Major telecoms face growing pressure from both consumers and competitors to transform the backbone of their networks. Data consumption is skyrocketing thanks to ubiquitous mobile devices, video streaming and the onset of the internet of things (IoT), while at the same time new low-cost wireless startups are challenging the viability of the sector's long-dominant business models. Competition is fierce—and customers expect affordable, unlimited data plans.
AT&T's network supports 137 petabytes* of data every day, and the organization expects traffic to increase tenfold in the next five years.
*1 million gigabytes
In response, telecoms like AT&T, Vodafone and SK Telecom are embracing the cloud and automation. They're launching massive multiyear transformation programs to jettison legacy, hardware-based network infrastructure and migrate to software- and cloud-based systems. The programs cut to the core of how these organizations operate, and promise to deliver new flexibility and efficiencies.
“Our old approach to business won't work in this environment,” says Sorabh Saxena, CIO of network and shared services, AT&T, Dallas, Texas, USA. “We had no choice but to pivot.” The organization is in the middle of a five-year program to virtualize its core network functions.
AT&T's network supports 137 petabytes of data every day, and the organization expects traffic to increase tenfold in the next five years, Mr. Saxena says. “Customers aren't going to pay 10 times more for the same service.” And they aren't going to wait months for a new feature to be rolled out in a world where they can get the latest app or phone overnight.
Yet telecom companies today can't quickly upgrade to meet surging demand and deliver new functionalities. Their legacy networks are made up of hundreds of different types of computers with specialized chips, each in charge of a different function, from text messaging to controlling antennas. As a result, it can take months to set up a new service.
PHOTO BY JILLIAN CLARK
“These projects present an opportunity for telecoms to reinvent themselves.”
—Prayson Pate, ADVA Optical Networking, Morrisville, North Carolina, USA
“We have witnessed all the benefits happening in the cloud, and we are ready to take advantage of it.”
—Alex Choi, SK Telecom, Seoul, South Korea
That's why the telecom transformation programs underway are about agility through the cloud. There are two complementary types of projects multiplying across the sector—both letting organizations manage and grow their networks in new, more efficient ways. Network-function virtualization (NFV) projects replace hardware-supported services with software-based virtual networks. Software-defined networking (SDN) projects enable automated application delivery through a centralized software platform. (See “Acronym Decoder,” page 38.) These projects will give telecoms shortened innovation cycles, letting the organizations rapidly improve the customer experience without constantly raising prices. For example, 5G capabilities, which AT&T began rolling out this year as part of its transformation process, will deliver mobile data dozens of times faster than a standard cellular connection.
“Our old approach to business won't work in this environment. We had no choice but to pivot.”
—Sorabh Saxena, AT&T, Dallas, Texas, USA
BLOOMBERG VIA GETTY IMAGES
“We have witnessed all the benefits happening in the cloud, and we are ready to take advantage of it,” says Alex Choi, CTO, SK Telecom, Seoul, South Korea. His organization and the South Korean government have expedited cloud evolution projects in anticipation of the sharp network demand increases expected during next year's Winter Olympics in PyeongChang, he says.
Whatever the drivers, these projects are complex and costly—with little room for failure, says Michael Howard, senior research director at market research firm IHS Markit, Santa Rosa, California, USA. Telecommunications organizations “aren't just replacing one box with another. They are executing a virtual version of the network that uses servers for multiple purposes,” he says.
Ahead in the Cloud
AT&T's massive network transformation program is helping facilitate change for an entire sector.
Here's a staggering fact: The volume of data on AT&T's network has increased 250,000 percent since 2007. The organization is coping by transforming for the cloud computing age.
At the end of 2014, the organization committed to a five-year project portfolio to virtualize 75 percent of its core network functions by 2020. Planning five years ahead helped the company prioritize resources across all projects. It covers efforts such as setting up new cloud-based networks and migrating functions and customers into these new systems.
Thus far the program is on schedule, says Sorabh Saxena, CIO of network and shared services, AT&T, Dallas, Texas, USA. And the benefits are apparent: In many areas of the network, the organization can meet customer demands in real time. This can entail downloading software to extend a virtual network instantly rather than having to send a technician to set up a server. That capability alone is a huge time- and cost-saver, he says.
“The impact on customer-touching technology has been significant,” Mr. Saxena says.
