Differentiating networks with software

For most of the telecom industry’s history, hardware has been the focus, while software has not been widely recognised as a centre of value. However, this perception is now beginning to shift among customers in the market at large. Value is increasingly being derived from software, and this is reflected by the rising prevalence of software defined networking (SDN).

To gain an understanding of the value that software defined networking can offer to operators, it’s perhaps easiest to explain the newer concept via its more entrenched counterpart – hardware defined networking.  

Stu Bailey of automated network control specialist Infoblox observes: “HDN is an entire industry organised against box functions: firewalls, load balancers and other hardware to fulfil specific functions in the network. This model describes how most networks are organised today.”

From a hardware perspective, these boxes are fairly undifferentiated. Customers that buy networking solutions are not getting the same economics of hardware as those that buy white-box servers. SDN can be thought of as a market correction where the centre of value is shifting away from dedicated hardware solutions, providing the consumer with the economic advantages of inexpensive hardware in the networking industry for the first time.

White boxes are open, programmable network devices – consumers can use different software to attribute different functions to them. Whether this is load balancing, routing or switching, they allow the network to scale through complexity issues at an economic price point. This kind of market shift could be very disruptive to the vendor landscape as it exposes the value limitations of commodity hardware.

Without low cost hardware and value added software, an operator’s business economics simply don’t work – it threatens their entire business. Operators have a hard time recouping their hardware investment and are also facing growing complexity challenges; software defined networking is the only realistic option that will allow them to reduce costs. Less expensive, more generalised hardware and a richer ecosystem of software will add value to a business.

“The primary challenge in the developing world is infrastructure”, notes Srinivas Hanabe of Infoblox. Setting up a local connection is not difficult but connecting this to the internet presents problems – there are typically no copper lines in many developing markets, so people have to rely on cheaper, slower connections using satellite phones. These problems cannot be overcome by SDN alone.

“Because the cost of infrastructure will drop significantly with an SDN implementation, operators won’t need any of the expensive hardware devices that they currently do to build networks in any of these places. Instead, they will only need commodity hardware with extensible, ubiquitous software. This will lower the price point and allow them to provide connectivity to underprivileged parts of the world”, adds Hanabe.

SDN will allow for the advent of a new kind of operator, able to deploy very inexpensive hardware that doesn’t require the same levels of expertise or power footprint. The flexibility is there so they can continue to gain the benefit of the hardware investment by adding new software or upgrading it aggressively. This allows them to develop services that act as a differentiator from incumbents or rivals that focus on a more equipment-based approach.

Using commodity hardware will allow for a far lower price point while offering the same functionality – the infrastructure itself is not any more low-tech than what is currently available, but the value will be delivered via the software.

One particular area where software defined networking can deliver value to operators is churn prevention, according to Timo Ahomäki of systems developer Tecnotree. “Today, churn management tends to be very reactive and therefore inefficient”, he notes, and goes on to add that the shift to value delivery via software is empowering for consumers.

Touching on the example of ‘soft SIMs’, he observes: “It’s now possible to update SIMs over the network, allowing users to change provider while keeping their SIM and phone number. This makes trying out new providers much easier for the end user; in turn, this forces providers to address churn before it happens by making it more appealing for customers to stay on their network.”

The same concept also helps operators to prevent revenue loss from roaming. After forming roaming agreements with international partners, providers can then switch networks on-the-fly as soon as their customer enters another region. Soft SIMs allow operators to be more agile in reacting to these situations, ‘catching’ their customers to prevent them from using a rival network and thereby retaining their roaming revenue.

The value proposition of software defined networking comes from facilitating operations while encouraging customer loyalty by enhancing the subscriber environment. Stuart Eveleigh of customer experience specialists Convergys explains that his firm’s Service Delivery Layer can automate processes and segment customers, using the data to drive loyalty. The SDL sits on top of the network and allows the operator to react intelligently to improve customer experience.

“The Service Delivery Layer is able to pull in Customer Data Records to establish how subscribers are using their phones, and updates the database to match the records. Most of the time, this can channel the subscriber to where they want to go; it also benefits the operator as they have quicker throughput and fewer calls going to live agents”, he says.

For example, a self-service customer care application can be made more intelligent – if a customer has recently logged a call about a specific issue with their phone, the next time they call the customer care line, this will be recognised and they will be immediately provided with the option to connect their call to this issue. Alternatively, if a user calls with a low balance it will immediately provide them with the option to top up.

It’s clear that operators are strongly motivated to drive customer loyalty – and increase customer network usage – by improving their overall experience. Indeed, the news this week that three of the world’s largest equipment vendors are forming an initiative to set standards and improve interoperability for carrier-grade software solutions demonstrates that the importance of software is increasing. 

It is becoming ever more apparent that attitudes towards software are shifting. With the commoditisation of infrastructure, software will increasingly become the differentiating factor for network providers.

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