The disruption introduced by the “end to end argument” has a heavy impact in strategies and deployments of Operators. But there is even more: “the best network paradox” (http://netparadox.com/), in its concise definition states that “The best network just moves bits and the best network is the hardest one to make money running”. If the network is stupid then it provides simple services that make it a commodity. It is therefore difficult to make money from network services and the only viable possibility is to reduce investments on it providing just the essential functionalities.

Alternative networking capabilities are becoming highly available (from community networks, to municipal networks, from WiFi to Wimax and the like). They could provide connectivity at a cheaper price. Emerging networking techniques (e.g., mesh networking, peer to peer, opportunistic networking and the like) are able to adapt, optimize, and share network resources within communities and they can scale up to many users (in the case of p2p even millions). An example of this adaptation and sharing capabilities is given by FON (What’s FON” available in http://www.fon.com/en/info/whatsFon); the idea is to share the connectivity that a user pays to a Provider also for allowing other peers (members of the FON community) to access freely or for a low fee to the residual bandwidth of the hosting user. Other examples are given by hotels, bars, coffee shops and even municipalities (see the case of Venice plan to offer WiFi connectivity to tourists) that provide connectivity for free in as a competitive means to attract more customers to their premises. In the long run connectivity could be provided for free by many different providers in exchange for the “attention” of the customers. This is the phenomenon of decrease of the “value” of the bandwidth.

The consolidated market of many Telecoms Operators is under turmoil, on one side the Internet technologies are challenging the way Operators create and deploy services, on the other side new Internet business models are eroding the margins of the telecoms market. This situation creates a deep uncertainty and a set of network paradoxes that Operators have to cope with. This and other posts are about a few network paradoxes. 

Many Operators are facing the problem of the obsolescence of their network infrastructure. This problem rises in a new context dominated by the possibility of substituting a consolidated technology (the circuit switching) with a new one completely based on the IP connectivity (packet switching). The so called All-IP Networks (AINs) allow for lower infrastructural and management costs and promise to be the basis for building a seamless service platform able: a) to provide a myriad of new services for the fixed and the mobile environment; and b) to intercept the Internet evolution and its increasing market. However this transition to an All-IP infrastructure has inside the seeds for an important transformation: the consolidated way of providing communications services is going to be fundamentally challenged (e.g., see the post of Roberto Saracco’s about Skype).

One of the foundation of the IP communication (and consequently of the Internet) is the “end to end argument” (see for example http://www.reed.com/dpr/docs/Papers/EndtoEnd.html), which dictates that “mechanisms should not be enforced in the network if they can be deployed at end nodes, and that the core of the network should provide general services, not those tailored to specific applications”. This principle has been well expressed and stressed out by the “stupid network” paradox (http://www.rageboy.com/stupidnet.html). It juxtaposes a slim, simple and cheap IP core network (dominated by abundance of connectivity capacity) with intelligence at the edges to the centralized and expensive infrastructure of the Intelligent Network.

The advantages and the disruption of this move of intelligence are appalling for the Operators: the rich and costly deployed network functions and services are not anymore appreciated by customers that do value services and applications offered by servers at the edge. In this way, the network is progressively emptied of functions and all the value moves to the edge. On the long run, Operators could be forced to play a less significant role, the one of Bit Pipe Carrier and not the desired role of Service Provider.  And this could happen in spite of the significant investments in existing and new service infrastructures (like the IP Multimedia Subsystem, IMS) intended to position Operators as Services and Platform providers also for the Internet market.

This has disruptive impacts on the telecoms industry: the rich market of value added communication services is not anymore under a strong influence of Operators; the existing and the scheduled service infrastructures are rapidly aging or are not fitted for competing with new solutions based on emerging Internet technologies; the telecoms service equipment market is radically changed yielding to a strong reduction of investments (and prices) in the area of service platforms. This course of action has far-reaching effects on the service delivery telecom market as a whole:

• Service Delivery: services cannot be anymore deployed in long cycles (sometimes up to 18 months); they have to be much shorter in order to find a potential market and to compete with the Web Service providers (WebCo) offering;
• Interworking: services offered by Operators have to be readily interoperable and run on different networks. Long standardization periods for new solutions have to be dramatically cut down in order to come out with simpler and quicker deployable solutions;
• Vendor relationships: Vendor lock-in has to be limited; Operators have to be able to really integrate different solutions. In addition Operators should be able to enlarge their ecosystem of vendors sometime favoring the entrance in the telecoms markets of new vendors form emerging countries;
• Equipment costs: the foreseen huge investments in new networks and services require a contraction in costs of equipment. Costs cannot be anymore those of the past but they have to be aligned to Internet prices.