NetEvents Service Provider summit, Frascati

Service Provider summit, Frascati

Long-time NetEvents attendee Camille Mendler, principal analyst at Informa, opened the final day's plenary proceedings here in Frascati.

To set the scene, she presented an overview of the cloud under the rubric of transformative business models, and highlighted some of the telecoms companies' activities in this area.

She pointed out that the number of telco cloud services launched has doubled in the last couple of years but that telcos are not being as innovative as they could be, describing them as the bottom feeders of the market, focused on the IaaS market.

Using concrete examples, Mendler said that telcos are mainly copying pure-play cloud providers rather than innovating, and are not playing to their strengths such as their expertise with and ability to manage the network.

She urged them to think about traditional services in a different way, and to use the cloud to reinvent legacy services.

The remaining presentations were case studies of how telcos are delivering cloud services, the first of which was BT's Alessandro Canzian, head of global telecom markets in Italy.

Canzian highlighted BT's On Demand Compute offering, its service levels, and physical and logical security measures. He also pointed out that customers can obtain individual statements of their carbon footprint for use in their annual reports.

He then explained BT's white label services and its virtual datacentre service, designed to act as underpinnings for systems integrators' own offerings.

Tim Gigg, Head of International Transport Programmes at Vodafone then took the stage and said he had just come back from building networks in Africa. He described how there was a strong business case for new infrastructure, especially fibre, in the continent. As a result, he said, two new cables, each with 5.12 terabit capacity, were due to reach Africa by the end of 2012.

He went on to describe how his team had laid fibre in Ghana to professional standards, to replace fibre that had been simply dropped on the ground. As a result of this project, Gigg said, Accra and 10 regional towns were now connected, and connections to adjoining countries were now possible. they key business opportunities were mining and energy companies, and the emerging middle class, he said.

The final event was a joint presentation from Akber Jaffer, VP Strategy Data Centre Services at COLT, and Tate Cantrell, CTO, Verne Global, a datacentre building company.

We aim to build efficient datacentres, the engines behind the cloud, said Cantrell. In a commodity industry, which cloud will eventually become, you will get the best profit by moving to the most efficient location, he said. This was why Verne has built a modular datacentre based on renewable power - with zero emissions - at the south-western tip of Iceland, he said.

Jaffer pointed out how efficiently COLT could build datacentres by modularising and using production line techniques - much like the car industry. It is fast and capital efficient, he said, and means a new module takes just four months from design to power on, compared to years for traditional methods.

Cantrell added that one of the advantages of Iceland was its server-friendly climate, the availability of geo-thermal and hydro-electric power, and the ability to lock in power prices for 20 years.

With that, editorial director Manek Dubash closed the plenary event, which continued with meetings between service providers, vendors and the analysts present.

Day two of NetEvents October 2011 press summit in Frascati opened with a set of meetings between vendors and press (more info in next blog), followed

KEYNOTE: Joe Baguley, Chief Cloud Technologist, VMware.

The morning's keynote was delivered by Joe Baguley, chief cloud technologist from virtualisation software company VMware. Baguley talked about how virtualisation in the cloud will change how everyone works.

One of his main points was that in future the desktop operating system will be pulled apart as its various elements -- memory, disk and CPU -- are pushed into the cloud, and applications will be available anywhere on any device. This will remove the need for desktops, he said.

He also said we would also be seeing mobile virtual phones -- Android phones running another phone image -- very soon. Some corporates already do this with laptops so that one image is locked down and secured, designed for company usage, while the other is for personal use.

He was lightly grilled by the event host, Manek Dubash, who asked about the confusion that remains between cloud and virtualisation, the problems of over-reliance on unreliable networks, and Microsoft, VMware's biggest competitor.

HEAD 2 HEAD ‘Clash of the Titans' : Datacentre Architecture Shoot-Out

An entertaining session headed by Daniel Beazer, senior research analyst at Tier1 Research. Beazer played the role of an Australian media baron looking for pitches from cloud service providers, in the shape of Verizon Business's David Howarth and Brocade's John McHugh.

Howarth's pitch offered access anywhere, any time, any place, and to overcome the barriers of change, governance and trust. McHugh offered a flat, low-latency network which he said would allow capacity-based scaling. After a show of hands from the audience as to the more effective pitch (which McHugh narrowly won), two analysts played the role of consultants examining the two vendors' offerings. Keith Humphries (Eurolan) asked about legacy integration, while Rob Bamforth (QuoCirca) asked how the vendors planned to quantify existing assets.

After John McHugh declared systems integrators were going to be the road kill of the cloud, a final vote was taken, in which McHugh increased his margin of victory.

DEVIL’S ADVOCATE “Into the ether then into the cloud – the vital role of Ethernet”

Analyst James Eibisch from IDC was up next, and discussed the role of Ethernet in the cloud. For him, the question was whether high speed Ethernet can deliver at the core, and what benefit it brings to the cloud.

