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SATELLITE BOOM A bust in the making? AFRICAN SATELLITE On the up and up M2M The case for dedicated networks PUBLIC SAFETY LTE to the rescue? ROAD TO RECOVERY A chat with new Vodafone Australia CEO Inaki Berroeta August 2014 • Published by Decisive • A CommsDay publication

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Page 1: CommsDay Magazine August 2014 edition

SATELLITE BOOMA bust in the making?

AFRICAN SATELLITEOn the up and up

M2MThe case for

dedicated networks

PUBLIC SAFETYLTE to the rescue?

ROAD TO RECOVERYA chat with new Vodafone Australia CEO Inaki Berroeta

August 2014 • Published by Decisive • A CommsDay publication

Page 2: CommsDay Magazine August 2014 edition
Page 3: CommsDay Magazine August 2014 edition

COMMSDAY

4 Cover Story Vodafone CEO Interview

Features

9 A satellite bubble?

14 Why satellite is still Africa’s best chance

17 What is the best network for M2M?

19 LTE creates an emergency for TETRA

21 Smart cities

23 The cloud and the network

MAGAZINE

ABOUT COMMSDAY MAGAZINE

Mail: PO Box A191 Sydney South NSW 1235 AUSTRALIA.

Fax: +612 9261 5434

Internet: www.commsday.com

COMPLIMENTARY FOR ALL COMMSDAYSUBSCRIBERS AND CUSTOMERS.

Published several times annually.

CONTRIBUTIONS ARE WELCOME

GROUP EDITOR: Petroc Wilton

FOUNDER: Grahame Lynch

COVER DESIGN: Peter Darby

WRITERS: Geoff Long, Richard van der Draay William Vanefner, Grahame Lynch, Tony Chan

ADVERTISING INQUIRIES: Sally Lloyd [email protected]

EVENT SPONSORSHIP: VeronicaKennedy-Good [email protected]

ALL CONTENTS OF THISPUBLICATION ARE COPYRIGHT.

ALL RIGHTS RESERVED

CommsDay is published by Decisive Publishing, 4/276Pitt St, Sydney,Australia 2000

ACN 13 065 084 960

Page 4: CommsDay Magazine August 2014 edition

CommsDay: Where would you de-scribe where Vodafone is rightnow?

Inaki Berroeta: My first takeon the company [is that it’s] abusiness that is recovering,with an amazing job done lastyear in terms of rebuilding ournetwork. But there’s still a lit-tle bit of history in terms ofthe perceptions that some cus-tomers have about the prob-lems that the company washaving a couple of years ago.Today, the situation is that weare sitting on a very good net-work and we need to work onconvincing customers to try it,and to see it as an alternativeto what they’re currently using– and at the same time, tomake sure the [customers]who’ve stayed with us get fan-tastic service, [so] we are ableto keep all of them with us.

The company, in the lasttwo years after all the prob-lems that we had, went

through a significant loss ofcustomers; last quarter, we stilllost a few customers... but nowwe are in a position where weare very close to getting sometraction in the market again.We’re not like we were twoyears ago, or last year, losinghundreds of thousands permonth.

I also think that we stillhave work to do, especially in

the commercial capabilities ofthe business, and that is whatwe are concentrating on; bet-ter service, better points of salein more places. We are presentin many areas where we havenew network but... we can stillnot commercialise because wedon’t have a commercial pres-ence, our network presence ismuch larger than our commer-cial presence. And we need to

Consolidating a comebackThree years ago, Vodafone Australia was on the ropes, suffering massive subscriber losses in the wake of

high-profile network outages and customer care problems. In 2012, the company brought in turnaround

king Bill Morrow as a new CEO, charged with mapping out a road to recovery; this year, Vodafone Ro-

mania veteran Inaki Berroeta has taken over from Morrow to complete the comeback. Berroeta sat

down with CommsDay group editorial director Petroc Wilton to lay out his vision for the company.

INTERVIEW WITH VODAFONE AUSTRALIA’S NEW CEO

Page 5: CommsDay Magazine August 2014 edition

match that. That will be, real-ly, the war that we’ll be[fighting] this year.

CD: The smartphone market inAustralia is well saturated... ifyou want more customers, more orless, you have to take them from acompetitor. Can you expand onyour strategy for doing that – anyparticular points of weakness thatyou think are ready to exploit, orany particular Vodafonestrengths?

IB: As you said, this is a satu-rated market... but at the sametime it’s one that, for the lastcouple of years – because wewere off the market – did nothave a lot of alternatives forcustomers. That has changed;and it has changed at a timewhen customers have differentdemands in terms of howthey’re using their phones.This is [now] the data world ofthe smartphone.

These two things happenedat the same time, which meansthat there is an appetite forcustomers to really considerhow they’re using their mobilephone, what is their relationwith their operator and howmuch value they’re getting outof it. You see many operatorsare still here talking about‘equivalent dollars’, but thatonly refers to voice, when thisis no longer a voice world.And you see how some peopleare falling behind; it is im-portant to understand that alot of customers will be chal-lenged, a lot of customersthat... are really enjoying thecapabilities that theirsmartphones give them are re-ally discovering how those ca-pabilities require a differenttype of relation with operators.

And that is where Voda-fone very strong, because notonly are we committed to de-veloping a good network,we’re committed to developingperformance and quality, espe-cially, in data. And we alsobring that to our contracts,where we are providing moredata than any other operatorat a very good value – and not

only that, but because weknow some customers are stillreluctant [to join Vodafone]because of our [historical] ex-perience, we give them a 30-day money-back guarantee.Nobody uses it! But it’s goodto have it there.

CD: If you’re offering more datafor the same cost... you are essen-tially driving down the cost of da-ta in the market. How do youstrike that balance between keep-ing that competitive edge, but stillkeeping a focus on profitability?Your EBITDA actually came upin the last quarter, so clearlythat’s going in the right direction.

IB: There are several things tolook at. One of them is that4G is a technology that ena-bles us to provide more datawith a lower cost structure,that’s the reality; the technolo-gy’s there to provide fasterspeeds, but also to make thecost to carriers more afforda-ble. We have a very good spec-trum strategy in terms of how

we’re managing [it], so we’revery confident that what we’reoffering in terms of data issomething that we can affordand manage and make profita-ble. You will see the profitabil-ity of the business will be veryhealthy.

But at the same time, wewant to be very good value forour customers; and the de-mands of the customer in thismarket have changed dramati-cally. There are still plans inthe market that have 200MB –which is the amount of data ittakes you to do a speed test on4G! – which is something thatwill have to change. And Ithink that we understand whatthe current usage [patterns] ofour customers are better thanour competitors, and we’re try-ing to make that into a pack-age that provides value to ourcustomers and is also goodbusiness for us.”

PW: What’s your vision for whatthe Vodafone brand in Australiashould stand for – perhaps in acouple of years?

IB: Our company is aiming atthe customers that use asmartphone, especially in met-ro areas. If you love yoursmartphone, if you’re not go-ing to rural Australia, youwant to be on the Vodafonenetwork. That is how we wantto position the company: weare the company for the heavymobile data users who de-mand high performance, withgood value, on theirsmartphone. That’s how we’regoing to position our brand.

We want to build, also, notjust on marketing communica-tions but on how we deal withour customers, in terms of

“We are the company for the

heavy mobile data users who

demand high performance,

with good value, on their

smartphone. That’s how we’re

going to position our brand.”

Page 6: CommsDay Magazine August 2014 edition

transparency; make things real-ly simple and clear to the cus-tomers. What you see is whatyou get... no tricks, no catches.We want to be very transpar-ent there, and we are workinga lot on customer experience;really focusing the company,especially, on the customersthat we have today, and mak-ing sure the service they get istop. That is where our brandis going.

CD: You mentioned that you’vegot network, now, in places whereyou’ve got no commercial presenceand that you’ll be building outmore points of sale. Can you ex-pand a bit on that?

It’s very simple. If you go toNewcastle, we have a fantasticnetwork, [but] our presence interms of points of sale is reallysmall. So that’s something weneed to fix. Newcastle has apopulation of half a millionpeople – two stores for half amillion people is not enough!If you look at the main cities –Melbourne, Sydney, Perth,Brisbane, Adelaide, we havemore or less good coverage,though I think we could do alittle better in Perth. But thenwhen you go to the next twen-ty cities, our presence is quitelimited. Two years ago, we did-n’t really have a network inthose cities; today, we do havea very good network in thosecities. And those are areaswhere, with a combination ofonline and retail presence, weneed to be more reachable forthe customers.

CD: Any particular de-mographics, or business sectors,that you’ll be concentrating on?

IB: Our average customer is a

woman in her late thirties...[but] we have a pretty open de-mographic. We have veryyoung people but we have a lotof people in their fifties andsixties as well – we have cus-tomers everywhere. Whatwe’re going to [target] more isindependent, self-employed[customers]... entrepreneurs,home-office businesses, SMBs.

We’re going to work in thebusiness segment, but mostlywith customers [who have] on-ly a few lines. And the otherarea we’re working on is com-panies who have their peoplebring their own phones... sorather than have a contractwith Telstra and pay them afortune, they’ll just give eachemployee an allowance andthe employees bring their owndevices.

We have a dedicated callcentre in Tasmania for thesecustomers, and I think that al-so makes a difference; a lot ofcustomers prefer to talk topeople in their own culturalcontext.

CD: The Red roaming packagewas an initiative that really capi-talised on the internationalstrength of the Vodafone groupand, I guess, also goes to yourpoint that the way people want toconsume data is different now....are there any other ways in whichyou’re hoping to bring the re-sources of the larger group to bear?

