12 December 2015

Softwarization towards closing a CAPEX cycle

In the past, the barriers to entry for new Players in the telecommunications were rather high and primarily concerned the necessity for massive capital expenditures (CAPEX).

The telecommunications infrastructure required in fact high capital expenditure investments, at a level that would be very difficult for any new company to enter. Existing major Operators have taken decades to construct their existing infrastructures, and they used to possess an enormous advantage over any new company attempting to establish a presence in the telecommunications market.

Today the story is changing rapidly. Technology drivers (e.g., high-performance standard hardware coupled with a wide deployment of ultra-broadband connectivity) are bringing the telecommunications CAPEX cycle towards the end. Low investments, low RoI. On one side we have created the conditions for the development of an “hyper-connected world”, on the other side Softwarization is “pulverizing” the telecommunications market, which is moreover under the pressure of OTTs, which are providing global ICT services (almost) “for free” an (mostly) “un-regulated”.

In brief, Softwarization is enabling and driving:
  1. a converged (fixed-mobile Network and Data Centre) infrastructure (whose CAPEX is gradually decreasing) where the creation/provision of services is likely to become decoupled from the Operations. This will bring a related split of business roles (infrastructure/service enablers and the service providers);
  2. a converged industrial structure covering voice services, Internet access services, and ‘OTT’ services, “packaged” in various ways;
  3. a consequent split of roles in vendors supplying the infrastructure/service enablers and the service providers: the market will see high volume standard hardware (e.g., server and switch/routers) and a world of “software”.

This transition will have a number of far reaching implications, in terms of job, culture and socio-economic transformation. The grand question is “how opening a new cycle” !