06 August 2014

The Digital Society and the Digital Economy

SDN and NFV appear to be just the top of an iceberg of a world-wide industry transformation. Ultra-broadband diffusion, advances in Information Technologies (IT) and optical bandwidth, tumbling hardware costs and availability of open source software are creating the conditions for a change of paradigm in designing and operating networks and service infrastructures.  In fact, all these factors are creating the conditions for the so-called IT-zation, or Softwarization or Computerization of several industrial and even societal processes, activities, jobs. And the networks are going to become the ubiquitous, ultra-high bandwidth “nervous systems” of the Digital Society and the Digital Economy of the future.

Actually we're witnessing that mass digitalization (e.g., Big Data) and wide adoption of software apps are accelerating rapidly the pace of innovation in several industrial ecosystems: it will be the case also about Telecommunications. Software is going to eat the Networks. Technology advances are making Cloud Computing/Networking and IT platforms are accessible  in any part of the world (almost) on an equal basis: this will reduce the thresholds for new Players to enter the Telecom and ICT markets: competition is being moved to “software”, lower Capex (or even just Opex) will be required to provide ICT services. This tendency is accelerating the non-linear transition towards the Digital Society and Economy of data/information/knowledge.

As we mentioned previously, as a matter of fact, the basic technological principles proposed by Software Defined Network (SDN) and Network Function Virtualization (NFV) are not “completely” new principles, as they were already proposed and demonstrated since a few years (the former in the ‘90ties and the later even before). Nevertheless, today SDN and NFV are considered potentially impactful due to the novelty of the techno-economic landscape (i.e., availability high bandwidth links, high performance IT/hardware at continuously decreasing costs). So SDN and NFV are not new technologies per se, but they can be seen as indicators of as a global trend (which will be coupled with other indicators such as Cloud-Fog Computing, Cloud Networking, C-RAN, etc) impacting Telecom and ICT arenas in the next years. Just to give you a simple example: it will be possible, in the medium-term developing any network functions and services (L2-L7, i.e., from a software switch/router to a software middle-box) as “applications” and executing them logically centralised in the Cloud, or in clusters of mini-Data Centres (e.g. in correspondence of current exchanges, enriched of processing and storage). This will have a deep impact on the current value chains of Telcos (split of roles are possible) and Equipment Providers (change of biz paradigms are possible), as competition is moving towards OPEX-centric roles. Having said that, SDN and NFV is not only about technology, but it is much more on business sustainability and regulations rules.

But there is more. The number of devices connected to the network is growing at an exponential rate. The network of the future will be a sort of “Fabric” seamlessly interconnecting a tremendous number of terminals, devices, smart things…robots, drones. This is paving the way to medium long term scenarios which are very well described in the book the “Second Machine Age”, which will improve, at the end of the day, the quality of our life and will create a new growth.

This evolution is going to produce an deep impact from a socio-economic perspective, as well. We’re witnessing that the number of employees per business revenue is falling. As mentioned in this report “…as technology races ahead, low-skill workers will have to reallocate to tasks not-susceptible to Computerization, i.e., requiring creative and social intelligence”. It will be necessary to mitigate the risk of unemployment due to the coming of the Second Machine Age. This is also another interesting reading about that. In this direction, also education will be very much important to understand these implications, as well as it will be very much important identifying the value chains, the new roles and the new skills required to face such industrial and societal transition.