IB: Of course, we have thebenefit that we have verystrong shareholders... we havethe Vodafone group on oneside, and Hutchinson on theother. And I think the ad-vantage that we have by havingthese two groups is that onone side, we have access to alot of expertise and best prac-tice in many, many differentmarkets, and a lot of the workthat’s been done here in tech-nology around the networkhas been possible because webrought resources fromHutchinson, and we alsobrought resources from Voda-fone, and we built a very goodnetwork in a very shortamount of time. We’re able toprovide these roaming agree-ments because we have theroaming network of Vodafone,we also have the roaming net-work of Hutchison, and thisenables us to have very com-petitive offers for Europe butalso for Asia.

The other thing is the availa-bility of what other marketsare doing – how they’re doingprepaid in Indonesia, howthey’re doing prepaid in Italy –being able to learn from differ-ent markets and pool re-sources is a huge benefit ofhaving these two shareholders.

CD: Vodafone Romania isn’tcompletely dissimilar to VodafoneAustralia in terms of companysize, although the revenues are dif-ferent. Was there anything in yourexperience there that you thinkcan be brought to bear on yourchallenges in the Australian mar-ket?

IB: Yes, revenues for Voda-fone Romania were a littleover A$1 billion. It’s a very

“Our average customer is a

woman in her late thirties...

[but] we have a pretty open

demographic. We have very

young people but we have a

lot of people in their fifties

and sixties as well”

Page 7: CommsDay Magazine August 2014 edition

low-ARPU market... the com-pany there had over eight mil-lion customers. It was big inenterprise – about 40% of rev-enues were coming from enter-prise. And in terms of employ-ees, it was a similar size; about3,500.

There are many [learnings],of course, that you accumulatefrom experience. What I thinkwas good there was some ofthe work that we did aroundour brand, some of the workaround commercial efficiencyas well – a lot of the things wedid there around retail, andhow retail is managed, I thinkwe can use here as well.

CD: You’ve said that data, anddata usage, will always be yourmain focal point – but that you’llalways offer speeds at least equiva-lent to competitors, if not better.And right now, at least, you havethe spectrum to do that in some ofthe cities. But Telstra is... capital-ising on its future spectrum ad-vantages; they invested in [digitaldividend] spectrum, they’re bring-ing Cat 6 devices to market,they’re obviously positioning as afuture speed leader. Can you givemore detail on how you answerthat, or at least prepare for it?

IB: The speed is a matter of,on the one side, devices – andTelstra does not manufacturedevices, so whatever we canbring to the market everybodycan buy on eBay. And I canguarantee that Vodafone canbuy a lot more phones thanTelstra! I think it’s kind of amarket gimmick.

If you look at the way LTEis developing, a lot of it isaround carrier aggregation orhow you’re able to managethat spectrum; if you look at

the amount of customers theyhave and we have, the amountof spectrum they have and wehave, I really don’t see a lot ofcompetitive advantage. I thinkthey will be able to providefast speeds; when manufactur-ers deploy more technology,they will be improving theirspeeds – but so will we.

CD: Can you talk a bit about theregulatory landscape? Vodafonehas, for some time, been trying toraise awareness around what itpositions as [mobile] competitionissues in rural areas... [strategyand corporate affairs director]Dan Lloyd has made it very clearthat Vodafone’s not out to changethe past, but rather to shape policyand regulatory policy going for-wards. Is this an area where you’llpersonally be very active?

IB: Definitely. We believe themarket has some areas thatcould be fixed to enable morecompetition. We’re not askingfor more regulation; we’re ask-ing for better regulation. Manytimes, the regulator exists notbecause it’s going to take a par-ticular action but because byits existence, it triggers somemarket action that is beneficialfor the market and for con-sumers. And that’s the partthat we think is important,and that’s why the regulatorneeds to be there to ensure abetter marketplace.

Today, Australia is a marketthat has some structural issues

that probably make competi-tion difficult. And that meansless choices for consumers.There are many places in Aus-tralia where Telstra has builtan infrastructure using publicfunds, and this infrastructurecan only be used by Telstracustomers.

We believe that universalservice should ensure choicefor customers, not just ser-vice... and that’s somethingthat is not happening. Wedon’t agree with public moneybeing used to create differenti-ation points.

Another thing is, whereTelstra has monopolistic infra-structure, we need to ensurethat there is a reasonable com-mercial offer for everybody.For example, transmissioncosts in this market are still abig issue.

CD: But you’re talking about theway things are run going forward,not going back and re-examiningexisting arrangements?

IB: No. I think it should be aforward-looking exercise.

CD: Are there any areas in whichyou’d like to reinforce your staff,either at executive level or down inthe trenches?

IB: The main changes arearound building commercialcapabilities; most of thosechanges are made with inter-nal talent, and sometimes,when we think it’s appropri-ate, we’ll look in the market aswell. It’s a very normal processin that sense. And I also thinkwe’re quite lucky in terms ofthe talent that we have – we’rea good employer... and peopleare seduced by the challenge!

“We believe that universal

service should ensure choice

for customers, not just ser-

vice... and that’s something

that is not happening.”

Page 8: CommsDay Magazine August 2014 edition
Page 9: CommsDay Magazine August 2014 edition

A ndy Start, president of In-

marsat's global government

business, summed up the

thoughts of many when he suggested

that there's never been a more excit-

ing time to be in satcomms. Speak-

ing at the Australasia Satellite Forum

in Sydney, he described “something

of a renaissance in the industry.” Hy-

perbole aside, there is evidence that

the sector is about to enter a new

phase, with a number of high-

throughput launches set to redefine

what satellite can offer in terms of

capacity and price.

Inmarsat has already commenced

the launch of its next generation ser-

vice Global Xpress, which promises

mobile broadband download speeds

of up to 50Mbps.

However, it won't be alone. The

likes of Intelsat, Thailand's iPSTAR,

Optus, SES, NewSat and newcomers

Kacific Broadband and O3b are all

in various stages of launching new

satellites and services that they be-

lieve will shake up the capability

available in the Asia Pacific region.

“In terms of what that means for

the customer, it's starting to make a

real transformational change in

terms of how much capacity people

can have and at what price. How

much mobility they can have with

how much weight,” says Start. “The

high-throughput satellites are start-

ing to make it possible to have very,

very high data rates into really quite

small terminals. That's going to really

transform the accessibility of the in-

dustry.”

Start notes that the first of the

satellites forming Inmarsat's Global

Xpress network was launched last

December, with global coverage ex-

pected by the end of 2014.

It's part of a US$1.6 billion pro-

gramme and, according to Inmarsat,

marks the first time a commercial

operator has utilised Ka-band radio

frequencies to deliver a global satel-

lite service. The first spacecraft cur-

rently sits over the Indian Ocean re-

Flying highThe satellite sector is awash with investment money, with a new generation of high-throughput spacecraft

poised for launch over the next two years. But is there a bubble in the making? Geoff Long talks to some

leading industry figures to find out

NewSat’s Jabiru

Page 10: CommsDay Magazine August 2014 edition

gion and provides coverage on the

west coast of Australia.

According to Start, funding for

the programme wasn't an issue.

“Satellite still represents a very inter-

esting long term investment where

the capital markets can put an invest-

ment in and see a return over 10 or

20 years,” he says, echoing the

thoughts of a number of satellite ex-

ecutives on the current state of fund-

ing.

Terry Bleakly, Intelsat's regional

VP for Asia, is similarly buoyant

about the investment environment

for satellite. He points out that Indo-

nesia's state-owned Bank Rakyat In-

donesia (see Sidebar “Banking on

Satellite”) is even going so far as to

invest in its own satellite – believed

to be the first time a bank had got-

ten into satellite directly. “So if

banks are starting to buy satellites

now and going into that business, it

must be a good business,” he quips.

Intelsat, which celebrates its 50th

year this year, has also been active in

the region of late, having launched

five satellites in Asia Pacific in the

last three years. The global operator

has its own high-throughput play –

Epic – which it claims will be capa-

ble of delivering between 30 and 60

GB of throughput.

“The first two Epics that have

gone up had forward orders or over

US$800 million, so we see the de-

mand,” says Bleakley.“We think our

Epic play is a very innovative play.

It's a play that's for carrier grade con-

nectivity. We're not talking about

broadband to the home – it's

providing high throughput capacity

at the service level that will provide

telecommunications companies and

media companies the ability to get to

points that they couldn't at a cost per

bit that they couldn't get before.”

Asia's first real high-throughput

satellite play – the IPSTAR system

launched back in 2005 by Thailand's

Thaicom – could also be about to re-

ignite its efforts in the HTS space.

Phil Cross, sales director for IP-

STAR Australia and New Zealand,

says there are plans afoot for an IP-

STAR-2, with financing unlikely to

be an issue.

“We haven't experienced any ma-

jor problems securing finance for

Thaicom-6 and Thaicom 7 is under-

way. As long as you've got dishes

pointing at roofs in the broadband

industry it's a pretty good bet for a

bank or an investment entity to put

some money into that,” he suggests.

“We're at the point now where the

business case warrants we can start

the project for an IPSTAR-2 launch.

We'll probably start that project late

2015, early 2016.”

Ahead in the launch queue will

be new satellites from Optus, O3b,

and NewSat with its Jabiru-1 bird.

NewSat had a notably difficult time

to finance its project, even going so

far as to halt trading on the Australi-

an Stock Exchange for a number of

months while it shored up its invest-

ment backing. However, the compa-

ny put such challenges down to be-

ing a relatively new player in the in-

dustry. In the end it raised the

US$600 million needed for the pro-

ject, which will launch next year,

with the majority of funding coming

from the US Export-Import Bank

Banking on satelliteOne of the most interesting satellite ventures announced in Asia Pacific of late is by

Indonesia's state-owned Bank Rakyat Indonesia, which wants its own satellite to run

and expand its banking operations across the archipelago. Should it go ahead, it will

be the only bank in the world that owns and operates its own satellite.

Already, BRI has signed agreements with US satellite manufacturer Space Systems/

Loral to build the satellite and with France's Arianespace to launch it, with the

launch expected in 2016.

