The TM Forum Live! conference returned to Asia last week, and as many forum members might agree, it wouldn’t be a TM Forum event without Strategist and Catalyst Evangelist Tony Poulos getting into an onstage argument with someone. And that’s just what they got on the final afternoon of the event during a panel discussion on digital paradigm shifts in OSS/BSS solutions.
A hot topic raised on the panel was this: as technologies like NFV come into play, telcos have an opportunity to simplify their OSS/BSS structures, since the legacy complexity of those backend systems is a key obstacle for telcos who need to undergo some level of digital transformation to compete with agile software-based OTT competitors. However, the inherent dilemma in this scenario is that at some point telcos must make the decision to finally ditch that legacy complexity, which raises key questions:
Do they have the nerve to pull the plug? Are they addicted to legacy complexity? And if so, can they possibly compete in the coming digital ecosystem?
For Poulos, the answers were: no, yes, and no.
Poulos said that while he understood the necessity of porting some OSS/BSS complexity into hybrid systems to keep legacy functions running, the real problem is that this is not the first time the telecoms sector has had the opportunity to ditch legacy complexity – and every time they’ve failed to do so.
“My problem is that we’ve done it three or four times before, and we’ve never actually dumped complexity,” he said. “For example, mediation has been mediation since time immemorial, because we never made the switches simple. So we need to make a decision to either cut the complexity and not bring the legacy over, which is risky, or we start building new networks that eventually phases out that complexity. But you have to make the decision to do that. We can’t keep bringing the old stuff forward. We’re bringing that complexity into a world that shouldn’t have it.”
Håkon Jacobsen, VP of Asia Pacific at Amdocs Digital, argued that telcos simply are not in a position to make that kind of decision because of the business and market realities of the industry.
“It’s all about timing,” he said. “Everybody in the room here has a revenue stream, have shareholders they have to answer to, so we can’t just do that – it’s impossible. I’m not saying it won’t go that way eventually – it’s a matter of finding the right time and the right approach to swap out the current paradigm with a digital paradigm.”
Jacobsen added that it wasn’t fair to compare telcos to OTT players. “Can service providers become an Amazon or Google by gradually changing? I think that’s going to be a challenge as well. To become an Amazon you have to have a different DNA than what most service providers have today. Service providers need to find their niche – and there are many different positions they can fill in that ecosystem. But it is an unfair comparison because they didn’t start with legacy.”
Jacobsen also pointed out that digital players have complexities of their own – they just hide it better. “Amazon did something recently where they did a test where you had Netflix running in a data center, and they just shut off the electricity to the entire data center – not just one server –for a couple of seconds, then turned it back on and the stream took right up where it had left off, because they expect no disruption of service. If you believe the technology behind that is simple, raise your hand. That’s not simple. That’s hiding the complexity.”
Brij Bhushan Ravat, chief architect of OSS/BSS R&D at Ericsson, commented that both telecoms and OTT players have their own advantages and disadvantages, and that there’s no silver bullet to address them all.
“The people who start late always have the advantage of handling new technology. But the people who are there already have to undergo transformation, and they have to decide how soon to make that transformation,” he said. “Once they’ve started that journey, they have to look at how much it’s costing them and how long they can bear the cost of managing both legacy and new infrastructure.”
“You’re absolutely right,” responded Poulos, “but … what if we don’t do anything? What if we never make that decision?”
That matters, he argued, because we’ve already seen clear examples of entire industries having their business models disrupted by software companies with a new way of doing things – and the same thing is inevitably going to happen to telecoms, whether it’s Google’s Project Loon or Facebook’s UAVs or something else.
“Someone put up a quote [during a presentation] yesterday about how Edison didn’t invent the lightbulb by trying improve the candle,” he said. “We keep trying to improve our networks when someone’s going to come in and do something completely different. What happens if tomorrow somebody comes up with technology that allows 1,000 houses within ten kilometers to get a 10-Gbps link using public spectrum? No one is expecting that to happen, just like the taxi industry didn’t expect Uber to happen or the hotel industry didn’t expect Airbnb. It’s going to happen someday. So I’m saying maybe we as telecoms operators should start thinking about making something completely different, even if it’s separate from our existing networks to prepare for that.”
Poulos also said that the paradigm shifts promised by SDN, NFV and 5G won’t help much if telcos continue to cling to legacy systems.
“My concern is that we have to put a stake in the ground and say, that’s it – let’s stop with the legacy and try something completely new,” he said. “And there’s no telco in the world that’s got the balls to do that at the moment because the shareholders won’t allow it to happen.”
Take it to the board
Jacobsen of Amdocs disagreed, arguing that telcos are already having these discussions in the boardrooms, investing in next-gen technologies and exploring the economic justifications. “They’re not announcing that they’re spending millions of dollars on new things and new business models, but they are doing it. Operators are involved in projects that are looking at the future and trying to figure out how they respond to this.”
However, he admitted, “I am not sure that anybody, at least the big ones, willl be brave enough to jump first.”
Ericsson’s Ravat said that the ability to convince board members to make that radical shift depends on how much research you’ve done before you present your case. “Top management is never interested in change that doesn’t have any certain benefit. So it depends how much homework you have done, what risks you anticipate and what solutions you have to mitigate them. You have to be able to show them how long it will take, how much capital is required. Then you can at least have the conversation. But again, if you’re company that’s been around ten or 20 years, to change the pace is very difficult.”
Poulos added that board mentality is a key difference between telcos and companies like Uber.
“Uber is valuated in the billions of dollars – more than some telcos – and they still haven’t made any money, but their shareholders and their board members are not concerned about that at the moment because they’re looking at something different,” he said. “Our traditional telco shareholders are the Kodak companies – they don’t want to see a different way of running the business, and it’s very difficult to get them to change or to invest in a new system. I used to have to go and convince telcos just to buy a new billing system for $10-20 million, and it was near impossible, even though they knew they had legacy systems that one day were not going to work. Unless the mentality changes or the DNA changes, which I don’t see happening, somebody outside of the industry will come in and either do it, or they will buy the telcos, remove the rubbish and then make the changes.”
After all, he said, companies like Google and Facebook are already investing in data centers and backbone networks, and the last mile is the one missing piece in the puzzle.
“Google has tried building the last mile in the US with fiber, and they discovered it’s really difficult and expensive,” he said. “So what will they do next? Buy someone who’s already laid the fiber. They already have the biggest backbone network in the world. The only piece missing for total world domination is the last mile, and they’ll just buy someone. Or they’ll buy technology that will replace us. Maybe not Google, but somebody like Google.”
FULL DISCLOSURE: Tony Poulos is co-publisher of Disruptive.Asia