How to create fit-for-purpose wholesale data services
 

How to create fit-for-purpose wholesale data services

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Keynote presentation given at Asian Carriers’ Conference in Cebu, Philippines on 3rd September 2013. Describes how to create assured cloud services.

Keynote presentation given at Asian Carriers’ Conference in Cebu, Philippines on 3rd September 2013. Describes how to create assured cloud services.

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  • Small cellsHome workingEducationOTT voice and video delivery partnerships
  • I have four simple messages from this presentation
  • We will look at some of the potential service offerings.
  • Every network access involves creating value by substituting for something less beneficial or more costlyThe alternative could be another online or digital experience; it does not have to be offlineDoing it well means making good experiences common, and bad ones sufficiently rare.Asymmetry between success modes and failure modes.Alice defines the whole value of this substitution; not the operator
  • Excess risk has to be (self-)insured
  • TDM for voice had highly-utilised network cores, and low peak-to-mean at the network edge
  • TDM for voice had highly-utilised network cores, and low peak-to-mean at the network edge
  • TDM for voice had highly-utilised network cores, and low peak-to-mean at the network edgeEveryone made money!
  • However, TDM is not a suitable basis for delivering bursty data applications, because it leaves the network empty most of the time. When we switched to packet data broadband services, we gained resource efficiency through statistical multiplexing gain.
  • If it doesn’t work, Bob complains or churns.
  • TDM for voice had highly-utilised network cores, and low peak-to-mean at the network edge
  • at the network edge, where there is high contention between flows.
  • We will look at some of the potential service offerings.
  • TDM for voice had highly-utilised network cores, and low peak-to-mean at the network edge
  • Run the network hot, and deliver good experiences
  • TDM for voice had highly-utilised network cores, and low peak-to-mean at the network edge
  • TDM for voice had highly-utilised network cores, and low peak-to-mean at the network edge

How to create fit-for-purpose wholesale data services How to create fit-for-purpose wholesale data services Presentation Transcript

  • How to create fit-for-purpose wholesale data services Martin Geddes Martin Geddes Consulting Ltd © 2013 All Rights Reserved This presentation was given as a keynote at Asian Carriers’ Conference in Cebu, Philippines on 3rd September 2013.
  • Consultancy on the future of telecoms. Business model innovation. Technology & product ideation. Organisation development. Public & private workshops. I work with smart people on the hard stuff.
  • 1980s Digital fixed voice services Evolution of wholesale telecoms 1990s Mobile voice and messaging Broadband data services 2000s ? 2010s What’s next?
  • Next ten to twenty years? Packaged cloud services The growth is in new kinds of managed cloud services.
  • And by ‘packaged’ you mean? • Available when and where you need it • At a cost you can afford • Right quantity and quality • Easy to consume
  • Key messages
  • Wholesale voice services historically have a sustainable business model 
  • Today’s wholesale broadband data services are not fit-for-purpose for future applications needs. 
  • Wholesale telecoms businesses need to fundamentally rethink their service offering for the cloud. 
  • This requires new fit-for-purpose cloud services with a sustainable business model. 
  • There is a profitable future for those who take this path. 
  • Digital fixed voice services Mobile voice and messaging Broadband data services Packaged cloud services 1980s and 1990s 2000s & 2010s 2010s & 2020s
  • 2010s & 2020s Fitness-for-purpose Purpose-for-fitness Fitness-for-purpose 1980s and 1990s 2000s & 2010s The thread that runs through this presentation is ‘fitness-for-purpose’ Which we’ve lost, and need to regain.
  • 2010s & 2020s Packet-based statistical multiplexing (using IP) Time-division multiplexing Best of both worlds! 1980s and 1990s 2000s & 2010s These changes are intimately tied to our technology choices, and how we share the network’s fixed and finite resource.
  • How do networks create value?  There are some basic things we need to get sorted out before we begin.
  • Meet Alice and Bob It’s the end users who put the money into the system, and decide whether we are creating value worth paying for. Alice and Bob are end users.
  • Alice is a sales woman Alice Smith Sales Director alice@widgetcorp.com 555-125-9876
  • Bob is her customer Mustn’t run out of widgets!
  • Alice wants to communicate with Bob I want to meet Bob to sell more widgets!
