Metro Fiber Networks Being Bulit Out in U.S.- Competitive Carriers take the lead

A recent WSJ article – The Fiber-Optic Networks Regain Some Glow,- notes that there have been 14 acquisitions in the metro fiber industry this year alone and 45 since the fiber market began its turnaround in 2006. It states, “The deals have turned a market that once had many small participants and a few giants into one made up of a handful of regional and national players. Analysts say the consolidation has helped stabilize the prices fiber owners can charge customers like banks, phone carriers and universities that lease their networks.”

What we found most remarkable about this and similar articles, is that we’ve never heard of the new breed of fiber facilities based telcos Zayo Group, founded in 2007, was reported to be one of the largest with networks in 27 states and Washington DC. They have acquired 15 smaller fiber optic companies in the short time it has been in existence.

In Metro Route Mileage Leaders for Competitive Fiber Operators, Rob Powell of Telecom Ramblings lists the top 20 metro fiber CLECs, ranked by total mileage for metro loops and laterals, but NOT counting long haul links. To no one’s surprise, Level 3 leads the pack with 27,000 metro fiber miles, followed by TW Telecom with 21,000 miles.  Mr. Powell states that the list does not include the incumbents (e.g. AT&T, Verizon) and most cable operators (e.g. Comcast, TW Cable, others) – many of whom would obviously be at the top. Hence, this lisitng should be thought of as competitive metro fiber. 

We were also intriqued by FiberLight’s December 18th announcement of a new initiative to drive its fiber even deeper into its 21-market footprint .  The company is in the process of identifying an additional 8,000 near-network buildings to serve along the 4,200 route mile footprint it owns and operates.  That’s a lot of new buildings that will get fiber based network access!
Can CLECs and independent telcos have a signivicant impact on the percent of buildings in the U.S. that have lit fiber access?   In 1998 it was about 7% and we heard it was only 15% in 2008.  The key assumption so many optical networking start-ups made was that fiber to the building would happen in a big way in the immediate future.  Will 2011 be the year it does?  If so, neglected business customers will have many more high bandwidth services, especially high quality video conferencing/ video presence.
To read the entire article + comments, please visit:

Network provider benefits and options in providing cloud computing services

Abstract:

Recently, we’ve written about cloud network infrastructure and the need for a UNI and (multiple) NNIs.  For more on that topic, please visit:

http://techblog.comsoc.org/2010/12/10/whats-the-uni-nni-and-network-infrastructure-needed-for-cloud-computing

In this article we look at telco benefits (both internal and external) of deploying cloud services as well as a cloud computing services model.  We believe that cloud computing offers great potential for telcos to participate in the growth of the enterprise, government, and consumer ICT markets, which are currently dominated by IT vendors (IBM, Cisco, Oracle, etc) and Internet software companies (i.e. Google, Amazon, Facebook, Yahoo, etc).  With a cloud computing services model, service providers can insert themselves into the value chain by redefining their roles to expand beyond connectivity and provide Web-based application delivery services.

Benefits of Cloud Computing to Network Provider:

A.  ITU-T FG Cloud Position

The benefits of cloud computing could  be considered from several different perspectives, including network/ service providers, partners and users.  The ITU-T FG-Cloud sees three potential benefits of cloud computing from a telecom/ICT provider perspective: 

  1. To consider the cloud delivery model as a converged platform to deliver IT and communication services over any network (fixed, mobile and worldwide coverage) and used by any end user connected devices (PC, TV, Smart Phone, M2M, etc).
  2. To deliver a rich set of communication services (voice & video call, audio, video & web conf, messaging, unified communication, content creation, workspace, broadcasting…) according to cloud multi-tenant consumption based usage model and creating mashups with Web 2.0 collaborative services for “Communication and Collaboration as Services” CaaS.
  3. To consider network services (L2-L3 connectivity , VPN and L4-L7 network services) as smart pipes “high-grade network” for cloud services transport and cloud interconnection (inter-cloud) in order to guarantee secure and high performance end-to-end quality of service QoS for end users (considered as an important key differentiator for telecommunication players.

In addition to these main three benefits , some other benefits can be also considered from Service Provider and user perspectives:

  • Cost saving: Cloud providers can host software at a much lower cost than enterprise customers can themselves. Virtualization and provisioning software lets them efficiently allocate computing resources, lowering their cost of hardware. Cloud computing service providers can locate facilities at low cost locations, provisioning which cannot be duplicated by most enterprises. There are low up-front costs. In fact, other than the costs for a user terminal (personal computer or smart phone), web browser and network capacity for each end-user, there are no software or hardware costs that customers need to pay.
  • Improve Total Cost of Ownership & De-Risk: Investments are shifted from the upfront Capital Expense (CAPEX) to Operational expense (OPEX) for consuming IT resources. Increases capacity utilization of IT assets. User terminals, servers, or software, which is not needed in-house (Onsite), can be offered up for outsourcing (Online), and equipment not fully utilized can be used jointly with third parties to reduce idle time. Costs can also be reduced by short lead times, and by paying for just what is needed.

