European Telecom Blog

If you’ve been in the telecommunications market longer than a decade you have witnessed the rise of the Chinese dragon.  Chinese firms have aggressively engaged every marketplace on the planet with a rulebook that is totally alien to incumbent vendors.  Aggressive pricing, support giveaways and a seemingly limitless supply of human capital are tactics used in every engagement. North America is now the last frontier.

The secret to Chinese success is a very simple idea;  A complex system is made up of cleverly connecting simple components together.  We can use our human capital to connect these discrete components together and build software around them  much less expensively than our western counterparts.  We will pass these cost savings along to our customers and undercut the competition.

This model has been wildly successful at gaining marketshare in Europe.

Customers are in the drivers seat as they can use the threat of Huawei or ZTE to dictate pricing to almost any other vendor.  I have been many sales meetings where a customer put an offer from a chinese vendor on the table and said:

“You’ve got some really interesting technology here.  Here’s the pricing from a chinese vendor, if you match it we an discuss this project further.”

So, price is more important than technology differentiators.  That’s a powerful statement and contrary to how the western vendors have positioned themselves.

This is a headache for the western(American/European) based telecommunications vendors.  Most of them have reacted by slashing prices, discounting aggressively or offering free services to match the financial terms that the Chinese vendors have set.

The 400Kg gorillas of the telecoms vendor world (Cisco, Alcatel, Ericsson) have many ways to counter this threat; Relationships, long contract cycles, deep pockets and of course brand name recognition, but these models aren’t sustainable in the long run.

So how can we change the game to our advantage?

As usual, we need to turn our attention to the next-generation technology companies for an answer. Some of these small technology firms have found a way to leverage their expertise to change the rules of the game by vertically integrating technologies into silicon.  This strategy is core to obviate the labor cost burden most western vendors have today while simultaneously adding more technology differentiators for Carriers to exploit.

So, price is more important than technology differentiators. That’s a powerful statement….

As stated above, complex systems are cleverly connected discrete components.  If these components can be integrated into silicon we gain a cost reduction by obviating the need for a bunch of people to “glue components together”.  Although the initial R&D cost is high, the follow-on manufacturing cost is significantly reduced.  This can result in a scenario where a company can compete with the chinese on price while maintaining a Wall St. margin expectation.

When components and software are tightly integrated together on silicon, a performance advantage emerges.  Consumers, businesses and Carriers have been clamoring for more bandwidth, cleverer packet handling, more services and lower cost.  Integrated Silicon, whether it’s in the form of ASICs (Application Specific Integrated Circuits) or FPGAs(Field Programmable Gate Arrays) is the foundation of ensuring network elements have the ability to provide all existing and future services at wirespeed,

There has also been concern regarding the software development practices of Chinese Vendors.  Issues ranging from disregard of software patents to blatant piracy have been reported.  This is only a threat of the software has code that is portable, i.e. can be run on any other machine.  When the hardware is vertically integrated and the software written specifically for this hardware then the threat of software appropriation is significantly reduced.

A number of companies have been very successful at this, even some of the 400Kg gorillas.  Here are a few examples of companies who have integrated silicon at the core of their product strategy:

• Juniper Networks – Internet Processor Family of ASICs
• Timetra, later Alcatel – MPLS and Ethernet chips
• Infinera - The Photonic Integrated Circuit
• Accedian Networks – integration of testing, measurement and service creation
• CyanOptics – Vertical Integration of Lambda, Ethernet and Transport technologies.

Vertical Integration of technologies is the only way forward for Western Technology companies.  If you run a high-tech company in the western hemisphere, leveraging advanced technology expertise to reduce costs, increase performance and protect Intellectual Property is the way to secure your future.

As always, I’d love to hear your comments, please let me know what your experiences are.

Related posts:

1. Network Management – Steps in the right direction
2. Telecom Vendor Challenges
3. Your gear is good? Prove it!

Telecommunications company Ericsson has initiated a dialog about the future, specifically about how we will communicate 10 years from now.  The name of the campaign is 2020, Shaping Ideas.  Most would take a cursory look at consider it just a marketing campaign and they would be doing themselves a disservice by not investigating further.

Above all else this campaign is a platform for discussion to shape the future of communications.  Thought-Leaders, visionaries and experts from all walks of life have been asked a few questions about how communications will shape the future; To quote directly from the campaign’s website:

What will life be like in 2020? What will consumers, enterprises and society want from communications in 2020? How will the world evolve? What habits and needs will people have? What kinds of technologies will they use to make life easier?

These interviews have been distilled into small videos that are available to see on the 2020 Shaping Ideas site.  The topics discussed range from eliminating poverty to the dramatic rise of women in the workforce, to the next generation and how communications technology will shape those trends.  According to the site there will be a new video every week.  A List of the videos so far:

• Jeffrey Sachs – Fighting Poverty with Connectivity
• Ian Pearson – Twenty-Four/Seven Connected
• Carlota Perez – Golden Age or Another Crisis?
• Johan Bergendahl – New Demands on the Telecom Industry
• Don Tapscott – Growing Up Digital
• Adrian Bowyer – Download, Adjust, Print!
• Anne Lise Kjaer – Ethical Business and Female Power
• Hans Rosling – On Our Way to a Stable World

I hope as the site evolves we will be able to see longer and unedited interviews as well as a place for those of us who are interested to participate in the discussion.  A moderated way of allowing public dialog between those if us interested and the people featured in the interviews could add another dimension to this endeavour.