A key milestone in the program was the completion of a two-year project to develop open source software that can automate network services and infrastructure running in a cloud environment. AT&T and the Linux Foundation jointly sponsored the project, which was completed at the end of 2016, to create a set of standards that all telecoms and cloud vendors can follow. In February, AT&T released the code, documentation, educational videos and sample use cases to help other network providers integrate the software into their own cloud transformation projects and use cheaper off-the-shelf hardware. By allowing vendors and other providers to use and improve the software, AT&T also can benefit from the open-source approach.
“We put out 8 million lines of code as part of this project,” Mr. Saxena says. “It is a big differentiator that even our competitors welcomed.”
WHAT CHANGE TAKES
Mr. Saxena attributes much of the success of the program to new project team structures. AT&T merged its software solutions department with its hardware installation and maintenance department. Bringing the two previously separated realms together was necessary to implement virtual networks. “Too many silos would have killed these projects,” he says.
A customer at an AT&T Inc. store in New York, New York, USA
250,000%
Data traffic increase on AT&T's mobile network since 2007—mostly due to video
55%
Portion of AT&T's network slated to be virtualized by end of 2017
75%
Portion the organization aims to have virtualized by 2020
Source: AT&T
Forging into new project territory, the organization uses agile approaches, hosting “hundreds of scrums a day” across dozens of teams to ensure everyone is up to speed on all progress. “We know we are doing a lot of first-in-market projects and no one has all the answers,” Mr. Saxena says. Scaling the upgraded network iteratively and constantly sharing feedback on what's working helps mitigate risk and improve delivery speed over time, he says.
The biggest challenge at this point is talent management, Mr. Saxena says. During the past two years, his team has invested US$250 million in training employees to support AT&T's new cloud-based network business model. Training has been about more than mastering new technology; it also has covered agile project management and leadership skills.
“This isn't just a technology move,” he says. “It will take a massive pivot of skills for us to remain the industry leader in this space.”
“You have to stay true to delivery discipline to keep things on track.”
—Matt Beal, Vodafone, London, England
This involves hundreds of projects conducted over several years and new execution approaches. Telecoms are assembling new cross-functional project teams and collaborating closely with software vendors they had no reason to talk to before. The upshot: Big budgets and culture change are in order.
“These projects present an opportunity for telecoms to reinvent themselves,” says Prayson Pate, CTO of Ensemble, a division of ADVA Optical Networking, Morrisville, North Carolina, USA. (ADVA is a hardware and software vendor.) “Organizations are changing the way they build and manage networks, and that takes time.”
RACE INTO NEW GROUND
No telecom has completed the move to the cloud yet. “There is no precedent. No one project team or vendor has all the experience needed,” Mr. Howard says.
That fact adds risks to NFV and SDN projects—risks organizations are trying to mitigate through sector-wide collaborations. For example, many telecoms and software vendors are participating in the Telecom Infra Project, a series of industry working groups kicked off by Facebook last year that attempts to redefine the technology and standards that will shape the industry's transition to the cloud.
The fast-changing nature of cloud-based network technologies is one risk with which teams must contend. Security is another: Project managers at telecoms need to verify that the vendors they hire to build cloud-based networks can meet security requirements. That can include regulatory requirements regarding where data is stored and how it's shared, says John Delaney, associate vice president of mobility research, IDC, London, England. For example, in Germany, there are tight restrictions on the storage of citizens’ data outside the country. That can be tricky for major vendors who have server sites all over the world.
“Security should be among the biggest concerns of organizations when launching these projects and choosing suppliers,” Mr. Delaney says. “It requires a lot of due diligence.”
Acronym Decoder
Telecoms’ move toward the cloud has spawned lots of projects—and unwieldy terms. Here's a primer for the uninitiated.
NFV
Network-function virtualization: This is all about decoupling networks from traditional, proprietary hardware devices like routers, firewalls and load balancers. Instead, NFV allows organizations to operate and grow networks through standard servers running software applications. The agility and savings delivered via this approach are significant: Network administrators no longer need to buy a bunch of hardware to add bandwidth.
SDN
Software-defined networking: This allows organizations to dynamically grow and manage network storage and bandwidth in response to real-time needs. Administrators managing network traffic can do this through one centralized console rather than various individual switches. The upshot: They can respond quickly to changing business requirements.
Transformation Time
Organizations are pouring money into network virtualization projects so their networks can handle the data-hungry digital world.
VIRTUALIZATION REALITY
Telecoms’ move to virtualize networks is part of the larger global IT shift to the cloud.