  • Highly scalable and flexible infrastructure: Massively scalable engine allows building highly scalable services for customers and partners. Infrastructure scale with the demand for peak loads and seasonal variations.

  • Efficiency & flexibility of resource management: Service providers can use more flexible and efficient resources (IT resources, server, storage and network resources) using virtualization technology in cloud computing.

  • Business agility with rapid service deployment: Service provision with lower cost by efficient use and management of resources. The easier and faster a provider can perform an administrative task the more expedient the business moves, reducing costs or driving revenue. Easier to get IT operations established and less need for IT expertise at the company level. Provider also finds their speed of deployment is much quicker than if they were to build applications, or worse, a whole data center, from scratch.

  • Reliability of service with high availability: Since the workloads can be spread across many facilities, and even across clouds, redundant instances of applications can be used to avoid downtime and increase the availability. In addition, data distribution strategies can help address disaster recovery and business continuity issues.

  • Highly support of 3rd party business: Intermediate service provider, utilize marketplace which allows multiple input from Independent Software Vendors among ISV, developers, cloud service (SaaS) providers, integrators, business customers, end users

  • Energy efficiency: In principle, cloud computing can be an inherently energy-efficient technology for ICT provided that its potential for significant energy savings that have so far focused on hardware aspects, can be fully explored with respect to system operation and networking aspects.

ITU-T FG-Cloud home page: http://www.itu.int/en/ITU-T/focusgroups/cloud/Pages/default.aspx

B. Alcatel-Lucent strategic whitepaper: Assessing Cloud Computing- Challenges and opportunities for network providers, by Jane Anderson

Ms Anderson suggested cloud benefits for network providers:

• New revenue opportunities – network providers can benefit by switching enterprise-hosted services to private or virtual private clouds. This approach offers better margins, along with decreased management demands. A number of leading network providers have already introduced their own cloud services, and they will soon be followed by an array of other operators who have new services in development now.

• Exposure of capabilities – network providers can add new revenues through partnerships with application and content providers. As ACPs look for ways to enrich their services, control delivery and ensure quality, network providers can gain a better position in the cloud computing value chain by contributing their unique capabilities.

Ms Anderson concludes:  “The growth of cloud services has important implications for network providers. Like Internet video, cloud services currently add to today’s increasing demands for bandwidth, while delivering revenues primarily to application and content providers, rather than to network providers.”

“In addition, as consumers and businesses become increasingly aware of the limitations of existing cloud services, network providers have a key opportunity to promote themselves as the “safe” cloud services provider.”

C.. Independent Expert Opinion

Ray Mota, Managing Partner of ACG Research. identified five reasons on how network/ service providers could capitalize on cloud computing for their own business and for their customers:

1.  The value proposition of cloud computing
Cloud computing has the potential to affect service providers’ total operational costs by reducing the hardware and software requirements of their current networks and platforms. Network architectures that build on optimization and consolidation are a key interest — also, increasingly, a requirement — for all service providers. Cloud computing platforms also enable enterprises to provision an infrastructure and add computing capacity on demand. This elasticity promotes rapid deployment of solutions and allows service providers to scale their infrastructure based on demand and consequently to improve time to market for new services.

2. Web-based applications promote IT independence
With more employees scattered in global offices or telecommuting, Web-based services and applications are perfect for the rapidly changing enterprise workplace. Service providers can increase their revenue and market share and capitalize on Web-based application services by communicating and promoting the tangible business benefits to their customers.

Mobile communication, accelerated developments in broadband networking, open source technologies, and Web 2.0 have made on-demand services more reliable and affordable. Using cloud-based services, businesses can store more data than on private computer systems, allowing them to save on the processing power and hard disk space required for desktop software while giving them access to an unlimited number of applications. Additional benefits for businesses — and selling points for service providers — include lower costs, improved system performance, reduced software cost, instant software updates, data reliability, universal data access, and hardware/device independence.

3. Growing cloud-based managed services market produces revenue
The managed services market is one of the fastest growing segments in the IT industry, and service providers are uniquely positioned to capitalize on it. Cloud computing offers service providers an ideal model for developing managed services because they already have the scalable engine to build scalable services. By assuming an end-to-end position (application to end user) in the cloud computing value chain, the service provider can improve and add significant quality of service to user-to-application experiences. This network-based approach to service assurance can position service providers to capitalize on the software revenue market related to the use of the applications — a market that network providers have yet to fully explore and utilize.

