1. Economics of Networks and Data
Centers: the Future of
Communications and Computing
Robert B. Cohen, PhD.
April 24, 2013
bcohen@bway.net

2. The Current Telco Dilemma

3. Telcos are focusing on Cost
• ARPU is flat and there is little chance for
growth.
• To survive, telcos need to change the cost
curve from what is forecast.
• Software Defined Networking offers a way to
do this.
– It provides for better management since the
control plane and the data plane are separated.
– It offers greater elasticity and surge capacity.

4. Google’s Network Traffic and Cost Per
Bit

5. What the Google Network Shows
• Volume has run up from about 1-2% of total
Internet traffic (500 exabytes in 2009 or 16
exabytes in 2013) to about 6% of the total in
2012.
• With SDN, the network is far more elastic and
expansible.
• At the same time, key characteristics of the
network make it easier to manage and to add
new functionality.

6. Network Functional Virtualization
Scalability is the main
benefit. With easier
management, the
sought after goal of
expanding a network
with declining costs
becomes possible.

7. A Software Defined Network
Network Operating System
OPEN
INTERFACE TO
HARDWARE

8. What does this mean for Future
Networks
• Economics of Networks shifts from having rising cost
curves as networks scale to having flat or slightly
declining costs (due to scale efficiencies, improved
control mechanisms, largely due to software).
• With cheaper costs and easier management, new
features will be easier to add to networks. An ability to
burst, an ability to quickly add new features. These
should change the competitive landscape for certain
types of services (Amazon and Netflix (?) stream video
into the home), and change the economics of media
and services.