BRI provides services to more than 50 million customers and already uses satellite

communications to connect more than 9,800 conventional outlets as well as more

than 100,000 e-Channel outlets. BRI said the scale of its operation requires support

equal to 23 satellite transponders. It currently leases from nine satellite service pro-

viders in Indonesia but expects its needs to increase in the future.

BRI will utilise an existing Indonesian ITU satellite filing at the 150.5o E orbit loca-

tion for the service, and noted that maintaining the continuity of the filing was one

of its aims. Some transponders of the service will be specifically allocated to the inter-

ests of the government of the Republic of Indonesia.

Known as BRIsat, the service will reach Indonesia and ASEAN countries, East Asia

(including most of China), most of the Pacific and stretch down to Perth in Western

Australia. It will have 36 x 36MHz C-band and 9 x 72MHz Ku-band transponders.

In addition to the use of BRIsat for supporting BRI’s operation, some of the tran-

sponders will also be used by the Indonesian government for direct communication

with or between Indonesian representative offices in the countries within the satellite

service coverage, notably China, Hong Kong, Japan, Cambodia, South Korea, Macau,

Malaysia, Myanmar, Taiwan, Thailand, Philippines, Singapore, Vietnam, Papua New

Guinea, and Australia.

BRIsat will be owned and self operated by BRI, which pointed out that the encryp-

tion process and the control of channels will be completely managed by Indonesian

institutions.

Page 11: CommsDay Magazine August 2014 edition

and its French counterpart, the

Compagnie Française d'Assurance

pour le Commerce Extérieur.

NewSat CTO David Ball says that

despite the company's financing

struggle, it was still a good time to

develop new projects. “The invest-

ment community is still very positive

on the satellite sector. They've seen

the tremendous success stories of the

past, some of the private equity in-

vestors and how that's travelled

through the market. We've found it

a little heavier here in Australia,

where the investment community is

still very focussed on digging up

rocks and selling them to China one

boatload at a time,” Ball explains.

Hoping to follow NewSat's lead

in getting a project off the ground

for the first time will be newcomer

Kacific Broadband, which plans to

launch new Ka-band satellite capacity

over the Pacific region at the end of

2016. Kacific CEO Christian Patou-

raux claims that the market is cur-

rently still receptive to new ventures.

“What we see is there is a lot of

money in the market for investment

in satellite. If you offer a good differ-

entiator, a good value for investors,

there is definitely an appetite around

the world, especially in this region,”

Patouraux says.

Kacific Broadband only went

public with its plans in December

last year. It wants to launch Ka-band

HTS capacity that specifically targets

the 40 million people in the Pacific

including the Pacific Islands, New

Zealand, eastern Indonesia and Pa-

pua New Guinea.

According to the company, the

estimated total potential demand for

bandwidth from Pacific Island states

is 44Gbps. Today just 20%, or less

than 10Gbps, of that demand is be-

ing met. Kacific plans to sell whole-

sale bandwidth and anticipates that

telcos and ISPs will offer it to end us-

ers at speeds of up to 10Mbps and at

price points as low as 5% of current

costs. It expects to commission its

launch vehicle and payload this year

and to provide broadband services to

the region by late 2016.

“We are the new kid on the

block. When we set up this business

we saw a substantial hole in the mar-

ket in the region – specifically the Pa-

cific nations and the Pacific islands.

This market has probably the highest

discrepancy between supply and de-

mand per capita. It's not a very large

market but it's a very interesting mar-

ket that craves for bandwidth. So we

decided to address this market with a

high-throughput satellite,” Patouraux

explains. However, all of the activity

and planned capacity begs one obvi-

ous question: is there a coming over-

supply in the market? One person

that will go on record to suggest a

potential bubble in the wings is Glen

Tindall, VP Asia Pacific for global

operator SES. While SES isn't direct-

ly launching a HTS play in the re-

gion, it is a major shareholder in

O3b, which has launched the first of

12 satellites that will provide high-

capacity across Australia and much

of the Pacific.

According to Tindall, the most

likely scenario is that the extra capac-

ity will get consumed – eventually –

but there could be an oversupply in

the short-term.

“We all went nuts in the early

2000s launching satellites and then

it was we learnt our lesson and it all

went quiet,” Tindall says. “And now

everyone’s gone crazy again because

there’s so much money around and

there’s probably more capacity com-

ing into the market.”

Tindall notes that SES has fi-

nanced 13 satellites over the last

three years, with money raising not

an issue. Despite this, he sounds a

note of caution.

“We spend a lot of time and ef-

fort getting the financials right. At

the moment, I think with the world

awash with money and the economy

pretty good, it's not that hard to get

funded. But I think when the tide

goes out we'll see who's swimming

naked.”

“Now everyone’s gone crazy

again because there’s so much

money around and there’s

probably more capacity com-

ing into the market.”

Kacific’s Pacific footprint

Page 12: CommsDay Magazine August 2014 edition

PerthNewcastleBrisbane

Auckland

Los Angeles

San Jose

AUSTRALIANEW ZEALAND

HAWAII

FIJI

GUAM

PHILIPPINES

Christchurch

U.S.A

HONG KONG

SydneyCanberra

AdelaideMelbourne

Communicatefaster with Vocus

1000+on net buildings

75+

How connected are you ?

on net data centres

SINGAPORE

Page 13: CommsDay Magazine August 2014 edition

W hile the majority of theworld hurries to bury its

newest telecommunications infra-structure underground, the bulk ofservice providers in Africa seem tohave nowhere to look but up.

Africa presents a unique chal-lenge for telcos, wireless providersand ISPs attempting to provide inter-national voice and broadband con-nectivity to their subscribers.

While a number of cities on Afri-ca’s west coast and even a handfulon the east coast have recently beenlinked to the outside world via un-dersea fibre-optic cables, the rest ofthe continent remains largely isolat-ed and untethered.

Aging copper networks dottingthe landscape are quickly being aban-doned for cheaper and more reliableforms of wireless phone service byconsumers. Direct fibre connectionsfor end-users in the government andbusiness markets are also being slow-ly rolled out. Although these tech-nologies certainly have the potentialfor delivering high-quality voice anddata service to customers, connectivi-ty beyond the reach of the local loop

remains a costly and troublesomeproposition.

In order to connect to interna-tional voice and data networks,telcos and ISPs have relied upon fi-bre-optic connections to the nearestsubsea cable or more traditionallyuplinked traffic via satellite. Unlikeon most continents though, Africa’sgeography and scattered populationhave combined to make delivery ofservice via satellite often the only via-ble economic option.

Extending fibre-optic connectivi-ty hundreds, or even thousands, ofkilometres inland is not only moreexpensive, but less reliable than us-ing a fixed satellite service, whichrarely suffers from service outages.

As in the rest of the world, voicetraffic carried via satellite tends to beboth expensive and come with inher-ent limits to quality. With fixed satel-lites being in a geostationary orbit36,000km above the earth, latency is

a serious issue while trying to carryon a voice conversation. Under thebest of circumstances, the speed oflight itself will introduce a delay ofmore than half a second betweencalling parties – and deployments inAfrica rarely enjoy the best of cir-cumstances. The problem is oftencompounded by internal network la-tency or the need for more than onesatellite “hop” to relay the call.

Relaying internet traffic via satel-lite also comes at significant cost inprice and speed. Besides having tocontend with the same latency issuesthat plague voice traffic, internet traf-fic of any speed approaching‘broadband’ status is severely restrict-ed due to the limited amount ofbandwidth that C- and Ku-band sat-ellites have available to them. By thetime a carrier’s service actually reach-es the end-user, it is typically reducedto speeds more associated with ana-logue dialup modems than withbroadband access.

While VoIP may be driving downthe cost of international voice trafficin many markets, African carriers arelargely immune to such competition

African telecoms looking up

With most of the inland African continent lacking high-speed terrestrial connectivity, many local service

providers are looking to satellite. William Van Hefner reports.

Relaying internet traffic via

satellite also comes at signifi-

cant cost in price and speed.

Page 14: CommsDay Magazine August 2014 edition

due to the latency issue. Even inmarkets where carriers and ISPs haveaccess to the newest subsea fibre net-works, the enormous distance thatIP packets must travel make VoIPunreliable at best in many countries,and certainly not viable for criticalbusiness or government communica-tions in countries with the most seri-ous latency problems.

Although the number of satellitesbeing launched to serve Africa iscontinuing to climb, with bandwidthconsumption roughly doubling onthe continent each year there is littlechance of supply exceeding demandanytime soon. Wireless providers of-fering modern smartphones havelargely driven the market for internetbandwidth on demand, but with nosingle carrier consuming enoughbandwidth to justify the launch of itsown satellite a virtual oligopoly hasflourished, keeping competition to abare minimum and prices sky high.Satellite costs in some countries havegone down by roughly half in recentyears, but those cuts have largelybeen in response to the addition ofnewly-deployed fibre-optic cables ra-ther than competition between satel-lite providers themselves.

There does seem to be somehope on the horizon. O3b (see previ-ous article) last year launched thefirst four of what it eventually hopesto build into a fleet of 12 or moremedium earth orbit satellites target-ing Africa and the rest of what itconsiders underserved regions of theworld. Backed by investors such asGoogle, SES and HSBC the compa-ny has already secured deals with anumber of fixed and mobile opera-tors in Africa to backhaul traffic di-rectly from local uplink facilities toits satellites.

One great advantage that O3Bhas over traditional satellites with ge-ostationary orbits is an enormous re-duction in latency. By occupying anorbital slot only 8,000km above theearth, during its closest passes it canachieve latency delays nearly 5x low-er than that of other satellites. An-other advantage is bandwidth. O3b

labels itself as a “fibre in the sky” ser-vice, due to its ability to deliver up to84Gbps via Ka-band, which it plansto make available once four addition-al satellites are launched in July2014.

While O3B is not a publicly-traded company and much of its fi-nancial details are secret, initial pric-ing is reported to be somewhere be-tween the cost of direct fibre connec-tions and fixed satellite services. Thismakes the company’s product amuch easier sell to telcos and ISPsfurthest from Africa’s coastlines. La-tency performance versus underseafibre-optic delivery would also tendto favor countries in the southern-most regions of the continent, whereIP packets must travel the greatestdistances.

