Why is Transformation so Difficult?

By: Mark Cummings, Ph.D.

It has been many years now since the concept of telecommunications transformation emerged, and yet we seem to be having a hard time getting there.  Looking at the last time such a fundamental change was made leads to the conclusion that to achieve transformation, telecommunications companies (Telcos) need to learn to do business with small innovative technology start-up companies and to use business cases to help all portions of their companies to understand the need to implement the resulting innovative technology.

There are forces driving the Transformation effort.  As early as 2012, a senior executive of Deutsche Telekom stated publicly that the current methods of operating and orchestrating Telco networks are resulting in a non-linear increase in operating costs.  This increase in costs along with pricing pressure has been cited the reason for dramatic reductions in dividends by many Telcos including Orange and Deutsche Telekom.  About the same time SDN (Software Defined Networking) and NFV (Network Function Virtualization) appeared.  As Google, Facebook, and Amazon started to combine SDN and NFV with their Cloud technologies, some Telcos started studying how they operate and orchestrate their networks.

AT&T appears to have been the most prominent early advocate of transformation motivated by a market capitalization perspective.  Senior AT&T executives started speaking publicly about Transformation and AT&T quarterly reports began to have prominent sections dedicated to transformation.  Early in this process, AT&T tied transformation to virtualization. Virtualization is the foundation for end-to-end orchestration.  It is essentially moving from a concept of networks as a bunch of physical devices tied together in a particular way, to a software-centric view where the network is a collection of software elements cooperating to deliver a service.  Thus, in December of 2017, a broad industry consortium ( reduced it to, “end to end orchestration to automate network operations enabling real time service composition.”

What history has taught us

So, the question is, after more than five years, where is the industry?  The answer is not very far.  To understand why, it is helpful to look back at the last time Telcos had to make a change of similar significance.  This software-centric orchestration to provide real time automation instead of hooking up boxes, is a change of the order of magnitude, as the move from mechanical switches to electronic switches.  It is helpful to look at what that entailed from a technical and business perspective so we can learn from it.

In the mechanical switching era there were buildings in every neighborhood; two or three stories; covering a good part of a city block filled to the ceiling with mechanical switches.  The noise was so great that staff had to wear ear protection.  These buildings were called Central Telephone Exchanges and corresponded to the exchange portion of the telephone number.  The switches were electrical mechanical.  That is, electrical (electrical motors, only mechanical logic) not electronic (electronic logic, storage, etc.).  The skill set required to operate these networks in the mechanical era was a combination of mechanical engineers, mechanics, real estate managers, and electrical engineering.


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