Will Federated Networks Ever Have "Owners Economics?"

Have you noticed how there is a need for, and move towards “federation” in most parts of the computing and telecom ecosystem? In other words, interoperability between networks and systems is federation.

Federation can be defined as “a group of computing or network providers agreeing upon standards of operation in a collective fashion.”

The typical practical arrangement is when two distinct, formally disconnected, telecommunications networks, that may have different internal structures, interconnect. When different messaging platforms agree to interconnect, that is another example of federation.

In computer systems, to be federated means users are able to send messages from one network to the other. In other words, federation means interoperability.

You can see this federation trend in the move to multicloud computing, when resources from multiple cloud providers can be amalgamated to work as one functional system.

Google Project Fi federates mobile device access from Wi-Fi, Sprint or T-Mobile US networks.

That last example suggests possibilities, as telecom networks increasingly become virtualized. Federation is about the creation of virtual networks, incorporating multiple physical network assets.

So here’s a big question. Will “owner’s economics” change in a world where federation is widely possible? Up to this point, it has been difficult for mobile virtual network operators to compete, sustainably, with competitors who own their own infrastructure.

In a virtualized environment, will that remain true? As we have seen with cloud computing, the economics of “owned capabilities” compared to “rented capabilities” already has changed.

Will something like that happen with telecommunications capabilities? In other words, might it be possible, in the future, to create virtual (federated) communications networks that rival physical networks? And could the economics change, to where a virtualized network has economics at least equal to those of a physical network?

It is an empirical question that will be answered in the concrete, at some point. In other words, might an app, platform or service provider be able to create virtual networks that cost less than using owned physical facilities?

Probably more to the point, can new capabilities be created out of federated networks that are driven by value, not cost? Can federated networks do things that single networks cannot? And does that increase in value offset the costs of using a virtualized approach, even if more costly than a physical network approach?

We must wait to see how the economics play out.

Source: Nokia Bell Labs