  • Alice doesn’t have to buy a telecommunications service Slow and expensive 
  • Alice has a choice of means of communication Email Post Phone
  • Alice ‘hires’ a telephone call to reach Bob Quick and cheap 
  • This is a ‘task substitution’
  • There is a chain of delivery Retail origination carrier Retail termination carrier Wholesale delivery carrier
  • Wholesale holds the value chain together
  • Role of wholesaler YOU YOUR CUSTOMER YOUR SUPPLIER (Remember the audience for this presentation is wholesale carriers and their suppliers.)
  • Money passes down this chain Retail origination Retail termination Wholesale delivery $ $ $ $ $ $ PROFIT
  • Profit depends on four factors BENEFIT COST RISK INSURANCE Are these big or small? Excess risk has to be (self-)insured.
  • TELCOSEND USER Benefits and Costs BENEFIT Made the sales call Revenue COST Price of phone call Tin, operational expenses
  • There are risks…
  • TELCOSEND USER Risks RISK Didn’t make sale SLA breach Unplanned capacity upgrade Time wasted Reputational loss Frustration Churn Regulatory non-compliance fines
  • TELCOSEND USER Insurance Second carINSURANCE Contingency fund (lawsuit, PR) If Alice can’t rely on her communications service delivering a good enough experience, she needs a Plan B – and has to carry all the associated costs. For a corporate user, that could be having multiple access providers; for a consumer, you need to buy a DVD in case Netflix doesn’t work. Telcos spend a lot of money dealing with screw-ups.
  • TELCOEND USER The whole picture BENEFIT COST RISK (failed call) Made the sales call Price of phone call Didn’t make sale Second car Revenue Tin, opex SLA breach or churn Unplanned capacity upgrade, fines Time wasted Reputational loss INSURANCE Contingency fund (lawsuit, PR) Frustration Lots of (potentially hidden) costs!
  • Who profits and why? CUSTOMER SUPPLIERWHOLESALER BENEFIT COST RISK END USER END USER INSURANCE Who & how big?
  • How is the role of wholesale changing? BENEFIT COST RISK INSURANCE Voice Broadband Cloud services
  • Wholesale voice services 
  • What are the risks? Retail origination carrier Retail termination carrier Wholesale delivery carrier
  • End user risk Alice only pays her telco for a successful phone call $
  • Retail telco risk passed to wholesaler Retail telco only pays wholesaler for a successful phone call $
  • Wholesale telco risk is transferred Wholesaler only pays terminating network for a successful phone call $
  • The delivery technology was (and often still is) TDM circuits. No overlaps or collisions! This isolated flows and assured end user outcomes – audible voice calls.
  • Composable value chain with SLAs Retail origination carrier Retail termination carrier Wholesale delivery carrier Predictable application outcome
  • How did we do? Retail origination carrier Retail termination carrier Wholesale delivery carrier     
  • TELCOSEND USERS Why? BENEFIT COST RISK INSURANCE                 Low risk!
  • Predictable experience • MOS or PESQ score model • Strong understanding of relationship to network properties
  • Predictable capacity requirement Voice erlangs
  • VOICE SUMMARY Telcos get paid for delivering fit-for-purpose voice services
  • VOICE SUMMARY Wholesaler mitigated both end user QoE risk and supply chain capacity & SLA risk
  • VOICE SUMMARY Resource efficiency Flowefficiency LOW HIGH LOW HIGH TDM (core) TDM (edge) Very profitable wholesale business! How hot can we run the network? How well can we deliver the flows within acceptable loss and delay?
  •  Broadband data services
  • Resource efficiency Flowefficiency LOW HIGH LOW HIGH MULTIPLEXING TDM For bursty data, TDM is highly inefficient, ev en if it is very effective
  • So we changed technology… Time-division multiplexed circuits Packet-based statistical multiplexing TELEPHONY BROADBAND
  • Lost phase and flow isolation! We gained higher resource efficiency, but at the cost of losing flow efficiency
  • What a great deal for Alice and Bob! COST COST Statistical multiplexing gain makes everything cheaper!
  • What a great deal for Alice and Bob! BENEFIT BENEFIT So many more rich applications to choose from!
  • But… There’s a catch!
  • What is the effect on Alice?
