and Orange launch VoLTE and VoWi-Fi services
2015 Launch 5G Lab
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