When going through the site I was truck by the notion that Ericsson has designed this platform to have a life of its own.  This is a considerable risk as some opinions can (and probably will be) contrary to Ericsson’s vision of the future.  Obviously Ericsson has gone into this endeavour with their eyes wide open and are aware of the inherent risks.

The real question now is; Will Ericsson use these discussions to shape their own activity in this market?

To take advantage of new technologies we have re-done the look and feel of this blog.  The main driver behind this was to improve the usability as well as bring it in-line with the overall Protege corporate identity (the company that makes this blog possible).

The bulk of the work was done while most of the readers were not looking at the site. However, since people from all over the world read this site a few might have seen some strange pages,  graphics or other anomalies.  We apologize for this.

Not all of the work has been completed yet. There are a few tweaks that have yet to be implemented, which are cosmetic and won’t affect overall site performance.

Thanks for your patience and as usual, please comment below or use our contact form to let us know how we are doing or what we could be doing better.

This is one of the most clever messages I have seen in quite awhile. It’s about the publishing industry and the work they’ve gone through to understand their customers.

Just click play, read and be patient…..

I hope this gives you as much of a smile as it gave me.

In European hotels there is a big surprise at how much a days worth of Internet costs.  This amounts to gouging a captive audience and “Social Democracy Europe” should find it unacceptable, but it’s been happening for well over a decade.

In the states Wifi access in hotels, in my experience, is between $7 and $12 for the day and in a lot of cases it’s free, a significant difference to Europe.  Especially in the San Francisco bay area, if Internet isn’t free in the room then the hotel takes a hit in their core business.  It should be obvious what is important to the business traveller.

The issues of Internet in European hotels don’t stop with the charges.  Most of the time the connection is hobbled in a way to make it unusable.  More often than not there is some packet handling done by the internet provider that breaks VPN connections, therefore the reason I wanted the Internet in the first place is rendered useless.  Secondary to this but just as important is the fact that VPN-like technologies are also used in email clients (SSL for example) the these are also often broken.  Yet another reason that the very expensive Internet connection is useless.

Where are the consumer watchdogs that Europe is so proud of?

Since these VPN and email issues have surfaced relatively recently (in the last 2 years), I first thought it was an issue with my laptop or configuration but after polling various people I see that these issues are widespread.  This is further corroborated by seeing upset customers at checkout time in various hotels being charged €27 for an internet connection that didn’t work properly.

Some hotels have the gall to use this packet handling as a way to upsell the end-user with an option for “full VPN access” for a premium.  If I get this right, I purchase a service that doesn’t work properly and if I want to work properly then I must pay an extra fee.  Where are the consumer watchdogs that Europe is so proud of?

At least one hotel chain, Radisson, offers free WiFi to their guests and it has prompted me to look at a Radisson hotel before any others on the list.  If they have a free room and the rate is reasonable then I’ll stay there without hesitation.

The Mobile World Congress was full of ideas about apps, lifestyle, mobile workflows and processes that can be enhanced by mobility.  I was stunned and amazed at how little promotion there was about Ethernet and Mobile Backhaul.

In 2009 the lack of adequate Mobile Backhaul implementations were all over the press in the US and UK.  One would think that the participants at the MWC would be promoting their latest mobile broadband solutions with fanfare.  It seems that the Elephant in the room will remain uncomfortably ignored.

This should be (is) the paramount issue in Mobile Networking today and equipment vendors should be investing resources to come up with solutions.  All of the entertainment, applications and business solutions promoting data usage are useless if the bandwidth end-to-end is not there to support them.

Fortunately I was in a position to engage multiple Mobile Carriers and Telecommunications Vendors at the MWC.  Obviously the paramount concern around bandwidth has been answered with Ethernet in the backhaul but the devil is in the details.  Throwing bandwidth at the problem has proven time and time again to be a only a band-aid.

From the discussions I had with operators and vendors there were a few common themes and/or concerns.  Here they are in summary.

The single most important point Mobile Carriers are concerned about today is ensuring visibility into the service layers of their network.  In other words, they want to measure, monitor, trend  and manage their networks as accurately as possible.  Currently TDM/ATM services are used for backhauling and there are tools inherent to these services which provide a level of visibility and comfort to Carriers.  With the move to Ethernet in the backhaul, mobile carriers are loathe to give up these capabilities.

In many cases these carriers do not own their own wireline backhaul infrastructure.  These carriers could just trust their leased infrastructure to carry the traffic according to the SLAs they have contracted, however we know in this day of “elastic bandwidth” via IP/MPLS that SLA’s are easily compromised.