US$162 billion
Global spending on public cloud computing services forecast for 2020
More than 50%
of software, server and storage spending growth will be dedicated to cloud computing by 2018
Sources: Network Functions Virtualization Tracker and Forecasts, ABI Research, 2017; SDxCentral; 2016 Top Markets Report: Cloud Computing, U.S. Department of Commerce, 2016; The Salesforce Economy, IDC, 2016
At the same time, telecoms can't afford to wait months to assess every corner of the network and then craft massive project plans that solve every potential problem, says Gary Kinghorn, product marketing manager at Nuage Networks, Nokia's cloud computing arm, Mountain View, California, USA. “They have to push these projects forward,” he says, lest they get beat by more agile peers.
Many telecoms are seeking a balance between speed and risk management by establishing a big-picture plan spanning several years, setting phased business goals for transformation, and then executing a program of smaller projects using agile approaches. The idea is to deliver incremental benefits to customers and the business on lower-risk projects while learning lessons to apply going forward.
“In the old waterfall approach, organizations had to answer every question before they could start anything,” Mr. Pate says. “But an agile approach allows them to implement pieces of the system, fix mistakes and then move on to the next project.”
For example, Matt Beal, director of technology architecture and strategy, Vodafone, London, England, has his team focus on projects that deliver specific benefits to the customer. This can include rolling out a new app or network upgrade to a select customer base or geographic region. “We can set requirements and roll out a proof-of-concept project in a matter of months to deliver results without locking the network up,” he says.
BETTER TOGETHER
But in the brave new world of cloud-based networks, no telecom is an island. For example, Vodafone is working with Nuage on multiple projects to implement SDN technology. It's also working with U.S. cloud computing company Mirantis to support NFV efforts.
“You have to be flexible because there is still so much to learn.”
—Prayson Pate
PHOTO BY JILLIAN CLARK
All of this is part of the Vodafone Ocean framework, a program to transition the organization's network and computer infrastructure to the cloud that began in 2014, Mr. Beal says. Ocean's architecture relies on platforms from multiple software vendors to meet the individual needs of business units and regional data centers, he says.
“We are approaching this as an aggregate program of projects that touches back-office technology, customer-facing systems and a complete network transformation from hardware to software,” Mr. Beal says. “We call it ‘Ocean,’ but we are taking it one project at a time.”
Partnerships between software vendors and telecoms are central for the successful move to the cloud. Unlike in the past, when organizations got locked into specific vendor contracts, these projects are built in an open-source environment where multiple vendors collaborate. “An open, multi-vendor SDN infrastructure is key for delivering better, faster and smarter services,” Mr. Beal says.
To accommodate these more fluid relationships, vendors are becoming more flexible in their project-planning strategies. For example, when Mr. Pate's team at ADVA Optical Networking was delivering an NFV network operating system for Verizon this year, the telecom wasn't sure how it wanted the software to be loaded onto the third-party server before being sent to the customer. To help Verizon in the decision process, the team pitched two detailed plans. In the first, ADVA would send its software to the server manufacturer, which would be responsible for loading, testing and shipping it to the end customer. In the second, the servers would be sent to the ADVA team to load and test the software before shipping.
“We didn't say ‘Here's how you have to do it.’ We gave them options,” Mr. Pate says. “That way, no matter which choice they made, we were ready to support it.”
That willingness to adapt on the fly is critical for all players in these projects, he says. “You have to be flexible because there is still so much to learn.”
FAREWELL TO SILOS
Along with collaborative vendor partnerships, these projects require an internal shift in planning and leadership. “It's a huge change,” Mr. Beal says. While the individual projects in the Ocean framework might follow the same general project management strategies as any other technology upgrade, the volume of projects and their impact across the network mean that Vodafone is adapting its approach to project management. “When a program has such a cumulative impact, it requires a fundamental change in the way we work.”
“Security should be among the biggest concerns of organizations when launching these projects and choosing suppliers.”
—John Delaney, IDC, London, England
In most cases, it requires breaking down silos between IT teams, which handle the hardware installation and maintenance, and network teams, which handle the software solutions. The result is new cross-functional teams that can address all of the technology issues, as well as legal, regulatory and security concerns.
This merging of teams can be politically tricky, particularly when one team is giving up power and budget control to another, Mr. Choi says. “It is difficult to find commonality between the two camps.” SK Telecom is addressing these challenges by retraining existing employees and recruiting new talent with cloud infrastructure experience, he says.
But given the accelerating rate of digital change, the transformation of the telecommunications sector is continual, Mr. Beal says. The key is to stay focused on the goals of the portfolio and to remain practical about what needs to be done and what can be put off. “Be objective, stay on scope and focus on change control,” he says. “You have to stay true to delivery discipline to keep things on track.” PM