On the panel, Kevin Vachon of the MEF said that Ethernet will be critical to the cloud, while James Walker of Tata Communications said that cloud services are being taken up quickly as providers deploy Ethernet within and between their datacentres. McHugh said that Ethernet is great where appropriate, enlarged upon by Alcatel-Lucent's Phil Tilley who reckoned that Ethernet gives high bandwidth, secure and reliable services. Tilley added that Ethernet is ideal for known – i.e. not mobile -- locations. John McHugh added that it's not as simple as that as you can't just let people create and run their own Ethernet. It needs a multi-protocol architecture, he said.

After further discussion, Eibisch polled the audience, who agreed that Ethernet will be essential to cloud where its application makes sense.

Service Assurance with the Cloud. Rob Bamforth, Principal Analyst, Communication, Collaboration and Convergence, Quocirca

The summit's penultimate session was led by Rob Bamforth, principal analyst at QuoCirca, and concerned service assurance in the cloud. He asked the panel how much was needed.

Panel member Marco Wanders from Acision said that the cloud needed application performance, availability and security, with cloud access being the key reason for the network's existence. Available capacity will always be used, he said, so you need to classify traffic to allow SLA and prioritisation to work.

Vodafone's Tim Gigg said his company has a cloud offering for multinationals but that latency is an issue when selling to Asia-Pac and Africa. He agreed that quality of service is important, so Vodafone places content caches close to its base stations.

David Howarth, of Verizon Business, said you need to define the experience you want to have and work backwards from there. We will backhaul traffic to the best place to get it to the Internet but we need application developers to collaborate, he said.

Ahmedou Oul Ahmed Sidi, from Mauritel, said his company was still thinking about cloud. His concerns were how cloud technology will affect the operator value chain and the telco business model. He was also concerned about security, service creation, the cost of migration from legacy infrastructures, and whether quality of service in the cloud was good enough for financial transactions. We wait to be convinced, he said.

Improving Profitability & ROI for SPs. Michal Halama, Principal Analyst, Business Network IT Services, Current Analysis

The final panel of the day came courtesy of Michal Halama, principal analyst at Current Analysis. Entitled Show Me The Money, this session concerned service providers' business models. The key factors for service providers are timing, revenue, cost-saving, and investment, he said. They need to blend existing services with new cloud services, and customers need to perceive the value.

From the panel, Alessandro Canzian, of BT, said that the cloud is a hub containing services from a number of players. Developers need to be creative in finding new services and not worrying about servers, while systems integrators need to integrate the legacy and cloud worlds.

Matthias Nass, from telecoms equipment vendor ECI, said that broadband is commodity, price-driven, with lots of user churn. This means there is a need to enhance revenue streams with services such as security, managed bandwidth, and datacentre strategies, Nass said. He said that a successful cloud needs to be easy to use, offer comprehensive functionality, automatic service provision, and integration of relevant services. He was favour of net neutrality but said that it was an international regulatory issue.

Panel member Simone Bonnannini, from Interoute, said that the service provider's role is not just to sell the bricks of the cloud but houses – i.e. not just services but the cloud itself. He saw the cloud as a black box to solve customers' problems and that's the key to making money. The problem with getting money from over-the-top operators, he said, is that if there are multiple operators, one will offer free transport and the rest must follow.

Jim Machi of Dialogic said that the cloud is a sandbox to allow developers to build applications. The first applications are non-essential, such as fax services, he said, followed by unified communications and new mobile services such as video messaging/SMS, and mobile videoconferencing.

After further discussion, the panel concluded. This wrapped up the summit for members of the press, although service providers and analysts stayed on for further discussions.

Mobile video goes mainstream

Mobile video is coming -- despite the sceptics, who see the idea of people wanting to watch TV on their handsets as an unlikely scenario. I'd number myself among those sceptics, as the situation is likely to be more nuanced than a simple either/or.

What's sparked this thought is the long-expected announcement this week of a deal between T-Mobile and 3 with BT, under which the two mobile operators will have their data traffic backhauled over the incumbent's shiny new 21st century network.

The agreement was actually cut between BT Wholesale and the mobile operators' joint-venture company, Mobile Broadband Network Ltd (MBNL), which was formed to allow the two operators to combine the infrastructure for the two networks. Instating MBNL allowed them to close around 5,000 base stations, according to one report.

That left MBNL with around 7,500 base stations, which are being increasingly inundated with demands for data, as ever more-capable handsets reach the hands of growing numbers of people. While many business users have been downloading the occasional web page along with their emails for years, the iPhone has been at the forefront of generating a hockey-stick curve in the data stats. That, and the jump in sales of 3G and HSDPA-enabled data dongles, have brought about a transformation of the data market, and which could become part of a financial rescue package for the mobile operators.

