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Three business drivers promote operator cloud/network integration

Three technology and business drivers provide the impetus for network operators to work toward tight cloud and network integration to monetize expensive and valuable network assets.

Network operators are as interested in cloud computing as third-party cloud services providers—perhaps even more so, but the way the cloud and the network come together is of special interest to operators.

Network integration is critical to content monetization plans because operators know that it’s the network that makes them unique.

Tom Nolle, President, CIMI Corp.

With more than a trillion dollars invested in networks worldwide, operators are understandably focused on how the cloud can help monetize the enormous network asset base. Three business drivers lay behind the focus on cloud/network integration, and they will likely drive deployment in both the cloud and the network in the future.

Driver 1: A desire to provide hosted services to businesses and consumers based on a scalable IT architecture in terms of both capital and operations costs. These services should leverage the connectivity (particularly broadband) available to business and residential users, and since  is only marginally profitable, the services should also help raise the average revenue per user (ARPU) and profit per customer.

Cloud computing is a way of “hosting” add-on services without resorting to the traditional server model that would put users at risk of a service failure should their assigned resource fail. The cloud, while not automatically more resilient than traditional architectures, can be made resilient and highly available through proper implementation, and the techniques are well understood and supported by IT vendors. The connection of cloud computing into network services is also well understood and supported.

Cloud Computing as a Service is an example of a hosted service, and nearly all network operators are interested in providing cloud computing as a service. But they point out that their broad customer base—consisting ofconsumers and SMBs—is more likely to consume a hosted service like security or management than buy cloud computing. For network operators, services with a broad opportunity base are particularly appealing.

Driver 2: Monetize content distribution, including content delivery, media transcoding and rights management. Verizon’s Digital Media Services (VDMS) is an example of a content monetization strategy offered as a service to content owners and partners. Content monetization has many functional elements, and creating an operations framework in which these elements can run reliably and at scale is critical. Cloud computing is seen as such a framework, and since content monetization projects are already creating deployments, operators are committed to finding an IT hosting approach immediately.

Cloud/network integration is critical to content monetization plans because operators know that it’s the network that makes them unique. A content distribution architecture built without any specific network links or integration would be the same kind of architecture an over-the-top (OTT) competitor could deploy. A market entry of that sort would not only fail to create differentiation, it might actually validate a competing model and provider. Virtually all network operator content distribution or media services architectures contain a content delivery network tightly coupled to the operators’ metro and access infrastructure, which is proof of the importance of a strong role for the network in these services.

Driver 3: The need to create a formal architecture for the hosted components of advanced IP and mobile services. There are well-understood and broadly supported standards for building “the network,” but there are no carrier-grade standards for creating an IP services layer. Cloud computing may not be a complete standard for future hosted services because it doesn’t define all of the component interfaces, feature composition and orchestration, or network interconnection rules and options, but it’s likely the start of such a standard.

In voice services, the Advanced Intelligent Network (AIN) architecture defined how special voice features like call forwarding and number portability were to be implemented. A next-generation network can be expected to need a next-generation form of AIN, and it’s particularly critical that this next-gen AIN define how services can exploit network capabilities and how information gathered from the network layers—such as mobile movement between cells—can be exploited as an information element in new services.

Component or feature re-use is critical to most network operators because they realize that capital and operations economies at the service layer will depend on needing only one software tool to host and support each service feature needed. An explosion of application-specific solutions has already dogged some operators in their mobile and VoIP services, resulting in an explosion of service delivery platforms and support costs. First, they need to prevent this multiplication in the new services they deploy to compete with OTT providers; second, they need to build a new service platform where they can consolidate older mobile/IP service features.

Cloud/network integration should support all drivers

Surveys and announcements by operators are demonstrating that no one of these drivers is dominating in the market. Network operators are acquiring cloud computing providers, which suggests that some operators consider it critical to have a quick way to address cloud service opportunities.

Operators are also deploying content monetization services like Verizon’s Digital Media Services, which illustrates that content monetization is probably the key focus arising from the increase in mobile competition. Alcatel-Lucent’s announcement of an expanded Application Enablement developer program designed to create service-layer partnerships is proof that key vendors are seeing a need for a formal framework for feature development in the service layer of the network.

Ultimately, of course, cloud/network integration or fusion will embrace and support all of the drivers. No one knows better than a network operator how important efficient infrastructure and operations support is to future service profits and success.

About the author: Tom Nolle is president of CIMI Corporation, a strategic consulting firm specializing in telecommunications and data communications since 1982. He is the publisher of Netwatcher, a journal addressing advanced telecommunications strategy issues. Check out his networking blog, Uncommon Wisdom

This was last published in May 2011

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