How AI Gets Used in Telecom

A survey of chief information officers by Gartner finds that 52 percent of telcos now use artificial intelligence in the form of chatbots.

IDC says 64 percent of telecom service providers are investing in AI systems to improve their infrastructure operations as well.

ZeroStack’s ZBrain Cloud Management, which analyzes private cloud telemetry storage and use for improved capacity planning, upgrades and general management.

Aria Networks, an AI-based network optimization solution that counts a growing number of tier-one telecom companies as customers.

Sedona Systems’ NetFusion, which optimizes the routing of traffic and speed delivery of 5G-enabled services like AR/VR. Nokia launched its own machine learning-based AVA platform, a cloud-based network management solution to better manage capacity planning, and to predict service degradations on cell sites up to seven days in advance.

Broader applications include applied AI for self-optimizing networks, software defined networks, network functions virtualization, marketing (personalized offers, advertisements), public safety use cases, traffic management, local event management, distributed cloud services or low-latency services.

Many of those apps also will support edge computing use cases.

SD-WAN Upends "Cheaper, Faster, Better: Choose 2" Choices

Many networking or computing alternatives offer value in terms of lower cost (capital and operating cost). SD-WAN offers a good example. The classic engineering trade off for all IT or communications alternatives is pretty simple: “You can have it cheaper, faster, or better, pick two.”

SD-WAN promises to demolish that set of choices by allowing improvements on all three dimensions, especially for connecting remote locations and branch offices.

SD-WANs offer better agility (faster and simper deployment), better performance and reliability while also reducing costs.

Software-defined WANs, as the name suggests, abstract edge connectivity and also  virtualize the WAN. In an overlay SD-WAN, new SD-WAN appliances are deployed on an existing routed network, either behind the routers or replacing them as the branch connection to the WAN, analysts at Nemertes Research note.

SD-WAN appliances also can collapse the typical branch stack by replacing other branch WAN appliances such as optimizers and firewalls.

In-network SD-WANs--often tied to Network Functions Virtualization--are more important for managed service approaches, and might be more attractive to enterprises that prefer to offload or outsource WAN management to third parties.

source: Nemertes Research

Lies, Damned Lies and Statistics

Nothing remains unchanged in the modern communications business, so we should not be surprised at how much, and how fast, “average” fixed network internet access speeds increased in the U.S. market in 2018.

To be sure, the actual value or meaning of most cross-country internet access statistics is nuanced and perhaps somewhat questionable.

“Do counties with mostly 25 Mbps broadband connections fare better economically than counties with mostly 10 Mbps broadband connections?” George Ford, Phoenix Center chief economist rhetorically asks. “I find no evidence of such an effect here, at least with respect to the growth in jobs, personal income, or labor earnings between 2013 and 2015.”

“Broadband (and higher speed broadband) is not randomly distributed across geography, but rather is deployed in areas where the ratio of demand to costs is favorable, complicating the task of discovering broadband’s influence on economic outcomes,” Ford notes.

To cite just one example, “population density in counties with predominately 25 Mbps service averages 603 persons per square mile, but only 32 persons-per-square-mile for counties with predominately 10 Mbps broadband service,” Ford notes.

According to measurements by Ookla, fixed network internet access speeds increased by nearly 40 percent in 2018 alone, largely on the speed boosts instituted by cable TV providers.

But that is not the only surprising statistic one might encounter.

A 2014 study of broadband adoption in the United States and European Union contained some surprising comparisons. On several key measures--including faster speeds, 4G service, fiber to home and cable modem service, the United States had a large lead over EU nations as a whole.

By 2017, the take rates for fixed network internet access remained at 75 percent, though coverage (ability to buy) was at 97 percent.

Perhaps significantly, a European Commission report recently said that “although fixed broadband is available to 97 percent of EU homes, 25 percent of homes do not have a subscription.”

One apparent reason is that although subscription growth “was very strong until 2009, but has slowed down in the last few years, partially due to fixed-mobile substitution," according to Techknowledge.

In 2017, about 15 percent of EU homes bought internet access at speeds of at least 100 Mbps. In 2016--a year earlier--about 23 percent of U.S. homes were buying service of at least 100 Mbps.

By the end of 2018 the average U.S. fixed network internet access speed was 95 Mbps, according to Ookla meaning half the customers had speeds faster, while half had lower speeds.  

The EC study also highlighted the importance of taxes when comparing retail prices for services such as linear video subscriptions. The posted retail prices are one thing; the actual costs--including all taxes--are something else.