One potential downside of the ser-vice is that the low cost of launchingO3B’s relatively small and inexpen-sive satellites into a medium earthorbit tends to drive up the cost andcomplexity of hardware needed onthe ground.

A minimum of two satellite dish-es with the ability to track each satel-lite as it travels at nearly 19,000 km/h around the earth are needed ateach customer location. Unlike fixedsatellite dishes, tracking dishes aremore costly and difficult to maintainreliably due to their use of movingparts. While these expenses will notlikely have much impact on large car-riers, it may make deployment bysmaller ISPs and wireless carriers im-practical.

What other options may be onthe horizon? Google, which is also amajor investor in O3B, is currentlyconducting trials on something theyrefer to as “Project Loon”. What lit-

tle public information has beenmade available about the project in-dicates that it will utilize a numberof high altitude (about 32 km) bal-loons to deliver wireless internet ser-vice directly to consumers on theground using an as of yet unspecifiedtechnology or frequency band.

The company has already con-ducted successful trials of the tech-nology in remote portions of NewZealand and has indicated that Afri-ca will be one of their primary tar-gets of deployment, assuming thatthe project ever makes it beyond thetrial phase. The goal is to eventuallyprovide service worldwide, whichwould require what Google estimatesto be “thousands” of the company’sfloating wireless platforms. The pro-ject would also require an unknownnumber of uplink facilities aroundthe world to link remote users to therest of the internet.

But while Google puts its “poorman’s satellite” through real-worldtesting, the odds of the projectchanging the current dynamics ofthe African telecommunicationsmarketplace anytime soon are slim,at best.

For the immediate future, fixedsatellite service still looks to rule theair with O3Bb perhaps taking asmall bite out of the satellite datamarket. The majority of fibre deploy-ments continue to target cities alongAfrica’s coastlines, with no plans insight for anything resembling a coast-to-coast fibre-optic route.

With a growing, redundant sup-ply of network connectivity in theway of undersea fibre continuing tobe deployed, those living along Afri-ca’s west coast in particular are al-ready beginning to see incrediblebenefits in the way of increased in-ternet speeds, reliability and reducedcost. But for landlocked counties onthe continent, as well as for thosewho reside well-away from any coast-line, it would seem that the onlyhope for the moment is to continueto look skywards.

The majority of fibre deploy-

ments continue to target cities

along Africa’s coastlines, with

no plans in sight for anything

resembling a coast-to-coast

fibre-optic route.

Page 15: CommsDay Magazine August 2014 edition

Service providers continue to face staggering increases in

bandwidth demand, driven primarily by video and cloud com-

bined with faster and faster broadband and mobile access

speeds. This growth requires ongoing CapEx investment in the

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Investors, on the other hand, continue to demand strong

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The Intelligent Transport Network Architecture allows network

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Page 16: CommsDay Magazine August 2014 edition

The Internet of Things – a stateof all-but-ubiquitous connectivi-

ty between everyday devices, fromfridges to cars to water meters – iscoming. Telcos around the world,from BT to AT&T to Telstra, are in-vesting in machine-to-machine com-munications; some, like Telstra, arelooking to the sector to provide anew wireless growth area in marketswhere traditional consumer mobileis heavily saturated.

But while traditional end-to-endtelco infrastructure is well-suited forcertain M2M applications, a differ-ent ecosystem of network suppliers,owners and operators is on the rise,specialising in low-power, often long-range networks.

Something like a connected car,which provides plenty of onboardpower for traditional radio kit andmight need high and sustainedthroughput for downloading mapdata or entertainment content,might fit well with existing 3G or 4Gnetworks. On the other hand, widelydistributed networks of sensors on,say, water or power meters need tosend only very small amounts of dataper sensor at less frequent intervals –but may need to run for months oryears on a single battery charge,

That’s where companies like Sig-fox, Neul, Truenet and Taggle comein. Based variously in Europe, theUS and Australia, each develops spe-cialised hardware – often designed torun independently of existing tele-

coms networks – for low-bandwidth,wide-areas, very power-efficient radionets. A whitepaper from MachinaResearch, commissioned by Neul,suggests that Low Power Wide Areanetworks “have the potential to con-nect up to 60% of devices in 2022” –of a total 20 billion total connecteddevices forecast by that stage.

“It comes down to fundamentalphysics,” says National ICT Australiatechnology strategist Dr. Dean Econ-omou. “With wireless, if you want alot of bandwidth to go over a largedistance, you’ve got to have lot ofpower. And what’s happening withLTE networks is that we want tohave a lot of bandwidth, we wantgood coverage, so if you don’t wantto use a lot of power, you’ve got tomake the cells quite small...thatsolves the problem of us having indi-

vidual devices with high bandwidththat need to move around. But ifyou look at.. M2M, typically thesethings are sensors, or they’re doingsome sort of telemetry... for thosesensors, there’s not a lot of band-width [required].”

“[Some] of those sensors are fixed

somewhere, so they can probablyconnect up to a power supply fairlyeasily, or maybe you run it on solarenergy... and it probably does use theGSM system. But what happenswhen you’ve got hundreds, or thou-sands, of sensors on a structure like abridge or something, or structures inremote areas that you’re trying tomonitor, and you want them all totalk to each other? Do you wire themall up with high-powered radio devic-es, or do you come up with some-thing very low-power, with batteriesthat last years and years [or that canbe run off] solar, or something likethat?”

“GSM, 3G, 4G; those things usequite a bit of power, up around awatt or something. Even the old fea-ture phones, you might [only] get afew days out of [a single charge.] Sothat tech... is probably not a great so-lution when you’ve got thousandsand thousands of low-bandwidth de-vices that want to talk to each other,or talk to something else... [where]you don’t really want to have mainspower. If you are going to put batter-ies out there, you want to make surethat they last for years, and years,and years.”

Chris Andrews – CEO of Tagglein Australia – agrees that one sizedoes not fit all. “Wi-Fi and Zigbeeare... great radios in their own right,but they’re really designed aroundmachine-to-machine networkingwhere there’s a bunch of power

How to network M2M

With hype building around the Internet of Things, machine-to-machine communications technology is

shaping up to be big business – and telcos around the world are looking for a piece of the action. But

will today’s cellular networks dominate the market, or are low-power, purpose-built M2M nets a key part

of the puzzle? Petroc Wilton reports.

“A different ecosystem of

network suppliers, owners and

operators is on the rise,

specialising in low-power,

often long-range networks.”

Page 17: CommsDay Magazine August 2014 edition

sources for machines close by. Younetwork a building, it’s beautiful;you try and network a couple ofsquare kilometres, it gets tricky; onceyou try and... is network large areasof towns, it’s almost impossible,” hesays. “Frankly, the network cost justgoes through the roof. It’s designedto do something very well, which istwo-way communications of largeamounts of data; it’s completely notdesigned to send small amounts ofdata at high reliability in an uncon-trolled environment. For things likewater metering, gas metering, tem-perature sensing, you have no con-trol where the radio is, so you’ve gotto have a lot of capability in terms ofrange in that radio. Mobile technolo-gies are even more extreme. They’vegot great range, but they’re designedaround high data-rate, high reliabil-ity two-way comms, and there’s avery simple rule – which is the fur-ther you want to send something atthe same power level, the sloweryou’ve got to send it.”

“We fundamentally believethere’s a network layer missing,which is what we call low-power long-range networks and what Europe isnow calling low-power wide-area net-works,” adds Andrews. Taggle’s ownnetwork uses completely independ-ent transmitters and receivers, in900MHz class licensed spectrum,which Andrews says the firm is‘extraordinarily efficient’ at using.It’s in ongoing discussions with gov-ernment and utilities about the pos-sibilities of dedicating spectrum forvery low bandwidth comms, and alsowith local regulator the AustralianCommunications and Media Au-thority about the possibility of usingsmall amounts of guard band spec-trum – which, says Andrews, Taggleis sufficiently low-power to use.

One of its tags will transmit hour-ly on an AA battery for about twelveyears. “The bulk of the economicson the device side is about batterychemistry, not about physics!,” saysAndrews, adding that a single Tagglereceiver will cover an area that couldtake up to 1,300 repeaters in a com-

parable traditional mesh networkingtechnology to cover.”

If such specialised low-power net-work hardware is going to be a majorpart of the internet of things goingforward, though, the question fortelcos is: should they partner withplayers in the growing LPWA space,or build their own solutions to com-pete against them?

While Taggle is currently notworking directly with telcos, An-drews “absolutely” sees a place forpartnerships – because the overarch-ing IOT market will have a place forboth high-bandwidth, secure pathM2M links suited for high-end mo-bile networks, and for specialised

lower-power connections. “It’s com-pletely logical... the mobile phonespace and the RFID space is where ahuge amount of M2M growth is go-ing to be, there’s a bunch of thingslike vehicle tracking which are per-fect for mobile,” he says. They’recompletely complementary; youcould roll out a Taggle network intoa mobile phone operator’s networkvery fast at low cost... if you go to Eu-rope, you’ll see 2-3 major technolo-gies being developed in this space inpartnership with telcos.”

In the UK, for example, BritishTelecom has been working with Neu-el on trials of the latter’s NeulNetsystem – using white space spectrumand promising very long battery lifefor terminal modules. “The Internetof Things market has huge potential,but existing short-range and cellularnetworking technologies are unableto meet the requirements of manyapplications we see,” BT Wholesalemobile strategy and portfolio devel-opment director Mark Harrop hasbeen quoted as saying. “A network-ing technology that can provide deepindoor coverage, last for many yearsfrom a single battery, is simple to

use, and comes at the right pricepoint is essential for realising thetrue potential of the IoT.”