4. Increasing carriers’ data center efficiency and operations
With typical data center costs running approximately 25% of total IT budgets, service providers are under pressure to find cost-efficient business solutions and models to operate their data centers. A cloud computing data center model enables rapid innovation, scalability and support of core enterprise functions, resulting in significant economies of scale. OpEx and CapEx savings are realized through the standardization of systems and software components. A cloud computing data center reduces the need for additional hardware, software and facilities, as well as automation of server, network, storage, operating systems and middleware provisioning, and security issues, all of which are costly and time-consuming functions.

A cloud computing platform also increases the utilization of servers, which can range from 20% to 70%, resulting in a decrease in required infrastructure. This hardware reduction translates to a dramatic drop in some associated operations expenditures: rack space, real estate, power and cooling. And let’s not forget the cost savings associated with continuity and data center longevity. The average life expectancy of a large data center is 12 years. With the cost of developing a data center at approximately $500 million, cloud computing becomes both a business and operational value.

Author’s note: We believe this internal use of cloud – for telco data centers – will yield an immediate payback on investment for telcos.  Especially, because of mergers, acquisitions, and industry consolidation, telcos own many geographically dispersed data centers where Operation Support Systems and Back End Network Management are done.  By outsourcing those data centers to the cloud (Infrastructure as a Service model), the many benefits stated above can be realized, with savings in cost, energy and a dramatic increase in productivity.

5. Differentiating service providers from the pack
The current economic climate has forced service providers to take a hard look at their business models and how they differentiate themselves from their competitors. The old business model was about cost-per-bit, but in the new paradigm, service providers realize they have to focus on what makes them stand out. Delivering cloud-based consumer and business-critical applications with solid service-level agreements (SLAs) will not only allow service providers to differentiate themselves but will maximize the value of the network while promoting a new business model.

Moving to a cloud-based platform poses challenges and concerns for service providers. Dealing with standards, security, performance, data compliance aligned with procedures and operations, and availability issues are just a few of the organizational and technical challenges they’ll have to address to make cloud computing a true value proposition. Service providers can leverage their reputations and solid performances to offer reliable, comprehensive and secure cloud services. Most importantly, service providers can show value by strongly emphasizing that cloud computing allows enterprises to focus on other aspects of their businesses without having to concentrate resources on IT, server updates, and maintenance issues — a win-win service offering for both service providers and their customers. And last but certainly not least, by ensuring the value of services delivered via cloud computing, service providers not only deliver business value to their users but increase and extend their sustainability.

For further information, please see:

Five telecom provider benefits of offering cloud computing services

http://searchtelecom.techtarget.com/tip/Five-telecom-provider-benefits-of-offering-cloud-computing-services1

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Follow up request: We welcome any comments, suggestions, or even differences of opinion – especially from the telcos. Let’s make this an interactive vs uni-directional web site!

ITU-T SG13 Focus Group on Future Networks (FG-FN) prepares several important documents

After their 8th meeting in Ljubljana, Slovenia, the ITU-T FG-Future Networks has been exchanging emails and having conference calls to agree on several output documents for their parent organization- SG 13.  Here is a list of  the output documents dated December 22, 2010:

FGFN-OD68-MeetingReport-LjubljanaR1.doc
FGFN-OD72-FNvision.doc
FGFN-OD74-FNenergy_final_draft.doc
FGFN-OD75-terminologyR1.doc
FGFN-OD76-Projectdescription.doc
FGFN-OD77-finalReportR2.doc
FGFN-OD78-LiaisonLjubljana updated.doc

There is also a Virtualization document being prepared.  

FNvision or “Future Networks: Objectives and Design Goals”  is the document that the FG spent most of their time and effort on.  The FG proposes that SG13 to start the approval process for this document at thier January 2011 plenary meeting.  That document can be downloaded for free at:  http://www.itu.int/oth/T3A05000072/en

Other output documents,  for each of the FG-FN meetings, may be accessed at:  http://www.itu.int/en/ITU-T/focusgroups/fn/Pages/output.aspx

Working documents can ONLY be accessed by individuals that have an ITU-T TIES account.  If your organization is an ITU-T member and you’d like to participate in this committee, please contact the FG-FN Chairman: “Takashi Egawa” t-egawa@ct.jp.nec.com

Here’s the link to an overview presentation of FG-FN by Mr. Egawa:

http://www.future-internet.eu/fileadmin/documents/valencia_documents/sessions/architecture3/Egawa_fia-itu.pdf

Call for InterestCurrently, IEEE is not participating in this committee although I’m told that IEEE is a Sector Member of ITU-T.  Do you think IEEE ComSoc should have its own “Future Network” Task Force and if so, under what umbrella?

