13/10/2017 Cloudification will mean upheaval in telecoms

Cloudification will mean upheaval in telecoms
It will allow startups to challenge incumbent operators

Print edition | Business Apr 12th 2017

IN THE computing clouds, startups can set up new servers or acquire data storage
with only a credit card and a few clicks of a mouse. Now imagine a world in which
they could as quickly weave their own wireless network, perhaps to give users of a
fleet of self-driving cars more bandwidth or to connect wireless sensors.

As improbable as it sounds, this is the logical endpoint of a development that is
picking up speed in the telecoms world. Networks are becoming as flexible as
computing clouds: they are being turned into software and can be dialled up and
down as needed. Such “cloudification”, as it is known, will probably create as much
upheaval in the telecoms industry as it has done in information technology (IT).


https://www.economist.com/news/business/21720670-it-will-allow-startups-challenge-incumbent-operators-cloudification-will-mean-upheaval?fsrc… 1/4

Charlotte Gainsbourg explores the hard to use efficiently. which is In “Rest”. Telecoms networks. which stand for “network-functions https://www. each in charge of a different function. Equipment-makers’ booths were plastered with diagrams depicting new technologies called NFV and SDN. One is largely unregulated. if not years.com/news/business/21720670-it-will-allow-startups-challenge-incumbent-operators-cloudification-will-mean-upheaval?fsrc… 2/4 . called 5G. as the smartphone boom ends in many places and prices of mobile-service plans fall. are a collection of hundreds of different types of computers with specialised chips. The next generation of wireless technologies. “You cannot turn radio See all updates towers into software. The shift was evident at the Mobile World Congress in Barcelona in February. The data centres of big cloud-computing providers are packed with thousands of cheap servers.13/10/2017 Cloudification will mean upheaval in telecoms inRead invented by Teads Latest updates IT and telecoms differ in important respects. powered by standard processors. the Why the North American west is on fire THE ECONOMIST EXPLAINS other overseen closely by government. But powerful forces are pushing for change. requires more flexible networks. a consultancy. says Stéphane Téral of IHS Markit.economist. Yet the most important factor behind cloudification is economic. the current way of building networks will hit a wall as traffic continues to grow rapidly. a market-research firm. America turns its back on refugees Computing capacity is theoretically GRAPHIC DETAIL unlimited. And telecoms sharp edges of grief PROSPERO networks are more deeply linked to the physical world. by contrast. let alone a new network. On the technical side. to set up a new service.” says Bengt Nordstrom of Northstream. It takes months. unlike radio spectrum. Mobile operators badly need to cut costs. from text messaging to controlling antennae.

If the history of cloud computing is any guide. storage and networking. are developing software to run networks on off-the-shelf servers. At the same time. chief technology officer of Nokia. Mavenir wants to work with underdog operators “to bring the incumbents down”. America’s largest operator. it will allow network operators to use cheaper off-the-shelf gear—much as the rise of Linux. By the end of 2017 it wants to have more than half of its network virtualised. Spin me up. which currently form a big chunk of their revenues. have begun consolidating these “baseband units” in a central data centre. argues Marcus Weldon. Both Affirmed Networks and Mavenir. These usually plug directly into nearby computers that control the radio signal. Cloudification may also create an opening for newcomers.economist. “Instead of sending a technician. Many parts of a network will not get virtualised. But some operators. it can now add to the network simply by downloading a piece of software. They turn specialised telecoms gear into software in a process called “virtualisation”. And there will always be a need for specialised hardware. Still. such as processors able to handle data packets at ever faster speeds. they will have to beef up their software business.13/10/2017 Cloudification will mean upheaval in telecoms virtualisation” and “software-defined networks”. Even more surprising for a firm with a reputation for caution. Alex Choi. In areas where it has already upgraded its systems. If widely adopted. an open-source operating system. they are not letting it show. led to the commoditisation of hardware in data centres a decade ago. They will make less money from hardware and related maintenance services. wants “radio” to become the fourth component of cloud computing. its chief executive.” says Andre Fuetsch. says Pardeep Kohli. we can just spin up a virtual machine. But this is also starting to happen at the edges of networks—the antennae of a mobile network. Nokia and other telecoms-gear-makers will have to adapt. after computing. If equipment-makers are worried about all this. for instance. AT&T The carrier that has pushed cloudification furthest is AT&T. AT&T has released the program that manages the newly virtualised parts of its network as open-source software: the underlying recipe is now available free. Affirmed already claims 50 customers. https://www. AT&T’s chief technology officer. Many networks have already been virtualised at their “core”. such as SK Telecom in South Korea.com/news/business/21720670-it-will-allow-startups-challenge-incumbent-operators-cloudification-will-mean-upheaval?fsrc… 3/4 . SK Telecom’s chief technology officer. the central high- capacity gear. two American firms.

computing power—to provide cheap mobile connectivity. As the case of AWS shows. a potential Amazon Telecoms Services does not have to spring from the telecoms world. However things shake out. fibre networks. But carmakers. the e-commerce giant’s fast-growing cloud-computing arm. Facebook. just like IT before it. According to John Delaney of IDC. is behind the Telecom Infra Project. which send calls and data via Wi-Fi hotspots.com/news/business/21720670-it-will-allow-startups-challenge-incumbent-operators-cloudification-will-mean-upheaval?fsrc… 4/4 . Amazon itself is a candidate. using the mobile network as backup. another effort to open the network infrastructure. Startups such as FreedomPop and Republic Wireless already offer “Wi-Fi first” mobile services.economist. This article appeared in the Business section of the print edition under the headline "Telecomulonimbus" https://www. which newcomers will still have to buy. operators of power grids and internet giants such as Facebook could have a go: they are huge consumers of connectivity and have built networks. for instance. But a clever entrepreneur may find ways to combine assets—unlicensed spectrum. the big barrier to cloudification is likely to be spectrum. expect the telecoms world to become much more fluid in the coming years.13/10/2017 Cloudification will mean upheaval in telecoms the telecoms world may also see the rise of new players in the mould of Amazon Web Services (AWS). a research firm.