Not every telco, though, is in arush to partner with LPWA playerson M2M. In Australia, Telstra islooking to push M2M revenue backto double-digit growth – but, at leastfor the moment, M2M director MikeCihra says it’ll stay focused on whatit can do with its conventional cellu-lar network.

“Right now, our focus... is stillpretty grounded around the businessof using our existing Next G and ex-isting LTE infrastructure for deploy-ments. It’s not a firm or committedposition; if there were for any reasonan important opportunity for us topursue as it related to alternate typesof network capability, I think that’ssomething that we would consider,”he says.

“The majority of our services to-day are on our 3G, or Next G, net-works; we’re starting to see some veryspecific interest from customers as itrelates to LTE, and those customersare typically coming from automo-tive, [which] I think is the most im-portant sector looking for LTE sup-port for business,” he continues. “Iwould say that what’s in cellularright now is the anytime, anywhereconnectivity requirement; whetherit’s things that are on the move, interms of a truck or a trailer or a car,or whether it’s things that are de-ployed in very large quantities inde-pendent of a manufacturing campusenvironment; things around vendingmachines, or infrastructure to sup-port companies that are, for exam-ple, in oil or gas, or utilities... thevast majority of our deploymentsare... someplace with access to pow-er. We are starting to have some as-set-tracking devices now that docome with fairly significant long-lifepropositions around batteries, thatcould [have a lifespan] in excess ofsix months to a year; but by andlarge, the vast majority are some-where where they’re power-assisted.”

“The bulk of the economics on

the device side is about battery

chemistry, not about physics”

Page 18: CommsDay Magazine August 2014 edition

Earlier this year UK Broadband,a company owned by Hong

Kong telco PCCW, demonstrated aproprietary wireless system fromHuawei running so-called enhancedLTE in the UK. The exercise was de-signed to show UK authorities thatthe eLTE system was a viable replace-ment for the existing terrestrialtrunked radio (Tetra) network serv-ing the country’s emergency services,a network which the governmentplans to decommission starting in2017 in favour of a new EmergencyServices Network.

UKB aims to use its considerablespectrum holdings in the UK –124MHz of TDD spectrum in the3.5GHz and 3.6GHz bands – to se-cure the deal for the ESN in the UK,a potentially lucrative contact worthup to £7 billion over 10 years.

The official tender for the UK’snext generation ESN is expected tobegin this summer with the replace-ment of the existing Tetra infrastruc-ture as early as 2017. All of the UK’smobile operators are expected to par-ticipate in the tender.

The UK’s complete replacement

of the existing network with an un-proven LTE deployment for missioncritical public safety communicationshas raised some eyebrows across theindustry, to say the least.

When ESN’s existing operatorAirwave spoke at the Critical Com-munications Europe 2014 event, fewbelieved the scale and condition ofthe project was achievable in thetight time frame. “It’s impossible,”remarked Norway’s directorate ofemergency communications Tor-

Helge Lyngstol. “If you, in the fu-ture, are going to use commercial in-frastructure, something has to bedone with it, and I think that is along, long way to go.”

Lyngstol was referring to corePMR services that are currently notsupported by standard LTE net-works. Performance features of sys-tems like Tetra include low latencyvoice connections, robust reliability,push-to-talk and group chats, and en-

TETRA’s own emergency

LTE is muscling in on the lucrative mission critical communications sector currently dominated by pub-

lic standards such as TETRA. Already, there are plans in the UK to shift all the country’s public safety

communications requirements to a commercial LTE network environment. At the same time, a number

of public safety agencies are beginning to explore the possibility of integrated 4G into their private mobile

radio networks to support increasingly demanding data applications. Tony Chan reports.

Page 19: CommsDay Magazine August 2014 edition

hanced security and prioritisation.While mobile standards bodies likethe 3GG are discussing some of the-se features, and some are already inthe standardisation process – such asrelay and device-to-device – theywon’t be official until 3GPP’s Re-lease 13, which is expected only bythe end of 2015. Assuming they areeventually finalised as part of LTE, itwill take time for vendors to inte-grate the features into their networksand devices.

Even Tetra Critical Communica-tions Association broadband groupchairman Tony Gray (right), one ofthe leads working on getting LTEsupport for public safety networks,pours cold water on the UK’s aggres-sive strategy.

“No way,” he says of ESN’s pro-ject. “We’ve put a timeline togeth-er… which looks towards 2020 andmaybe even beyond that – 2025.”

The overwhelming doubt aroundESN’s chances of meeting its sched-ule doesn’t change the fact that LTEwill definitely form a future part ofpublic safety networks.

“It is clear that the users hadwanted for many years new applica-tions, new advancements, new tech-nologies on their network. And it’sbeen clear that our existing technolo-gy hadn’t been able to provide allthat LTE can,” says Mike Norfield,CEO of UK-based critical communi-cations specialist Team TelecomGroup.

For Norfield, the question isn’twhether LTE can support publicsafety, but what the cost might be ofusing it to do so.

In fact, UKB’s proposal withHuawei actually claims to address allthe shortcomings highlighted by theindustry regarding public safety LTE,albeit using a proprietary solution.According to UKB, Huawei’s eLTEapproach supports traditional privatemobile radio services as well as LTE’shigh data speeds.

With the eLTE system, the 4G

network is transformed into whatHuawei has dubbed an “embedded”network, which UKB says offers bet-ter interworking with devices. Prom-ised improvements of eLTE rangefrom better voice quality using3GPP’s high definition voice codecand faster call set up times of lessthan 300 milliseconds, to supportfor ‘pre-emption’ – which allows a

device to get on a base station evenwhen the node is full – as well asnecessary features from the PMRworld including direct mode, priori-tisation, multicast, and end-to-endencryption.

The question, though, is whetherthe UK government will put its trustin a proprietary system, largely un-tested in a live environment, for itspublic safety agency. And will theUK public let it?

The situation is further compli-cated because the UK government ismandating the use of a commercialLTE network. According to TTG’sNorfield, a private LTE network witha closed group of users may very wellmeet the requirements of public safe-ty. “Actually when the LTE technolo-gy today is applied to a campus styleenvironment like an airport, it willwork. For instance, you will see com-munities in the aviation space, thenext network they put in will not bea Tetra network, it will be an LTEprivate network... it can be proprie-tary, it can be [a] closed user group,

it can do all the things that you wantit to do and have all the fantastic da-ta applications,” he said. “But whenit comes to public safety, you’ve gotanother issue… will the [UK] govern-ment invest in a dedicated LTE net-work with dedicated spectrum? Prob-ably not, because the expense will betoo high.”

The only option left for the UK gov-ernment, to engage a commercialnetwork operator as its supplier, iseven more problematic because itwould mean passing the question ofcost and return onto the network op-erators.

According to Norfield, a companylike Vodafone could technicallybuild a robust and reliable networkthat might satisfy public safety stand-ards, but it is unlikely they could doso at a cost level that would still givethem acceptable returns. “At one op-erator, they ran six business cases forpublic safety LTE and failed everytime,” he says.

Which opens up another questionfor the project. Will ESN pay forwhat network operators will chargethem, especially when some of theirstaff may simply be playing games ontheir phones – which might be usingthe same high quality and expensivenetwork reserved by public safety?

DATA DELUGE: Despite thesechallenges in the UK, there seems tobe some urgency for more data con-nectivity. Current mobile data solu-tions in the private mobile radiospace are limited to narrowbandthroughputs that can handle, withoptimisation, a few streams of low-resolution video.

With the explosion of online vid-eo, social media, connected sensorsand so on, the public safety industryis now facing a tsunami of infor-mation that it now has access to, butcannot use effectively.

“I feel right now like a surfer, andright behind me is a massive wavethat is going to blow me off my surfboard... the wave of data,” says Debo-

“It’s clear that our existing

technology hasn’t been able to

provide what LTE can”

Page 20: CommsDay Magazine August 2014 edition

rah Weiss, CIO of the EmergencyServices Telecommunication Author-ity for the Australian state of Victo-ria. “Like data everywhere, EMS datais changing... [but] unlike the rest ofthe industry, we haven’t embracedthis change as they have. Data isgrowing in volume… [and] is alsochanging. More and more of our da-ta is unstructured and this is datathat is not managed.” Also changing,she adds, is the way that data is col-lected, shared and used.

But according to Weiss, not us-ing the data because there is no datanetwork is depriving public safetyagencies of critical information.

“We have information that wecan provide to the officers, we haveoperations data that we can sharewith the agency. But at this point,traditional voice is all we can acceptat the moment,” she said. “I thinkabout us as a bit of a clucking hensitting on a golden egg. We are nothatching that egg, we’re not sendingthe chicks out to the world; we aresitting on data, but we are not using[it] wisely.”

For Weiss, and for Motorola So-lutions’ CTO Paul Steinberg, (right)the ability to access more datasources will be a key enabler for nextgeneration public safety applications,such as the connected officer or thevehicle area network.

“The connected officer is a veryinteresting concept for me as a man-ager of the technology that supportsthe agency: the ability of the officerto have sensors, whether they are bi-ometric, whether they are telemetric,use them to collect data, and thenhave us operationalise it and makesure the office is safe,” says Weiss.

“So we get to detect the heartrate of our officers, we can detect theoxygen level of our fire fighters... wecan detect whether or not an officerhas drawn her gun or not, whethershe is running or standing still,whether she is horizontal or verti-cal… we have to work out how wemanage this data, not only in view ofofficers’ safety, but also in view of es-

calating incidents and how we dis-patch more resources to the situa-tion.”

Another easy data collectionpoint is the officer’s vehicle, whichcan be fitted with local wireless net-work hardware coupled with sensors,Weiss said. “As soon as you enterthat space, you become immediatelysituation aware, so what we are talk-ing about is the same concept – thevehicle can create a wireless net-work.”