Telecom outsourcing thriving; Ericsson, NSN, ALU, Huawei soon to be running 3/4 of world's networks?

Infonetics Research (www.infonetics.com) released its updated Service Provider Outsourcing to Vendors market size, market share, and forecast report.  It confirms the mega trend of telcos outsourcing their network operations, e.g. Sprint’s network now managed by Ericsson.

ANALYST NOTE
“Fierce competition among telecom service providers around the world is driving them to increase operating expenses, and that in turn is forcing service providers to outsource more of their network tasks, because outsourcing is one of the last remaining ways to cut opex. With major outsourcing deals looming, Ericsson, Nokia Siemens Networks, Alcatel-Lucent, and Huawei may end up running three-quarters of the networks on this planet,” notes Stéphane Téral, Infonetics Research’s principal analyst for mobile and FMC infrastructure.

SERVICE PROVIDER OUTSOURCING HIGHLIGHTS
.    By the end of 2010, telecom service providers worldwide will have outsourced about $53.5 billion worth of networking tasks to equipment vendors, 8% more than they outsourced in 2009
.    Mobile network outsourcing is growing much faster than fixed (wireline) outsourcing: in 2008 revenue from mobile and fixed network outsourcing was roughly the same; by 2014, mobile network outsourcing will grow to account for 61% of all network outsourcing
.    The major growth areas for telecom network outsourcing include network maintenance, planning, design, and operations
.    Much of the growth in outsourced services is coming from EMEA (Europe, Middle East, Africa) and Asia Pacific, and to a lesser extent, Central and Latin America, with the Oi-Nokia Siemens deal in Brazil and activity increasing in Mexico

REPORT SYNOPSIS
Infonetics’ Service Provider Outsourcing to Vendors tracks the revenue vendors derive from the services they offer to their service provider clients, which include mobile and fixed network planning and design, building, maintenance, operations, application service delivery, service provisioning and activation, and billing. The report tracks worldwide and regional market size, market share, and forecasts through 2014.

The report provides market share for Alcatel-Lucent, Ciena, Cisco, Ericsson, Fujitsu, Hitachi, HP, Huawei, IBM, Juniper Networks, Microsoft, Motorola, NEC, Nokia Siemens Networks, Nortel, Tellabs, UTStarcom, ZTE, and others.

Please refer to this article for background info:  Will Outsourcing of Managed Services and Network Maintenance Make Telecoms More Competitive? 

http://viodi.com/2009/08/22/outsourcing-managed-services/



 

 

What’s the UNI, NNI and Network Infrastructure needed for Cloud Computing?

Introduction:

Cloud computing deployments are being announced on an almost daily basis. Cloud computing accelerates application development and deployment without upfront capital costs for servers and storage. For this reason, many enterprises, governments and network/service providers are now considering adopting cloud computing to provide more efficient and cost effective network services. The Cloud Computing market is forecast to be very big by IDC, Gartner Group, andother market research firms.

But there seems to be a lot of confusion regarding the service delivery method and lack of interoperability. More importantly, there are no solid standards for Infrastructure as a Service, Platform as a Service or Applications/Software as a Service, network infrastructure needed for them or the required network interfaces between customer-provider (UNI), or between cloud providers (NNI).  This results in difficulties in exchanging information between cloud service providers and for users that change providers. It may also present a problem when bursting between a private cloud and different public clouds. Interoperability facilitates secure information exchange across platforms. Why isn’t there more talk about these interfaces and network infrastructure (both fixed and mobile) for cloud computing? 

Most cloud pundits assume the UNI will be a broadband IP VPN (over whatever PHY layer access is used).  Will that IP VPN deliver the necessary performance, reliability/availablity and security that’s required- particularly for access to a public cloud?  And how do different cloud network providers communicate, e.g. what’s the NNI?  This is particularly important for Federated and Hybrid (Public-Private) Clouds, yet the topic is not discussed at Cloud Computing Conferences,  Finally, we don’t know of any standards organizations, including ITU-T FG-Cloud and IEEE Cloud Computing Initiative  that are seriously pursuing these very important network aspects of Cloud.  That said, the ITU-T FG-Cloud plans to work on the Cloud network infrastructure requirement and architecture design to fulfill intra-cloud, inter-cloud and the core transport network use cases, and network resource management issues as well.  (See ITU-T FG Cloud section below).  That’s a start, but we think a lot more work will be necessary for true multi-vendor  interoperability.