  • Alice now ‘hires’ a web conferencing system to reach Bob Richer, modern and more effective
  • This is a ‘task substitution’
  • End user risk Alice bought ‘bandwidth’ (speed and mechanisms like 4G and FTTH) $
  • ISP is blind to Alice’s needs No visibility of application outcomes $
  • Retail telco risk passed to wholesaler Retail telco buys ‘bandwidth’ transit. Has no means of expressing needs for application outcomes. $
  • Wholesale telco risk is transferred Wholesaler connects to receiving ISP, but is carrying effective risk of application failure $
  • And what about Bob? His ISP has no visibility of whether the service is delivering a good outcome.
  • What are the risks? Retail origination carrier Retail termination carrier Wholesale delivery carrier QoE RISK QoE RISK PLAN B PLAN B
  • What are the risks? Retail origination carrier Retail termination carrier Wholesale delivery carrier Churn Churn
  • What are the risks? Retail origination carrier Retail termination carrier Wholesale delivery carrier Capacity upgrade risk Capacity upgrade risk
  • And the wholesaler? Incentivised to find cheapest means of delivering ‘bandwidth’, regardless of impact on user or rest of supply chain
  • Current wholesale data business is structured in an unhelpful way. 1.Has become disconnected from the value end users are seeking. 2.This misallocates cost and risk.
  • Why? Broadband is like a statistical ‘game of chance’
  • There price we had to pay… Time-division multiplexed circuits Packet-based statistical multiplexing TELEPHONY BROADBAND Game of chance was easy Game of chance is hard
  • Can’t compose services & create strong SLAs Retail origination carrier Retail termination carrier Wholesale delivery carrier Unpredictable application outcomes
  • Resource efficiency Flowefficiency LOW HIGH LOW HIGH HEAVEN How to think about the problem HELL Network feels empty to users, even when full and making lots of money. Network feels congested even when no other customers around
  • Resource efficiency Flowefficiency LOW HIGH LOW HIGH IP (access network) Access network has poor QoE and utilisation
  • Resource efficiency Flowefficiency LOW MEDIUM LOW HIGH HIGH IP (access network) HEAVENHEAVEN Heaven gets further away Over-provision to resolve contention problems
  • Resource efficiency Flowefficiency LOW MEDIUM LOW HIGH HIGH Current approaches are infeasible to schedule at high load IP (access network) Can’t assure applications with strong scheduling requirements
  • Resource efficiency Flowefficiency LOW MEDIUM LOW HIGH HIGH IP (access network) Network collapses Can’t run network ‘hot’
  • SUPPLY CHAINEND USER Benefits, Costs and Hazards RISK Significant High INSURANCE Significant High
  • BROADBAND SUMMARY Telcos offering purpose-for-fitness data services
  • BROADBAND SUMMARY Wholesaler is exacerbating user QoE and supply chain cost risks
  • Resource efficiency Flowefficiency LOW HIGH LOW HIGH IP (access network) IP (core) Wholesale biz constrained by weakest link BROADBAND SUMMARY
  • How did we do? Retail origination carrier Retail termination carrier Wholesale delivery carrier     
  • TELCOSEND USERS Why? BENEFIT COST RISK INSURANCE                 Lots of risk due to application performance hazards.
  • Opportunity! Leaves a lot of potential value unrealised.
  •  The re-think
  • Effective task substitution is very sensitive to QoE hazards
  • BENEFIT BENEFIT Benefits to the user of both methods are similar
  • COST COST POTENTIAL PROFIT POOL The costs are very different
  • COST COST ACTUAL PROFIT POOL RISK Hazards to the user take value and profit out of the system INSURANCE
  • Retail origination Retail termination Wholesale delivery $ $ $ $ $ $ PROFIT Operator profit is also very sensitive to the QoE hazards RISK RISK
  • Operator cost risks Our experience is that these hazards are poorly modelled in broadband networks (if at all) SLA breach or churn Unplanned capacity upgrade
  • Summary so far BENEFIT COST RISK 1. There is value in effective task substitution 2. There are associated benefits, costs & risks 3. It matters how big these are, and how they are allocated
  • Where do these come from? RISK
  • Resource efficiency Flowefficiency LOW HIGH LOW HIGH QoE hazard Cost hazard
  • Resource efficiency Flowefficiency LOW HIGH LOW HIGH Requires lots and lots of good coincidences & very few bad coincidences HEAVEN
  • Resource efficiency Flowefficiency LOW HIGH LOW HIGH HEAVEN By tipping the odds through effective scheduling
  • Summary so far Failed call Plan B SLA breach or churn Unplanned capacity upgrade TELCOSEND USER Resource efficiency Flowefficiency LOW HIGH LOW HIGH HELL HEAVEN 1. Networking is a statistical game of chance 2. That schedules resources and determines application performance 3. That controls the QoE and cost hazards for both the user and network operator
  • How can we get the best of TDM and IP? 1. How can we increase benefits (substitute for more valuable tasks)? 2. How can we lower costs by running networks hotter? 3. How can we quantify, mitigate and allocate hazards appropriately?