Motorola Solutions’ Steinberggoes a step further, pointing to theapplications themselves as the keyenabler for public safety going for-ward. “I think what is really im-portant is the idea of contextualcomputing. So the device has got tobe second nature, it’s got to do whatit’s got to do without you and Iknowing how to deal with it… I planto study what we call high velocityhuman factors. That’s a fancy term

[meaning that] the more stress thatyou and I are under, the less cogni-tive capacity we have to cope withother things,” he says. “It’s not rock-et science. If you are a policeman orfire fighter, and you are under a lotof stress – either trying to stay aliveor save a life – that is when you havethe least amount of cognitive capaci-ty to make the technology work todo what it needs to do for you. Sothe technology needs to figure outwhat the right thing is for you, situa-tionally and in the context of the

moment.”

ONE NETWORK FUTURE: Allthese applications are only possiblewhen there is a high-speed data net-work to support the gathering anddissemination of data. In fact,TCCA’s Gray says that the criticalcommunications space is putting allits eggs into the LTE basket – justnot to the schedule of the UK gov-ernment.

“We want to come away from thetraditional situation… where there isTetra, Tetrapol, P25, GSM-R andother technologies and standardsthat fundamentally do very much thesame thing but in their own nicheareas,” says Gray.

“We would like to see a futurewhere a common global standard,based on commercial LTE, could ad-dress all of those markets as well asall of the commercial markets, andallow us in the critical communica-tions sector to benefit from someeconomies of scale, driven by the sizeof those markets. We would like forthe future critical users to be able tohave broadband capabilities that arejust as reliable, just as resilient, justas available as those they’re used towith their Tetra and other technolo-gy solutions.”

That is when the critical commu-nications industry will really flourish,adds Motorola’s Steinberg.

“One of the gaps that I see is theapplications development ecosystem.The enablement that the Apple andAndroid do in terms of APIs andnetwork capabilities... I think publicsafety [has] to get to a [a similar]point [with its] application ecosystemwhere innovation is going to comefrom anywhere – from the userthemselves, from Motorola – in astandardised way, where they can re-quest grades of service, where thereis a progression and a lifecycle man-agement approach for applications,where they can be validated, certi-fied, vetted, and introduced with se-curity and standard,” he says. “Thatapplication ecosystem is somethingthat needs to mature.”

Page 21: CommsDay Magazine August 2014 edition

W hile much of the conversa-tion around the concept of

‘smart cities’ is still a tad ephemeral,some recent developments may war-rant a closer look. What exactly arethe opportunities for commercialplayers? And will the Internet ofThings provide enough of a platformfor telcos and governments to steponto and really forge ahead?

In some circles, the idea of thesmart city is understood as merelythe next phase in the process of ur-banisation that has been trendingwithin policy spheres for considera-ble time. However, there is a moveto distinguish the concept from oth-er, more ICT-focused labels such asintelligent or digital cities, with a no-ticeable push to try to define theconcept more around the role of hu-man capital and education.

Together with social and environ-mental interests, these are proposedas some of the requisite key driversof urban development.

Another approach to smart citiesis to focus on business parks andbusiness-oriented cities. An Australi-an example is the Tonsley develop-ment in South Australia, a partner-ship project initiated by the SA De-partment for Manufacturing, Innova-tion, Trade, Resources & Energyand Renewal SA, the urban renewalauthority; the project sees the stategovernment investing more thanA$253 million in a scheme that aimsto integrate industry, education,training, research, residential livingand community interests. The collab-

oration is forecast to attract morethan A$1 billion in private invest-ment.

But these concepts of smart cit-ies, focused on enabling commercial,social, cultural and urban develop-ment, need not preclude the notionof a wired city as the central model.In fact, in nearly every conceivablescenario, connectivity could prove avital source of economic gain, usual-ly with a primary focus on the role ofhigh-tech and creative industries.

If we focus on the idea of net-worked infrastructure, aimed atboosting economic and public policyefficiencies, a range of services to beprovisioned presents itself. Includedamong these are business, housing,leisure and lifestyle services – andICT offerings such as mobile andfixed phone, computer networks, e-commerce and high-speed internetservices, fixed-line or otherwise.

“At the heart of every smart cityinitiative is ubiquitous connectivity,which very clearly marries up withcore telco service capabilities,” saysMarket Clarity founder and CEOShara Evans. “Wi-Fi networks formpart of this connectivity grid, but inaddition to telco-based services, cantake the form of government-ownedor sponsored networks, private net-works deployed by local business, oreven community networks estab-lished by residents — as well as pub-lic/private partnerships.”

“Smart cities are on the radar forgovernment, telcos, utilities, vendors

and infrastructure providers for awide range of reasons, includingubiquitous communications, energyefficiency, aesthetics, publictransport (location tracking of buses,trains, taxis, parking space availabil-ity, traffic incidents), traffic manage-ment (including driverless vehicles),public safety and environmentalmonitoring, emergency responsemanagement, and lots more!” addsEvans. The common thread, again, isconnectivity. “Communicationstechnologies are the glue that ena-bles all of these different applica-tions. And, fundamentally, whatwe’re really talking about here is theemerging Internet of Things.”

Evans cites the example of the‘Zero Site’ joint project from Erics-son and Phillips, which involves theplacement of small mobile cells in-side light poles that use energy effi-cient LED lighting. “These are spe-cial light poles that have [an inbuilt]cooling system, but even so are ableto generate a savings of 80% in elec-tricity use when coupled with smartcontrols. Apparently, there are a100 times more light poles than tele-com sites in the world, and this typeof dual-purpose deployment wouldaddress issues such as mobile net-work densification, difficulties thatcarriers have in acquiring sites formobile towers, and aesthetic issues —as well as saving energy.”

“Of course, backhaul from thelight pole to a network access pointis also required. The initial systemsuse fibre, but microwave could be

Smart cities for clever telcos

The concept of ‘smart cities’ is gaining currency, but where are the opportunities for telco players?

Richard van der Draay reports.

Page 22: CommsDay Magazine August 2014 edition

implemented as well. Hence, thereis also a role for the use of telco, util-ity or municipal fibre to connect thelight poles to the network cloud, aswell as for telcos to deploy small mo-bile cells inside of the light poles,”adds Evans.

“In my view, successful smart citydevelopments will involve an ecosys-tem of technologies, services andstrategic partnerships. Telcos certain-ly can play a valuable role here.”

Innovation in wireless sensor net-works is already being used to con-struct the technological frameworkof smart cities. The idea is to create adistributed network of intelligentsensor nodes, allowing the measure-ment of a variety of parameters.

This, in turn, facilitates a moreefficient urban management wherethe data collected is transmittedwirelessly in real-time to users andcity authorities. For example, resi-dents can monitor pollution levels ina particular street or receive alertswhen radiation levels exceed a cer-tain mark.

Other such applications includesmart ways for civil authorities to op-timise the irrigation of city parks orto control street lighting. For in-stance, this technology would makeit a breeze to detect water leaks or tohave sensors installed in rubbishbins that transmit an alarm whenthey are nearly full and ready to beemptied or collected. Road conges-tion could be tackled using systemsthat detect the nearest available park-ing space, while it has also been ar-gued that due to the revenue-generating aspect, smart parking sys-tems could be a prime motivationfor building civic wireless networks.

Once in place, networks like the-se could be extended to include oth-er types of sensing. For instance, theCalifornia-based company Streetlineannounced it would add road sur-face temperature and noise sensingcapabilities to its smart parking port-folio this year. According to a Frostand Sullivan White Paper on the

company’s intelligent parking solu-tions, the firm is one of several com-panies currently teaming up with lo-cal-level governments in the US andEurope in a bid to resolve challengesaround traffic congestion and park-ing availability through intelligentand innovative technology.

The report found that many suchprivate-public joint schemes are de-livering key results in smart parkingin large cities such as Los Angeles,San Francisco, Chicago, and Bostonin the US and Zurich, Amsterdamand Brussels in Europe – attracting avariety of other stakeholders. Premi-um car manufacturers are pushinginto the smart parking sector, withalliances forged between parking op-erators and app providers.

In 2011, Streetline won fundingtotalling US$15 million from ven-ture capitalist firms, enabling it toramp up its sensor-enabled mobileand web-based smart city and smartparking services. The Frost & Sulli-van research showed that the compa-ny had successfully adapted emergingtechnologies, such as the Internet ofThings and had hit upon a solidbusiness avenue for implementing itsservices while at the same time sup-porting urban improvement.

Similarly, a recent partnership be-tween Optus and the NSW Depart-ment of Transport saw the telcoproviding Wi-Fi connectivity in thefinal section of Sydney’s train tun-nels, enabling a range of mobile ap-plications for commuters en route totheir daily grinds.

Last April, NSW minister fortransport Gladys Berejiklian an-nounced the mobile phone recep-tion switch-on for train customers.

Sydney Trains chief executiveHoward Collins says that nowadays

many rail customers use their smartdevices to stay in touch on publictransport. “This project means[they] can also keep up-to-date withwhat’s happening on the networkwhile they travel, [with the] updateson Twitter [and real-time apps].”The mobile phone coverage projectwas undertaken in partnership withlead carrier Optus, along with Tel-stra and Vodafone.

One challenge with buildingsmart cities is how to physically in-stall the required infrastructure.Building scratch might well be pref-erable from the point of view ofcouncil town planners and assortedagencies involved in infrastructuredevelopment; equally, private enter-prise would hardly baulk at the pro-spect of landing exclusive contractsfor developing connected greenfieldscentres. Take for instance, the Song-do International Business District, asmart city constructed from scratchon 1,500 acres of reclaimed landnear Seoul in South Korea. The ten-year project is forecast to cost in ex-cess of US$40 billion, making it oneof the largest private real estate pro-jects as well as one of the most ex-pensive development ventures everundertaken.

But whether greenfields orbrownfields, Evans underscores theimportance of coordinated infra-structure planning for a truly smartcity. “Wouldn’t it make sense to digup a road one time to do roadwork,install conduits for telcos and/orutilities, pipes for water, sewerageand gas, or any other civil infrastruc-ture requirement?” she says.