Discussion:

Cloud Computing represents a unique opportunity for service providers to provide bundled offerings which combine Network and IT resources. We think that service providers can leverage their network assets by providing five nine’s network availability and excellent performance for secure end to end cloud services. Another opportunity for service providers is to evolve network resource allocation and control to be more dynamic, in order to provide on-demand provisioning of cloud services.

But what about the different types of network access, especially the choice between a L2 (Ethernet) and L3 (IP) VPN?  And various scenarios for IP VPN -to-private line communications?  In particular, what does the protocol stack look like for UNI and various types of NNI’s?  Who will decide these critical issues and promulgate the network related standards for cloud computing is anyone’s guess at this time.

ITU-T FG Cloud Work on Network Infrastructure:

The ITU-T FG Cloud has had only three meetings.  Among other things, it is pursuing work on cloud network infrastructure that’s focused on several objectives: the ability to link existing networks services, Internet connectivity,  L2/L3 VPN efficiency to deliver public or private cloud services.  The ability to link a flexible L2 & L3 network management and cloud technology to form an integrated cloud infrastructure would enable various types of cloud services.

Three distinct cloud network types have been defined ny FG-Cloud:

1. Intra-cloud network: this network is to connect local cloud infrastructures, such as data center LAN used to connect servers, storage arrays and L4-L7 services (firewalls, load balancers, application acceleration devices, IDS/IPS…).

2. Core transport network (WAN/MAN): this is the network used by customers to access and consume cloud services deployed within the cloud provider’s data center.

3. Inter-cloud network: this network role is to interconnect cloud infrastructures together. These cloud infrastructures may be owned by the same cloud provider or by different ones.

These three network components are essential for cloud services composition and delivery. In order to provide a real added value in support of cloud services, they must offer their network requirements (to cloud service users) in terms of flexibility, scalability,and on-demand resource provisioning. More importantly, advanced networking functions are necessary to ensure performance, security and availability of the various types of cloud services.

One of the most intriquing work areas of this FG-Cloud are the upper layer (L4-L7) services that may reside within the Cloud Transport Network.  The ITU-FG takes this position:

“In order to transform the core transport network into “smart-pipes” with real added value for cloud services delivery, the core network component should be able to provide on-demand L4-L7 network services required to ensure the performance, security and availability. Some examples of this requirement are:

  1. Security functions: provide on-demand security functions within the core transport network to protect and control customers traffic to cloud services. An example is firewalling functions and intrusion detection and prevention.

  2. Performance: provide on-demand application acceleration and optimization services for cloud services. This is essential to ensure application performance because these application will be accessed remotely (from customers sites to the cloud providers sites) and it is well known that most of business applications were initially designed for LAN environment and are negatively impacted by the delays and packet loss of the core transport network.”

In our opinion, this effort is commendible, but is just scratching the service.  For sure, a lot more work lies ahead.  So it may be years before we see a high level of interoperability amongst the many different types of cloud services and networks that support them.

IEEE Cloud Computing Standards Study Group:

A call for participation for the IEEE Cloud Computing Standards Study Group, sponsored by the IEEE Computer Society Standards Activities Board (SAB), was issued months ago.  We have not seen an announcement on an initial meeting or conference call to get organized.. An IEEE Standards Study Group is the initial step in the process of developing a IEEE standard and is open to all interested individuals.

The mission of the IEEE Cloud Computing Standards Study Group is to determine the feasibility of developing an open standards profile which defines options for portability and interoperability of cloud computing resources. These profiles should address issues such as interfaces to computing, storage, network, and content resources, as well as workload (program and data) interoperability and migration, security, fault-tolerance, agency, legal and regulatory, intra-cloud policy negotiation, and financial relationships. It is expected that there will be multiple architectural approaches from which to choose.

The profiles should also support the Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), and Infrastructure-as-a-Service (IaaS) service models, and the private cloud, community cloud, hybrid cloud, and public cloud deployment models.

For further information and/or to be added to the IEEE CCSSG mailing list, please contact Steve Diamond, Chair, IEEE Cloud Computing Standards Study Group, at ieee-ccssg-chair [at] intercloud [dot] org

Yankee Group’s 2011 Predictions for 4G + Infonetics report on 2G/3G Market

In its new report:  “4G Fuels the Decade of Disruption,” the Yankee Group predicts a slow start for 4G but says moves made by players in 2011 will determine their ultimate fate in the marketplace.

