The Cloud On the Horizon Is Closer Than You Think

The Cloud On the Horizon Is Closer Than You Think

On Sunday February 21, 2016, Facebook announced the Telecom Infra Project (TIP), an engineering-driven initiative with infrastructure providers, system integrators, and other technology companies to collaborate and re-imagine different and innovative methods for building and deploying telecom infrastructure. Initial TIP members include global organizations such as Facebook, Nokia, Intel, Deutsche Telekom, and SK Telecom.

The TIP members primary focus will be on three areas of the telecom infrastructure: (1) access, (2) backhaul, and (3) core management. Building upon their success as founding members of the Open Compute Project (OPC), Facebook believes they can impart knowledge from that project to reduce inefficiencies, streamline processes, and develop and deploy new communication technologies at a much faster pace. TIP is an open source initiative designed to spur rapid innovation with multiple parties contributing to the project.

Perhaps, TIP may be able to drive innovation in telecom infrastructure as OPC did in the design, deployment, and management of data centers. With that in mind, why weren’t large network operators like ATT, British Telecom (BT), and Verizon in addition to equipment providers like Cisco and Ericsson included in the announcement as participants?

According to an article in Fortune, Facebook’s Huge Plan to Shake Up Dull World of Telecoms, the success of this project directly represents an economic threat to equipment companies such as Cisco and Ericsson and could reduce the role of ATT, BT, and Verizon as network operators to mere providers of “dumb pipe”. How you might ask?

It may not be obvious to everyone, but Facebook is a cloud computing company. Sure, their primary product is a social networking service but behind the scenes they’ve built one of the largest cloud environments in the world. It’s estimated that Facebook had several hundred thousand servers in a 2014 article posted in Data Center Knowledge. Given that enormous server infrastructure, it was inevitable that Facebook would look for a way to monetize it.

In 2015 at their F8 developer conference, they announced an application development platform based on the Messenger service that enables video exchange, online payments, and a host of other services managed within messaging that previously required a separate app. With that announcement, Facebook became an official platform as a service (PaaS) provider.

Facebook is following in the footsteps of other global organizations like Amazon, Google, and Microsoft that deployed a large number of servers in disparate locations in order to provide their first service offering and then later developed and launched a cloud service.

Statista estimated that the global telecommunication services revenue for 2015 was $1.27 trillion growing to $1.44 trillion. Those figures represent enormous opportunity for the global cloud computing giants. The cloud services infrastructure is cheaper to deploy and is optimized to provide dazzling service unencumbered by the regulatory constraints faced by the large telcos.

Google launched their Fi Project on April 22, 2015. Fi positions Google as a mobile virtual network operator (MVNO) a.k.a wireless carrier in the U.S. telecom market. The tech giant partnered with Sprint and T-Mobile to provide the underlying network while Google provides the Motorola handset and Android operating system.

Google’s Basic service plan includes unlimited domestic talk & text, unlimited international texts, the ability to use the phone as a WiFi hotspot, and coverage in 120+ countries. Data is priced simply too. It’s only $10/GB and you only pay for what you use. Plus, they credit you for any unused data and no annual contract. In addition, Google Fiber just announced San Francisco as the twenty-second location of it’s fiber service.

The Fortune article described how ATT is moving forward rapidly with software defined networking (SDN) with the intention of enhancing their ability to develop, deploy, and manage services more efficiently. ATT expects to have their SDN efforts 30% complete by the end of 2016. This could be a game changer for ATT but we won’t know until the deployment is completed.

Cisco and Ericsson made a joint announcement with Intel at the GSMA World Conference in Barcelona, Spain on February 22, 2016 to collaborate on the next generation 5G wireless router. At the same conference, Ericsson announced an alliance with Amazon to enable Ericsson’s telecom customers to use Amazon Web Services (AWS).

What can we derive from the activity of these companies? Quite possibly, it’s just business as usual, nothing to worry about, move along now. Alliances, collaboration, and partnerships are all part of doing business on a global scale.

But why did Google venture into the wireless space and take on the trappings of a network operator? Why is Facebook trying to disrupt the telecom infrastructure through the TIP project? Could it be that Google is trying to leverage the patent portfolio they acquired with the acquisition of Motorola and Facebook is trying to reduce their expenses? I’m sure that both are correct up to a point.

What if the goal is larger than the near term return and both companies launched these initiatives as opportunities to learn and refine their understanding of telephony as they march forward with a vision of the future that includes WebRTC with voice and video for desktop and mobile apps? Or, Facebook Messenger that includes voice and video?

A possible future is Amazon, Facebook, Google, and Microsoft as your global communication service providers. They have the cloud infrastructure, global branding, and the brilliant minds required to innovate and overcome the difficult global communications landscape and emerge victorious. In this future, the traditional telecommunication providers, ATT, Verizon, NTT, BT, France Telecom, et al. would be transformed into regional transporters of the cloud based communications.

Two outliers that could impact this possible future are, (1) legislation limiting the ability of the cloud providers to infringe upon the incumbent telecom companies and (2) Apple. According to CNBC, Apple has more than $200 billion in cash available. Apple has a large cloud infrastructure, a global brand, the best and brightest personnel, experience in telecom services, plus enormous financial assets that could be used to become a more dominant player in the telecommunications space.

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Randall Smith – StratoSTACK Product Manager

Illustrations and Copy Edit: Jaime Baldwin- StratoSTACK Digital Media Specialist