So that's all very well, but what kinds of data are people downloading -- and what does it mean for the networks? While there's a pile of applications too, along with web pages, email, IM and so on, the bulkiest items that people will download are likely to be videos.

The operative word here is download, rather than stream. Real-world data is thin on the ground but data streaming in a mobile environment is a tough technical challenge. Reports from real users on web forums and the like suggest that what appears to be streaming is in fact downloading: the video downloads and plays while it downloads, YouTube and NetEventsTV-style.

In practice, downloading a video this way is a much safer and more seamless way to view content than expecting it to appear instantly. Even with a broadband link, streaming a video from an online service doesn't always mean you can view it in real time -- it's often best to wait for a minute or two until enough of it is buffered. Over a less reliable cellular link, many if not most users are likely to select this option.

And a further issue that the mobile operators and content providers aren't going to like hearing is that downloading gives users the option to fast forward through the ads, reducing the providers' opportunity to monetise the offering. It's an choice most users are likely to make.

The other issue is how much video users are likely to watch on a phone. Short YouTube clips under ten minutes long -- often called 'snack video ' -- are the most likely candidates. Few are likely to want to watch a full-length feature film, or even an episode of their favourite sitcom on a phone-sized screen. Given both the form factor, the impact on battery life, and the fact that it could take days to download a feature film, this is hardly surprising.

So mobile video is not just coming -- it's here. But downloading is the most likely delivery mechanism, not streaming. And the operators' networks still need to be updated to take account of the anticipated increase in demand. So the deal between BT Wholesale and MBNL is not likely to be the last of its kind.

Japan's NTT shows the way forward

Just got back from a week in Langkawi, where NetEvents held two conferences back to back.

We were billeted in The Andaman, a large, low-rise hotel snuggled down between the rain-forest and the beach adjoining the bath-warm Andaman Sea. It’s almost invisible until you’re on top of it, and the location, the local wildlife and, above all, the incomparable desire of the people to make your stay a memorable one combine to make it a great venue. Oh yes, and the warm tropical weather...

The first of the two conferences was the company’s inaugural summit meeting for service providers in the Asia Pacific region, which allowed SPs to meet each other to share best practices. It’s an event without parallel, according to the SPs, who were glad of an opportunity to talk to each other without the paraphernalia of a big exhibition.

NetEvents is all about meeting and talking, and that’s what happened at both events, the second being all about the more familiar meeting of vendors and press.

Service providers are often difficult to get in touch with, and I learnt a lot from this valuable opportunity to listen and talk to them. Among the most interesting presentations both to me and to most of the 60 or so attendees I spoke to was the one by Hiromichi Shinohara, from Japan’s biggest telco, NTT.

Here we learnt more about the company’s launch of its award-winning next-generation network or NGN -- alleged to be the first of its kind in the world. It’s analogous to BT’s 21st century network (universally known as 21CN), which has just been officially launched, and offers fibre to the home, which of course enables high-speed broadband access. However, BT's 21CN doesn’t enable fibre to the home but is instead an IP-based backbone network that in the main connects exchanges.

To give you an idea of how advanced NTT's network is, compare most western countries’ ADSL profile, and you’ll find that it’s growing. In the UK, for example, over half the country’s homes now have ADSL-provided broadband access to the Internet. Incumbent telco BT routinely dishes out press releases trumpeting another half-million homes connected -- see here for an example.

By comparison, NTT is way ahead. For example, numbers of Japanese users of ADSL technology, which was once described as an interim technology until we get to universal fibre-connectivity, have been declining. Instead, users are switching to fibre as an access mechanism.

This means NTT reckons it can deliver richer services, for which it can charge more. For example, it plans to offer videophone services, HDTV, video-conferencing and a range of both consumer and enterprise-focused multimedia services. As a result, NTT has been able to increase its average revenue per user or ARPU, a common metric for measuring a telco’s financial performance.

It’s routine for industry observers and analysts to argue that telcos such as BT and NTT ought to add more value to their fat pipes by providing services if they’re to remain profitable in a world where broadband prices fall as demand sky-rockets. If you look at the agenda for the service provider summit, that’s the issue which recurs throughout the event. However, the telcos have not, broadly speaking, been very successful at doing so, often because their networks cannot yet support services such as video on demand. NTT appears to be an exception to this long-standing industry mantra.

While NTT may be first to launch an NGN, depending on how you define “first”, what most at the NetEvents SP summit found interesting is the way that NTT is opening up its network for others to build on by providing a service delivery platform. as part of this process, it set up a forum for third party service providers. In this way, it helps to ensure that service providers help generate revenue for NTT, as well as for themselves. This kind of double-sided business model is one that many telcos are looking at -- and an issue, incidentally, that NetEvents TV will be examining in a future feature.

I hasten to add that I haven’t tasted NTT’s NGN, so have only Shinohara-san’s words to go on. But if the words are translated into reality, then NTT’s model is one that telcos elsewhere might do well to emulate.