“Connectivity—especially mobile connectivity—drives disruption in the telecom arena,Once 4G takes hold, its impact will be swift and profound, and 2011 is the year to prepare.”” said Jason Armitage, senior analyst at Yankee Group and a co-author of the report. We are hoping to have a phone interview with Jason who works and lives in London, England

Here are the 2011 predictions for 4G from Yankee Group:

1. 4G will be a “drop in the ocean.” By the end of 2011, the world’s most important 4G technology (LTE) will account for only 0.04 percent of all global mobile lines (but 0.33% in US).

2. 4G will fail to win the enterprise. Currently, less than a third of enterprise decision-makers believe 4G is important; that number won’t budge by year end.

3. 4G killer device will be a hotspot. Users will gravitate to hotspots’ simplicity and savings, reducing 4G subscriptions in the long run.

4. Competition in the U.S. will create a 4G marketing mess. As operators slap the “4G” moniker on everything from WiMAX and LTE to HSPA+, confusion will abound.

5. A denial-of-service attack will take a 4G network down. In their rush to roll out 4G, operators are cutting corners on security; one unlucky operator will pay the price.

6. Chinese vendors will beat 3G incumbents in their own backyards. Both Huawei and ZTE will make key 4G wins outside Asia, to the detriment of established players.

7. 4G users will spend twice as much time on the mobile Web as their non-4G counterparts. Companies that invest in mobile Web sites and free or near-free rich media content will benefit most.

8. Mobile video will not drive consumers to 4G. Mobile video won’t be the killer 4G app everyone expects; instead, consumers will spend more time with music services like Pandora and Slacker.

9. The Web will not save operators in the mobile apps market. Operators think 4G will give them a leg up in mobile apps, but Apple and Google will still lead the market in 2011.

10. MVNO hype will build, but most of it will lead to nothing. 4G MVNOs will fail for the same reason most 2G and 3G MVNOs failed: Most won’t complement their hosts’ businesses.

11. Pricing will end in tiers. 4G will herald the introduction of tiered mobile data pricing models, and flat-rate pricing will be gone forever.

12. Carrier VoIP will still be AWOL, despite 4G. 4G’s speed and bandwidth are multimedia must-haves but not big voice necessities. Few operators will launch services before 2013, allowing over-the-top companies to gain an early lead.

13. Google will take the wheel in mobile data. Currently behind Apple and others in the mobile space, Google will quickly grab the mobile lead as 4G rolls out.

http://blogs.yankeegroup.com/2010/12/07/webinar-yankee-groups-2011-predictions/


Infonetics Research (http://twitter.com/infonetics) released its 3Q10 report on  2G/3G Mobile Infrastructure and Subscribers market share and forecast.

MOBILE INFRASTRUCTURE MARKET HIGHLIGHTS

. The worldwide 2G and 3G mobile infrastructure market grew 2% in 3Q10, to $8.8 billion

. The overall market is still down year-over-year (-20.7% from 3Q09), when the market was inflated by massive 3G rollouts in China

. All major segments of the market posted sequential gains, including radio access network (RAN), mobile switching subsystem (MSS), mobile packet core, and home location register (HLR) equipment

. Since its peak of $42.5 billion in 2008, annual spending on just RAN equipment — base transceiver stations (BTS), base station controllers (BSC), and remote radio heads (RRH) — is dropping almost $10 billion, to an expected $33.4 billion in 2010

. The GSM RAN equipment market bounced back in 3Q10, up 12.5% sequentially, led by major 2G capacity upgrades in China and India

. Ericsson remains the King of the Radio, with double the revenue market share of its nearest competitor, Nokia Siemens, for worldwide macrocell RAN equipment

. In the mobile packet core equipment segment — in which Ericsson is also #1 — just 3 quarters ago the spread between #2 Nokia Siemens and #3 Cisco was about 13.5 percentage points; in 3Q10 the distance between them is only 2 percentage points

. The number of mobile subscribers passed the 5 billion bar in 2010 and is on track to hit 6 billion between 2012 and 2013

-With the worldwide population now at 6.9 billion, it is very likely that mobile penetration will exceed the global population in the near future

Infonetics Analyst Comment:

“As we anticipated more than a year ago, in the third quarter of 2010 the mobile infrastructure market was marked by the start of 2G capacity upgrades and modernization projects, sustained but slowing 3G activity in North America, and the start of 3G rollouts in India. Despite the misleading ‘4G’ pandemonium in the US, 2G is back in full force and will keep the planet busy for the next few years as global mobile penetration reaches 100%,” predicts Stéphane Téral, Infonetics Research’s principal analyst for mobile and FMC infrastructure.