“Unfortunately, I don’t see muchof this happening. When I talkabout this concept with the variousparties, with few exceptions they al-ways find reasons to describe why it’s‘too hard’. But the reality is that,yes, it does take work but the reduc-tion in unnecessary civil infrastruc-ture work would result in massivesavings, and a lot less disruption tolocal residents, businesses and visi-tors.”

“Innovation in wireless sensor

networks is already being used

to construct the technological

framework of smart cities.”

Page 23: CommsDay Magazine August 2014 edition

C loud computing’s arrival intothe mainstream market is

changing every facet of the infor-mation and communications tech-nology landscape. From the way cor-porations build and operate their ITinfrastructure, to how networks arebeing provisioned and sold, cloudcomputing and its model of allocat-ing resources on subscription andelastic consumption is bringing in awhole new set of variables to thebusiness of technology.

For network operators, cloudcomputing can be a massive businessopportunity since by definition,clouds require a network to be reach-able by their users. It can also be athreat since it can commoditise con-nectivity and in some cases, reduce itto a non-commodity – essentially rid-ing over the free public internet.

The problem is that there is nosimple model for cloud computing.To narrow down cloud computinginto a singular, one-dimensional de-velopment is nearly impossible.

Cloud computing is used to pow-er some of the world’s largest onlineservices and content companies –

e.g. Google and Facebook. Cloudcomputing is also being deployed asinfrastructure and platforms for rentby companies such as Amazon WebServices, Google, Microsoft, Rack-space and a host of others, includingtelcos such as NTT Communica-tions, Verizon, AT&T, Telstra, TataCommunications, BT and more. Ad-ditionally, cloud computing formsthe foundation for a growing ecosys-

tem of online business services.

At the same time, corporationsare increasingly turning to cloudcomputing as a way to optimise theirIT operations, leveraging both on-premise installations and third partysites in hybrid deployments.

Each of these cloud computingscenarios requires some kind of net-work connectivity. Each presents dif-

The network and the cloud

While there is no question that clouds need networks, the elasticity and on-demand nature of clouds is

breaking down the traditional business model of networks. Tony Chan reports.

Page 24: CommsDay Magazine August 2014 edition

ferent challenges and opportunitiesfor the telecoms sector. So what doescloud computing mean for the tele-coms industry?

BIG PIPES: Cloud computingmeans big pipes. One of the biggestopportunities for the telecoms sectorfrom cloud computing comes fromthe largest contributors to trafficgrowth: the internet content andover-the-top players. Companies suchas Google, Facebook, Yahoo and Mi-crosoft now operate global networks,rivalling those of many carriers, inorder to connect together their datacentres and to distribute their con-tent to different regions.

Google, for example, operates atotal of 13 datacentres across all ma-jor regions except Africa. All thesefacilities require connectivity to ex-change data and synchronise con-tent. That means really big pipesacross the Atlantic and the Pacific, aswell to South America.

This is obviously a huge oppor-tunity for the telecoms industry. Infact, many of the biggest capacitysales in the Asia Pacific region in thepast decade have involved internetcontent companies taking wave-length-level services on trans-oceanicsubmarine cable systems.

More recently, these ‘private’ net-works are starting to outgrow thepublic internet. According to Tele-Geography, private network band-width grew at a compounded rate of55% annually between 2009 and2013, outpacing the overall growthof international bandwidth (44%)during the same period. From 20%of the overall international band-width of 30Tbps in 2009, privatenetworks accounted for 25% of138Tbps of international bandwidthin 2013. According to those figures,private networks now account forsome 38Tbps of international capaci-ty, more than the entire market justfour years ago.

“What our data seems to show isthe demand growth of private net-works has been faster than the [that

of] traditional internet backbone op-erators, especially on the big transo-ceanic routes... across the Atlanticand the Pacific,” says TeleGeographyresearch director Alan Mauldin.

NEW PLAYERS: However, thesheer size and scale of the bandwidthrequirements from these OTT andcontent providers has created a newdimension in the market place. In-stead of shopping around for capaci-ty, some of these firms have startedto drive the market by dictating theirown terms.

For Google and Facebook, thathas meant going as far as to becomesubmarine cable owners themselveswhen they were not happy with theavailability or price of some routes.

Google is now part of two subsea ca-ble systems, Unity and Singapore Ja-pan Cable, while Facebook is part ofthe consortium building the Asia Pa-cific Gateway intra-Asia cable.

What this means is that bothcompanies now know exactly howmuch it costs to build a cable andhave hired staff that understand thesubmarine cable industry –knowledge that tips the scales intheir favour at the negotiations table,industry commentators pointed out.

That doesn’t mean there is no

more opportunity for wholesale play-ers, Mauldin adds. “I guess, in a way,you can say that Google and their irkare now cutting their cost by build-ing their own cables – that does re-duce the customers for traditionalwholesale players,” he says. “But youhave to bear in mind that [while]they are investing in cables them-selves, they still lease capacity on oth-er cables too; they have to haveboth… they are going to need capaci-ty on every cable, as with any otheroperator. Everybody has capacity onmultiple cables, for diversity purpos-es. Just because they are buildingtheir own cable doesn’t mean it isthe end of those companies having aneed for capacity on other systems.”

The industry should expect to seefurther participation of these OTTplayers into the subsea space.

“The last cable across the Pacificwas Unity built in 2010, that gotstarted in 2008. At that point intime, the requirement from Face-book, Microsoft, and everyone elseweren’t at the level that Google had,therefore, they were not willing toparticipate in a cable like Unity atthat point in time,” says Mauldin.“Since 2008, perhaps their view haschanged – so if there were a cablelast year, they might have been an in-vestor. You can’t view it as ‘they arenot investing in the Pacific’ becausethey have clearly brought capacity onmultiple submarine cables right nowand have a ton of capacity. Whyhaven’t they been investors? Well,there haven’t been any new cables.”

The industry should expect to

see further participation of

these OTT players into the

subsea space.

Page 25: CommsDay Magazine August 2014 edition

DATA CENTRE LINKS: But largetransoceanic routes and large inter-net content companies are not theonly market opportunities for telcosstemming from cloud computing.With the increased reliance on datacentres to host and run applicationsin the cloud, national and intra-regional connectivity is also seeing amajor boom.

According to KVH vice presidentof network strategy and architectureGint Atkinson, the company’sDCNet – which provides connectivi-ty between data centres – has mush-roomed into a huge business. Hesays that KVH, which was originallyfocused on providing proximity host-ing and low-latency networking ser-vices to financial institutions primar-ily in Japan, has now sold thousandsof 10G and 100G circuits withinand between data centres.

“One area [where] we have seen alot of success is in the 100G and10G connections. All those top play-ers coming into Asia, especially in Ja-pan, are looking at our 100G ser-vice… inside the data centres, we areseeing customers looking to reachout of the data centre and into otherdata centres using 10G services, andthey want to tie these services togeth-er into a fully managed network ser-vice,” he said.

The success of KVH was due tothe fact it was in the right place atthe right time. According to Atkin-son, the company had already laidfibre between key data centres withinthe metropolitan Tokyo area as partof its original business plan targetinglow latency routes. When the de-mand escalated between those sites,it was simply a matter of lighting upthose fibres.

KVH is now moving quickly tocapitalise on the opportunity and ex-pand its network to Hong Kong andSingapore from its home market ofJapan. The firm is currently buildingits own fibre ring that will connectthe three markets, with the aim ofadding 100 more datacentre sites toDCNet by the end of the year.

CLOUD CONNECTIONS: WhatKVH sees as a very specific oppor-tunity – inter-data centre connectivi-ty – Global Cloud Xchange CEOBill Barney sees as a wider marketshift towards connecting togethercloud infrastructure and services,particularly for corporations adopt-ing cloud computing technologies.

For Barney, the opportunity isnot just selling capacity, but also intaking on the role of a middlemanbetween users and the applicationshosted inside data centres.

“It’s essentially a way to touchclouds from our infrastructure,” Bar-ney said. “We think the datacentrebusiness is part of the ecosystem, butit’s a portion of the whole system,it’s not the whole. You need datacentres, you need connectivity, youalso need the orchestration layer.Without the orchestration layer, andthe customer facing capabilities, youactually can’t play in the segment. “

“You can be a datacentre opera-tor today, and you can be a fibre op-erator today, [but] this doesn’t neces-sarily give you a step into the ring ofthe cloud business. You basicallyhave to bring everything togetherwith the orchestration layer… be-cause CIOs don’t want to buy thebricks from one guy and the mortarfrom somebody else. They want toget the whole package. That’s wherewe are going to put our focus.”

According to Barney, these typesof services now allow traditionaltelcos like Global Cloud Xchange,formerly Reliance Globalcom, achance to expand into a new busi-ness segment.

“The opportunity for us is to sellinto a completely different segmentof the market, so suddenly, we can

compete with the computer compa-nies, the software companies, andplay in that space… this allows us tocompete in a much bigger market. Ifwe can participate and get a portionof the cloud deployments going for-ward… even if each one of our cus-tomers were to give us 10% of ITbudget they spend on compute, ourcompany will double in size,” saysBarney. “If you start to look at theopportunity for companies like us toplay in that space, it would be agame changer – that’s why we are do-ing it, and hopefully [for] the nextcouple of years, we have a successfulplan to get there.”

CORPORATE CLOUDS: GlobalCloud Xchange is far from alone inits attempts to become the conduitfor cloud adoption. It is becomingabundantly clear that corporateadoption of cloud computing –whether as a centralised internalhardware resource, an hosted appli-cation running on third party facili-ties, or a combination of both – isnow making cloud connectivity anecessary part of the equation.

As a result, a growing number ofcarriers have rolled out programs toaddress the need for private network-ing into the cloud, many promptedby the actual cloud computing pro-viders themselves.