  •  Cloud services
  • The cloud economy Different demands to those of voice and today's broadband. Understanding the nature of future demand, and how to create appropriate supply, is the key to future success. People want to achieve higher-value task substitutions: teleworking, education, healthcare. These require dependable networks and application outcomes.
  • What has to change? NOW FUTURE PURPOSE-FOR- FITNESS FITNESS-FOR- PURPOSE
  • The Cloud Economy We must assure application outcomes RISK INSURANCE
  • What do we need? “Application Erlangs”
  • Alice ‘hires’ a Lync application to reach Bob
  • What has to change? NOW FUTURE SUPPLY-PUSH Selling commodity bandwidth inputs DEMAND-PULL Selling differentiated application outcomes
  • End user risk Alice buys an assured Microsoft Lync cloud service $
  • What has to change? NOW FUTURE MONOSERVICE NETWORKS Weak exploitation of stat mux trades POLYSERVICE NETWORKS Strong exploitation of stat mux trades
  • Multiple classes of service Economy Standard Premium Airlines offer multiple tiers of service, based on comfort, rather than arrival time (bar a bit of queue-jumping at check-in). In networks, the tiers of service are based on how much you can time-shift traffic.
  • Resource efficiency Flowefficiency LOW HIGH LOW HIGH IP (access network) Run access network hotter and also get good QoE IP (access network)
  • Retail telco risk passed to wholesaler Retail telco buys assured transit to its final destination $
  • What has to change? NOW FUTURE UNASSURED DELIVERY Qualily and cost unbounded ASSURED DELIVERY Quality and cost bounded
  • Wholesale telco risk is transferred Wholesaler buys assured termination suitable for Lync $
  • What has to change? NOW FUTURE TRANSPORT SERVICES Locally optimised delivery LOGISTICS SERVICES Globally optimised supply chain
  • New value chain YOU YOUR CUSTOMER YOUR SUPPLIER Although these might be new market entrants coming from a cloud and distributed computing angle…
  • What has to change? NOW FUTURE WEAK CONTRACTS Boundaries misallocate risk and cost STRONG CONTRACTS Risk quantified and costed end-to-end
  • Quality Transport Agreements Strong and composable statistical delivery contracts
  • Profit! 
  • Example services: Bulk content cost reduction $ $ $ BULK DATA DELIVERY Bulk content providers are paid to mark time-shiftable traffic to reduce peak loads and network cost for ISPs. Wholesalers are ‘market makers’.
  • Example services: Small cell assured backhaul ASSURED BACKHAUL $ $ 3GPP standards were all built for a TDM world. Things are not working out that well moving to IP. Quality-assured IP backhaul would restore the necessary properties for small cells to work well.
  • Retail origination carrier Retail termination carrier Wholesale delivery carrier      CLOUD SUMMARY
  • CLOUD SUMMARY Telcos get paid for delivering fit-for-purpose application services
  • CLOUD SUMMARY Access suppliers and customers fully exploit statistical multiplexing
  • CLOUD SUMMARY Wholesaler becomes digital logistics supply chain manager
  • CLOUD SUMMARY BENEFIT COST RISK INSURANCE     New ‘application erlang’ wholesale business model
  • Think logistics, not transport It’s all about the trading space, matching supply to demand, offering a variety of quantities, qualities and cost, and doing it over multiple timescales.
  • www.martingeddes.com Learn more, subscribe to my newsletter.
  • Martin Geddes mail@martingeddes.com Get in touch to do business.