I can summarize this with a quote from one carrier I spoke with at the show who said,

I ordered a 20 Mbit ethernet service with a maximum latency of 10 milliseconds in October 2009 all under SLA.  I measured it last week and I was getting 7Mbit with a latency of over 40 milliseconds.  What I thought was a dedicated service was actually an MPLS based service with no guarantees, so we invoked the SLA penalties.

Active Service Monitoring

Standards based Ethernet OAM is the answer most vendors and operators have for ensuring active continuous monitoring of the network.  These technologies can be implemented in a way that the operator would know of any issues in the network, most likely, before a customer notices any problems.  Such an implementation is necessary when actively monitoring a mobile network.

What I thought was a dedicated service was actually an MPLS based service with no guarantees, so we invoked the SLA penalties

However, the devil is in the details.  Ethernet based OAM requires a lot of processing horsepower when trying to actively monitor thousands of base-stations simultaneously.  Existing routers and switches in the network aren’t (yet) architected for such a function.  A number of carriers have proven, with catastrophic results, that their routers and switches aren’t able to handle such a load.

Furthermore and probably the most important point, Ethernet OAM only measures Ethernet.  All of the services running over these phones are either IP based today or will be IP based in the future, even voice.  Carriers I have spoken with have expressed a wish to monitor the IP and IP service layers as much, if not more, than the transport layer.

Performance Management

One-way measurements is at the top of the list of Carriers wishes for service monitoring over Ethernet based networks.  While measurements on latency, litter and delay are all necessary Ethernet currently only measures round-trip performance.  This limitation is one of the main reasons why mobile backhaul has taken so long to accept Ethernet as a transport technology.

In order to provide one-way measurements there needs to be some way of handling Ethernet in a synchronous-like fashion.  Since Ethernet, by definition, is an asynchronous technology, this is no easy feat.

Standards bodies are reviewing all of the potential methods to make synchronous-like behaviors possible in Ethernet (1588v2, SyncEth) but we’re at least 1 year away from a real solution.  That doesn’t address the fact that the millions of installed Ethernet ports in carriers networks worldwide lack the hardware to take advantage of any new technological advancements.  I am not so sure that 1588 v2 or Synchronous Ethernet, in their current designs, will ever see mass adoption.

A number of carriers have proven, with catastrophic results, that their routers and switches aren’t able to handle such a load

Another equally important aspect of performance management is to use the measurements for trending purposes.  Many issues in a network aren’t visible right away but rather creep-up over time.  The ability to save measurements over-time and then apply policies and rulesets for interpretation can yield another perspective of the health of the network.  This is especially important when the transport of the backhaul network is heterogeneous to highlight any long-term degradations that can be masked by digital services.

Traffic Condiditoning

When a service traverses multiple transport/physical technologies a number of issues can (and will) arise.  These issues can manifest themselves as increased latency, jitter or re-transmission in the case of IP/data services.  These issues cause degradation of service, inefficient bandwidth usage and frame-loss.  One should also remember that there are differences between Fast Ethernet and Gigabit Ethernet that will give headaches if not allowed for.

These issues aren’t  exclusive to media or protocol conversion but can also be traced to inadequately engineered hardware.  Some base station vendors (who shall remain nameless) might be good at building radios but provide less than acceptable ethernet interfaces for backhaul.  Then we must take into account that many mobile carriers around the world have many types and brands of base stations in operation.

Carriers are now asking for backhaul solutions that can condition the traffic between the wireless and wireline networks (i.e. backhaul) to ensure that none of the aforementioned artifacts (jitter, delay, disruption) are minimized, if not eliminated altogether.  Conditioning of traffic cannot be limited to the transport or Ethernet layer.  The IP and IP service layers must also be conditioned to transit the network as efficiently as possible.

In Conclusion

The MWC was a fantastic opportunity to talk with a number of carriers and vendors who all know that there is an issue but I have yet to see anyone who has a complete end-to-end solution.  Some vendors have great radios, some vendors monitor excellently, and some vendors offer a cost efficient way of backhauling.  As has happened many times before a very clever network engineer somewhere around the world will come up with a way to solve these problems elegantly without going way over budget and ensuring a consistently good revenue stream.

Are you that engineer ?

Related posts:

1. iPhone crushing Infrastructure
2. Are Mobile Networks ready for Ethernet?
3. UK Mobile traffic set to explode?

I’m currently in Barcelona at the Mobile World Congress.  I didn’t expect this show to be very well attended this year and on Monday I was beginning to think it might be a waste of time to be here. Tuesday and Wednesday proved me wrong and I’ve been pleasantly surprised.  The amount of foot traffic, even in the smaller halls, is significant.

The buzz this year has been around mobile applications.  The amount of people in this space is mind boggling.  How applications will affect our lifestyle was apparent on every 2nd stand.  One theme I saw repeated over and over again was “How you can be a journalist armed only with an iPhone”.

This explains the dearth of updates recently as preparing and working a show such as this takes a lot of time.

It’s now time to break down the Accedian stand and try to find a beer so I’m cutting this post short.  I hope to have a larger post covering other aspects of this year’s show done by this weekend.

Related posts:

1. At the Carrier Ethernet World Congress
2. UK Mobile traffic set to explode?
3. Merry Christmas!