Amazon’s Direct Connect fea-ture, which allows corporate users toset up a direct link between internaldatacentres and its Elastic ComputeCloud, now counts 43 carriers in itsAmazon Web Services partner net-work. All these carriers have effec-tively productised what is essentiallya very specific transport service be-tween a customer’s data centre, of-fice, or co-location environment tothe AWS cloud.

Similarly, Microsoft has launcheda private network partnership pro-gram for its Azure cloud called Ex-pressRoute. So far, Microsoft hassigned up AT&T, BT, Equinix, Lev-el 3, TelecityGroup, and Verizon asits carrier partners for ExpressRoute.Interestingly, while Equinix, Level 3,and TelecityGroup support both

“Suddenly, we can compete

with the computer companies,

the software companies, and

play in that space.”

Page 26: CommsDay Magazine August 2014 edition

AWS and Microsoft, AT&T, BT andVerizon are so far exclusive to Mi-crosoft.

At the same time exchange facili-ty operators including Equinix andTeleCity, which previously providedinterconnection services for carriers,are pouncing on the demand fromenterprises customers seeking to con-nect into clouds.

Equinix has announced two initi-atives – Cloud Exchange and Perfor-mance Hub – each architected toprovide cloud connectivity.

Similar to GCX’s model,Equinix’ Cloud Exchange allows cor-porations to access multiple cloudsfrom single or multiple locations,while the Performance Hub productgoes a step further by providing datacentre space inside the network ex-change points to further reduce la-tency between corporate applicationsand cloud operators.

This is a market that GCX’s Bar-ney is expected to accelerate goingforward as the number of cloud facil-ities and services ramps up. GCX islaunching its cloud connect platforminitially with 28 cloud destinations –basically where corporations mighthost their own cloud infrastructure,or want to connect into to accesscloud services.

LOCATION: For TeleGeography’sMauldin, “cloud connectivity” ser-vices are simply traditional leased cir-cuits under a new name, althoughwhat and where they connect to mayhave evolved.

“It seems there’s a lot of talkabout cloud connectivity... it’s justanother name for just a private lineconnecting a user into some place…all you are doing is taking a custom-er, and taking them in at Layer 2, toa cloud at some location. That is re-ally just wholesale... providingtransport capacity between two loca-tions,” he says. “What’s changed isthe places that people want to con-nect to. You still need to [connect to]the major internet hubs, the majorinternet exchanges, but you may alsoneed to connect to specific datacen-

tres, specific buildings – that is oneof the changes to wholesale, beyondthe need to link to other networks,trying to link to specific sites.”

Location-specific connectivity isalso a key focus for GCX’s Barney,who believes that cloud connectivitywill evolve to address different coststructures and operating require-ments.

“This is a natural evolution fornetworks. What we are trying to dois build that orchestration layer sothat an enterprise customer can parkstorage somewhere it’s cheap, andyet they can have access to applica-tions and server time right next towhere their employees are to dostuff,” Barney said. “This is really go-ing to be the opportunity, how youactually segregate the cloud, so guyscan build hybrid clouds, becausethat’s where you are going to get theIT savings… The advantage we haveis we run past 1800 data centres, andif you look at a kilowatt of power,there’s a 90% difference between theprice at one end of that to the other.So we’ve got places where we candrop people off where it’s in themiddle of nowhere, but are cheap,all the way to places in downtownHong Kong – what we want to do isgive customers that choice.”

ELASTIC NETWORKS: Whilecloud computing is now a majordriver of demand for network capaci-ty, it is also changing the nature ofthe networking business. Just as theconsumerisation of IT has led to ma-jor shifts in how enterprise applica-tions are delivered and managed,adoption of cloud computing is lead-ing to a ‘cloudification’ of the net-work.

So while CIOs must now con-tend with matching the availability

and user experience of online appli-cations such as Dropbox orWhatsApp, the elasticity and on-demand nature of the cloud operat-ing model is challenging networks todo the same.

This is one of the main themesbehind the growing interest in andadoption of software defined net-working, as more enterprises take upcloud infrastructure and services.They are now looking to consumetheir networks in the same elasticand on-demand manner, accordingto earlier adopters of SDN such asKVH, Pacnet, NTT Communica-tions, Verizon, and others.

“[SDN] allows us to be more agileand put a lot more flexibility andcontrol into our services. So nowcustomers can have elastic band-width [and] get access to a largernumber of routes across the networkat different points in time. If theywant a low latency route for a shortperiod of time, or for certain timesduring the trading day for example,they can get that. And if they wantcheap reliable bandwidth, they canget that at different times of theday,” says KVH’s Atkinson. “So add-ing a lot of elasticity and flexibility toservices that are traditionally very rig-id... is something that we are expect-ing out of SDN.”

Similarly, Pacnet VP of productarchitecture for managed servicesJon Vestal says that elastic consump-tion has proven itself as a driver forcustomer adoption.

“The initial use cases were cloudburst, getting into other cloud opera-tors, as well as the disaster recoveryaspect – customers need to havebackup circuits, but they may notnecessarily want to pay for thosebackup circuits when they are not us-ing them,” Vestal says. “We are defi-nitely getting to more customers. Wesee something similar to what we sawin the cloud world, where peoplecame in and did a little bit of devel-opment, a little bit of testing, sometouchy feely stuff to see how itworks... we are starting to see that,

“If they want a low latency

route for a short period of

time, or for certain times dur-

ing the trading day for exam-

ple, they can get that”

Page 27: CommsDay Magazine August 2014 edition

but we are also starting to see cus-tomers coming in and going straightinto production.”

More importantly, perhaps, SDNempowers Pacnet to become part ofthe overall enterprise IT stack ratherthan just a provider of circuits.

“SDN has allowed us to have dif-ferent conversations with our cus-tomers. Historically, we went andtalked to them about providing a cir-cuit from point A to B. Now whenwe go in and talk to customers, weare talking about how can their ap-plications meet their specific busi-ness needs,” Vestal adds. “We areable to have the applications them-selves determine what paths to use,what network performance theyneed.”

It’s a way to stay relevant in theindustry, comments Ciena VP forproduct line management KevinSheehan.

“They see it as a stickier service.Typical telcos today fear becoming autility and being fully commodi-tised,” Sheehan says. “So anythingthey can do to add value to their ser-vice, and in fact, thereby make theirservice a little stickier, they are veryinterested in.”

CLOUD OF UNCERTAINTY: It’spretty clear by now that cloud com-puting, in all its shapes and forms, isimpacting many aspects of telecominfrastructure.

From consumers overloadingtheir broadband connections withonline video, to Google building itsown submarine cable, and the ap-pearance of on-demand publicclouds, cloud computing is having aprofound impact on the networkingbusiness.

OTT players using cloud technol-ogies now require massive global net-works to tie together their contentand services. Public clouds are nowevolving towards semi-private, virtualprivate, and hybrid infrastructuresthat demand secure, dedicated net-

works. Yet there remains uncertaintyabout how the characteristics ofcloud computing can be successfullyapplied to the networking industry.

SDN is on the cusp of makingcloud computing’s ‘as-a-service’ mod-el a reality for networks, but it’s stilltoo early to tell whether that willprove a profitable evolution for net-work operators. A profitable busi-

ness model for carrier-based SDNservices will likely emerge eventuallywith the right pricing structure andoperating model, but it is too earlyto tell just exactly what the settingswill look like.

In many cases, carriers remainhesitant to introduce elasticity acrosstheir entire product portfolio, reserv-ing SDN for specific offerings suchas inter-datacentre connectivity forfear of cannibalising existing services.

That fear is very real. Carriershave always sold circuits and band-width on long contracts to justify theinitial heavy investment of buildingnetworks. Even bulk discounts arebased on the length of the contractsas much as the amount of band-width.

Replacing their entire revenuebase with on-demand, pay-as-you-gocontracts not only risks operators’profits, but also presents significantchallenges in dimensioning their net-work since their customers wouldhave free reign over when they wantto take up capacity and how much.

Somewhat surprisingly, though,Pacnet has seen more stability ontheir network with SDN then previ-ously.

“We see the pipes being filledmore consistently. The biggest chal-lenge for carriers is how do we bal-

ance traffic. What we see is traffic...peaks and troughs during the day,and customers are committing atvery high levels because they need tosupport their peak, which meansthat when they are not hitting theirpeaks, you have a lot of white space,”says Vestal. “With this solution, cus-tomers can now provision band-width as they needed and when theyneeded, we see our pipes being moresolidly filled up, they aren’t over-committing which allows us to sellmore services on that same physicalinfrastructure.”

What’s beyond question is thefact that SDN and cloud computing-like network services are here to stay.Almost every carrier in the world hasdeployed, or is looking to deploy,SDN in their networks.

While some are using SDN exclu-sively to improve their internal net-work operations, or to speed up ser-vice development and provisioning,it is highly likely that those featureswill eventually make it to the frontend of customer facing systems –much like what is being offered to-day by Pacnet, NTT Com, KVH, anda host of others.

These types of services have thepotential to truly disrupt the tele-coms business, much like cloud com-puting technologies and serviceshave changed the face of IT. But likecloud computing today, there are alot of variables still left.

Cloud computing as an underly-ing technology has certainly enabledmega-scale service platforms likeGoogle and Facebook, but as a prod-uct and service in itself – as in thepublic cloud offering – it is unclearwhat exactly the business model is.

As one analyst asked during a re-cent conference on cloud, “is thereanyone making money from cloudbesides Amazon?”

“Carriers have always sold

circuits and bandwidth on

long contracts to justify the

initial heavy investment of

building networks.”

Page 28: CommsDay Magazine August 2014 edition

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Nextgen products headAakesh Gandhi on howSDN will transform datacentres and telecoms

Market Clarity futuristShara Evans on how 3Dprinting will turbo-charge network demand

Former ACA chair DrBob Horton on impactsfrom the SpectrumManagement Review

Challenge Networks MDSimon Lardner on hisfirm’s world-first mobilemesh network solution

Former ALP commspolicy adviser DavidHavyatt on how to takethe politics out of NBN