Some telcos just don’t want to change – Hrvastski Telekom

It is an interesting statement to make at a telecoms conference, but it is one which is pretty evident if you look back through the years.

Telco executives around the world will disagree with the statement made by Goran Car of Hrvastski Telekom, but we are tempted to side with him.

“Not everyone wants to change,” Car said at the 5G Core conference in Madrid during his presentation which assessed the challenges of creating a software-defined telco.

“The question you have to ask is how much you want to change.”

This is quite a broad statement to make, though it is perhaps true on two levels. Firstly, many telcos struggle through virtualisation because they bite off too much at once. And secondly, culturally, change is a very difficult process to manage and ensure the new status-quo remains in place.

The internet companies are dominating the world for a very simple reason; these are organizations which are not afraid to look at the evolving environment and create a new business which is more suited. Let’s not forget, Netflix didn’t start out as a streaming business.

Another factor which you also have to consider is the ability to change. The ones which have adapted and evolved are generally not tied to legacy systems and processes, and usually designed a business which is capable of disrupting itself.

These are elements which hold telcos back when it comes to creating a business which is fir-for-purpose in the digital economy. Very few telcos can afford to operate in a completely greenfield environment, while there are still obligations to serve customers who are still reliant on aging technology, services and products.

That said, we seem to have been talking about the evolution of the telco for years. New business models, a new approach to making money, new ways to engage the consumer and new technology to underpin the organization and networks were supposed to be solutions to facilitate digital transformation.

But how much progress is actually being made?

The cloud companies who have created so much disruption are still the envy of the world, while telcos are still talking about future-proofing the business and networks. Progress is being made, though the divide between the digital haves and have nots is still pretty notable.

Although we are discussing the cultural element of transition, Car has been focusing on the technological as well. Virtualisation is a very difficult task to undertake, and perhaps explains why there are few telcos which can genuinely describe themselves as ‘software-defined’.

One of the biggest challenges which many are likely to face is an understanding of the problem. Car pointed to virtualisation strategies and questioned whether too much is being done at once. What is the business case to cloudifying some aspects of the business? Are extra elements being bolted onto the project for the sake of it? What impact will this have on the success metrics?

Another element to consider is the sought-after benefits. Car described a ‘magic number’ at Hrvastski Telekom which is 40. If a project cannot deliver cost savings of 40% at the very minimum, it is denied. There is no point in virtualising something just so it can have a flashy sticker, it is supposed to serve a business purpose. Being selective in the drive towards being a software-defined telco is just as important as being innovative, creative and aggressive.

Being a bit more strategic with digital transformation strategies is a must, though the sceptic in us perhaps believes there are too many people who want to maintain the status quo.

We want to build a network where failure is impossible – Telefonica CTIO

If you consider 5G is not 5G without a 5G core, why have we not been talking about the 5G core more when 5G is being deployed and the 5G economy is just around the corner.

If you hadn’t figured it out, this article might be about completing the 5G puzzle.

In Madrid, telco executives are gathering to talk about a topic which has not grabbed many headlines to date. The evolution, or perhaps revolution, of the core. And whilst it might be a very complicated project, one thing is very clear; the 5G core will not look very similar to the 4G core.

“We are not building infrastructure for the customer,” Telefonica CTIO Enrique Blanco said at the 5G Core conference.

“We are building it for society. How can we build a network which will not fail? 5G Core is a key topic for us.”

There are two interesting elements to this statement from Blanco. Firstly, the network is fundamentally different in its application. And secondly, if connectivity is going to central to society moving forward, failures cannot be tolerated, irrelevant of severity, location or impact.

Starting with the application of the network, while 4G was built for the mass market and appeasement of the increasingly digitally-native consumers, 5G is much more than that. Increased download speeds are an added bonus, but the value of 5G is realised through the creation of new services and engagement with enterprise.

Walter Wang of Huawei illustrated this nuance very well. The 4G network has been built for a single purpose, however the 5G core needs to be built in a way which allows for the creation of customisable connectivity services for enterprise. For example, a customer in the energy sector will be demanding low-latency. In manufacturing, reliability and resilience are key. And for broadcasting, its speed and availability.

The ‘one-size-fits-all’ 4G network cannot deliver on these demands. If 5G is to offer an opportunity to engage enterprise customers, the 5G core needs to be created in a way which allows for the creation of these services. It’s multi-layered, regionalised and distributed and multi-vendor. Which leads us very nicely onto the next area.

The 5G network cannot fail. The same could be said of the 4G network, however the impact is very different. If 4G networks go down, the general public can’t watch cat videos on the bus. If a 5G network fails, enterprise customers are irked and SLAs (service level agreement) come back to haunt the telco. Critical services fail and there is a very real impact to society.

As Blanco highlighted, operating through multiple layers, distributing the core over several regions and engaging with multiple vendors adds resilience. If there is a failure at one point in the network or ecosystem, it is a case of damage limitation not everyone to panic stations.

This is a perfectly reasonable approach to business, though there are certainly some risks to bear in mind.

A multi-vendor environment is all well and good for resilience, reliability, competition and innovation, however as Veon CTO Yogesh points out, the more variables in the ecosystem, the points of failure. Franz Seiser of Deutsche Telekom also echoed this point; the future network is impossible without automation and automation is very difficult.

This is the challenge with the 5G network of tomorrow; if it is multi-vendor, with telcos selecting components which have been deemed best-in-breed, this is not necessarily a guarantee they will complement each other. The ingredients might be perfect, but if the recipe doesn’t work, neither will the network. In some case, it might be worth sacrificing some quality because the components complement each other.

What is worth noting is that all of these discussions are very much in the early days. The 3GPP Release 16, due in the early part of 2020, will pay more specific attention to the 5G core, and at this point we might see work accelerate.

That said, always bear in mind that 5G is not really 5G until the core is 5G. And the nuances of delivering a 5G core are a lot more complicated than 4G.