More info at:  www.infonetics.com

Mini workshop agenda: "FG FN results and future steps" – part of 8th FG FN Meeting in Slovenia

FG-FN Mini Workshop:  Lubljana, Slovenia Wednesday, 1 December (14:00 – 18:00)

Note:  ITU-T SG13  established “Focus Group on Future Networks (FG-FN)” to share the discussion on Future Networks and ensure global common understanding about Future Networks with collaboration and harmonization with relevant entities and activities.

The Focus Group, by collaborating with worldwide future network (FN) communities (e.g., research institutes, forums, academia and etc), aims to collect and identify visions of future networks, based on new technologies,  assess the interactions between future networks and new services, familiarize ITU-T and standardization communities with emerging attributes of future networks, and
 encourage collaboration between ITU-T and FN communities.

Motivation for this workshop: FG FN made big progress during last 18 months. FG produced very tangible results (documents, database).  It has established a very comprehensive program of work. This FG needs to communicate its achievements to the public (ITU, researcher, industry). FG FN will use mini workshop in Ljubljana to present our achievements to date.

Agenda:

  • Introduction – FG scope and objectives (Alojz Hudobivnik, Iskratel)

  • FGFN – the history of 18 months (Takashi Egawa, NEC)

  • Results of FG in details

    • Contributions analysis (Nozomu Nishinaga, NICT,)

    • FN Vision (Group moderator: Daisuke Matsubara, Hitachi)

    • FN Virtualization (Group moderator: Sangjin Jeong, ETRI)

    • FN energy savings (Moderator: Toshihiko Kurita, Fujitsu)

  • Database of world R&D projects about FN

    • Overview (as a source for now and the future)(Nozomu Nishinaga, NICT)

    • Examples:

      • Presentation of some FP7 project (Alix Galis, UCL)

      • Korea Future Internet R&D Plan and ETRI Activities (Myung-Ki Shin, ETRI)

      • Presentation of AKARI project (Hideki Otsuki,NICT)

  • ICT research network in Slovenia (August Jauk, ARNES, CTO)

  • Further steps in standardization and the role of the ITU (Chaesub Lee, SG13 Chairman)

Highlights of TiE-Silicon Valley Software SIG Meeting: Outook for 2011

Introduction:

With the global liquidity picture improving, more early stage companies are being funded by VCs and Angel Investors.  There’ve been more IPOs and some big corporate acquisitions, which provide the needed “exit” for those investors.  Some big M&A deals included: McAfee (Intel), Sybase (SAP) and 3PAR (HP).   There were more IPOs this year too. IPO’s like MakeMyTrip and Qlik Technologies were succesful.  Finally, there were a raft of new startup acquisitions and several large VC financing rounds for still private companies.

Another dynamic at work clearly favors start up companies. It’s that the largest companies are doing very little R & D  For example, look at how much HP has cut back on the percentage of revenues devoted to R & D.  And the disappearance of Bell Labs and other notable research institutions.  This trend has accelerated recently, as the bad economy has led to further cuts in large company (and U.S. government) R & D spending.  But start ups are all about doing new things in new ways.  They are all about R & D in very selected areas. Hence, they become more attractive acquisition targets when larger companies are not innovating. In effect, innovation is  being “outsourced” by large companies to start ups, which are often acquired (i.e. Cisco is famous for succeeding with this corporate strategy).  More nimble, less bureacratic companies are seen as being more innovative and quicker to get their ideas to market then medium or large size companies.  

On November 30th, TiE Silicon Valley (SV) Software Special Interest Group (SIG) convened a distinguished set of panelists to address growing software markets, technologies, applications, and investment outlook for start up companies in this space.  The panel  was to adress hot software segments and issues like:

  • What areas of software are ripe for investing in 2011?
  • Is the recession really over for software companies?
  • Which parts of IT budgets will grow? Which are likely to get cut?
  • What does it take to get funded now?
  • Will exit windows stay open in 2011?
  • How should startups navigate the current climate?
  • Technology investments in the US vs. China and India (local control vs better value for investment capital, respectively)

The TiE-SV panel session participants were as follows:

Moderator: 

Vispi Daver, Partner, Sierra Ventures

Panelists:

  • Byron Deeter, Partner, BVP
  • Mark Jacobsen, Managing Director, O’Reilly AlphaTech Ventures
  • Mitchell Kertzman, Managing Director, Hummer Winblad Venture Partners
  • Ping Li, Accel Partners

Discussion:

The hot software market segments identified were the following:

  • Business Intelligence- especially real time analytics which help companies make real time business decisions
  • Big Data- large scale data storage management.  At a time when it’s possible to store more data then ever before- what should be retained and where?
  • Cloud Computing- especially Software as a Service (AKA Application as a Service)
  • Mobile HTML5 (the next revision of HTML- the standard for structuring and presenting content on the Web) and its effect on how mobile apps will be written in the future

As this global ComSoc Community web site focuses on communications technologies, we will restrict our coverage to the latter two software segments- Cloud Computing and Mobile HTML5.

Cloud Computing:

The panelists saw huge opportunities in this space.  One stated that even Cloud Computing niches could be big markets as all heavy duty computing moves from mainframes and servers in data centers to distributed computing in the cloud (i.e. the Internet).  Here are some selected comments from the panelists:

  • Application as a Service will be a massive enabler of new services.  It’s more attractive for start ups  than Infrastructure as a Service or Platform as a Service (the other two layers of the Cloud Computing architecture).
  • The middle layer of management and services is intriquing.
  • Large companies are going through a consolidation phase as they plan to use cloud services.
  • “Pure play “cloud service providers and software companies can take cloud leadership from larger companies that have more diverse agendas and strategies.
  • Cloud computing redefines software layers, with virtualization and security of utmost importance.
  • Amazon is a role model as a Cloud service provider [Amazon’s Elastic Compute Cloud (EC2) is a web service that provides resizable compute capacity in the cloud. It is designed to make web-scale computing easier for developers.]
  • “Virtualized desktop” could be another Cloud Computing service (no details provided).
  • How to contol and maintain mobility of IT resources will be a challenge.
  • Both mobile and fixed line access to the cloud will be provided, offering different capabilities and apps.

Mobile HTML5:

Background:  The HTML5 specification was adopted as the starting point of the work of the new HTML working group of the World Wide Web Consortium (W3C) in 2007. This working group published the First Public Working Draft of the specification on January 22, 2008. The specification is an ongoing work, and is expected to remain so for many years, although parts of HTML5 are going to be finished and implemented in browsers before the whole specification reaches final Recommendation status late in 2010 or early 2011.

This new standard incorporates features like video playback and drag-and-drop that have been previously dependent on third-party browser plug-ins such as Adobe Flash and Microsoft Silverlight. 

Mitchell Kertzman stated that HTML5 might be a  replacement for both Adobe’s Flash and Oracle’s Java.  “HTML5 has the potential to deliver a much richer user experience.  More engaging HTML5 based apps will be offered to mobile users.”   Continuing, Mr. Kertzman said, “Programmers and (mobile app) developers will take advantage of bandwidth and generate apps that enable you to do more than you can do today.”

While the consumer software space was described as a “wild west,” it seems that HTML5 (along with the Android platform) might concentrate efforts and initiatives such that software produced will run on more devices and hence have wider applicability.

Funding Environment:

We knew that VCs make initial investments of $500K – to $10M per start up company selected after passing their due diligence screens.  What we were surprised to hear is that two of the VC panelists stated their company only made about four to six new investments per year.  That’s after receiving over 1,000 business plans from start ups during the same period of time. 

So very few new start ups are evidently being funded by VCs these days.  That’s why the Angel Investor financing model is getting a lot of traction.  Please refer to:   Highlights of Nov 15th TiE Angels meeting   http://viodi.com/2010/11/23/tie-2/

Prashant Shah, organizer of this panel session, believes the small number of start-ups funded may not be due to the sluggish economy, as many believe.  Mr. Shah made the following comment clarifying the funding environment for start-ups:

“One thought that jumps out is on your statement of how few startups are getting funded. True that it’s tough to get funding nowadays, but in reality, it has never actually been easy (with the possible exception of the dot com days). It’s always been a challenge. So the 4 to 6 fundings a year would not necessarily be a significantly larger number if the economy was better. In fact, I would argue that in a better economy the percentage of fundings would be about the same because the number of business plans would go up as well. (There is a question of how fast venture firms could scale up in better times, but that’s a discussion for another day)

My point is that sometime entrepreneurs forget when they seek VC money, they are competing for funding dollars against other startups who may be in a completely different market but represent better investment opportunities. That’s they key to getting VC money – regardless of whether they are funding 4 deals a year or 40, entrepreneurs have to demonstrate their business will generate higher ROI than anything else in the deal pipeline.”


TiECon 2010 and 2009 Conference Summary Reports:

http://viodi.com/2010/05/19/tiecon-2010-report-wireless-market-status-trends-and-future-directions/

http://viodi.com/2010/05/22/tiecon-2010-wireless-sessions-part-ii-mobile-apps-advertising/

a href=”http://viodi.com/2009/06/14/tiecon2009/” rel=”nofollow”>http://viodi.com/2009/06/14/tiecon2009/

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