As the study illustrates, even if posted retail prices for U.S. cable TV video are higher than Denmark’s prices, for example, the net cost of service in Denmark is higher, because of higher taxes.

The larger point is that although most casual observers would assume the EU has higher percentages of internet access connections running at 100 Mbps or faster, that is not true. Nor is it the case that customers actually buy services at such speeds, even when available.

It is good public policy to make quality broadband service available. It is a separate matter whether consumers want such services, how much they are willing to pay for it and--most importantly--what economic and social value can be wrung from such usage.

It is difficult to impossible to confirm that speed increases beyond 100 Mbps (or any other minimum speed) actually produce quantifiable economic or social outcomes.

Global Telecom Growth Less than Rate of Inflation

Telecom never has been classified as a “growth” industry, as equity analysts use the term. In fact, for most of its history, telecom was a “public utility,” viewed much as are electrical and water enterprises are seen.

That is to say, connectivity providers have often been government owned, highly regulated enterprises not expected to grow revenues more than the rate of inflation.

The era of mobile communications has shaped our perceptions in new ways, compounded by the privatization and deregulation waves that began in the 1980s.

As mobility has become the way we supply communications services in those parts of the world that never had robust communications in the past, it has seemed that telcos could become “growth” engines.

Once we reach saturation of facilities and services, the older framework is likely to reassert itself. The most-recent revenue forecast by STL Partners suggests revenue globally will grow less than the rate of inflation through 2022. That might, in fact, be the future and fundamental reality. Essentially, the global telecom business will begin to contract, in real terms, even as nominal revenue grows, albeit less than does inflation.

And even that outcome also hinges on service providers being able to discover and create enough new revenue sources to replace about half their current revenue every decade. Barring such success, revenue will contract faster.

  

source: STL Partners

That will be unsettling. A reasonable observer would safely make a few predictions. No industry that is contracting can avoid major waves of consolidation; some bankruptcies and business model changes for the survivors.

It will not be fun, for most.

Would You Build a Municipal Broadband Network Costing $23,000 Per Passing?

If you ran an internet service provider company, and you were looking at new markets to enter, would you attack where there are two suppliers of gigabit internet access already operating, with full-city networks and prices ranging from $65 to #110 a month?

Would you see unmet demand where 84 percent of households already buy service, and service at 40 Mbps costs $45 a month; 140 Mbps costs $65 a month, 250 Mbps service costs $60 and where lower prices are available in bundles?

None of that stopped the Tallahassee city council from voting to study the feasibility of a

municipal broadband network, in a city where adoption rates already exceed 84 percent and where 19 competitors offer service.

The city early estimated it would cost $280 million to $300 million to establish a city-run broadband utility. That works out to a cost of more than $23,000 per household.

For the sake of argument, assume that network eventually got 33 percent market share. That would be capex of $69,000 per account. In other words, there is no payback, as the typical customer pays $30 a month for service.

It is hard to see how there is a payback on such an investment. Nor does there evidence of big market gaps.

Comcast sells stand-alone internet access operating at 100 Mbps for $50 a month and gigabit service for $110 a month.  CenturyLink sells 40 Mbps service for $45 a month, 140 Mbps service for $65 a month and gigabit service for $65 a month.

Economic rationality does not always win out against political rationality. Bad ideas get funded when the benefit does not outweigh the cost. But one of the council members now will rescind her "yes" vote on proceeding with the feasibility study, perhaps after realizing how big the risks were.

The city of Tallahassee provides an example of economic reality creating a brake on an almost-fanciful public policy initiative to create a municipal broadband network where there is almost no evidence of need.  

Next-Generation Networks Might Cost Less Than You Might Think

Lots of people remain concerned about the cost of building new 5G mobile networks. But capital investment plans, the way 5G is built on 4G and open, dynamic, virtualized and lower-cost platforms all combine to reduce cost.

That is important because it means our existing notions of what it costs to build an advanced next-generation platform are less than once supposed. Also, the new platforms tend to be more efficient, wringing more value out of any specific asset.

And that leads to lower service costs, lower app creation costs and potentially higher financial returns and lower cost per bit.

Consider use of existing 4G spectrum.

In all prior generations, frequency division was used to add new mobile platforms while the older platforms continued to operate. In the 5G era, time division is possible, allowing 4G spectrum to support 5G devices--using the same spectrum--as demand requires.

Discussions of spectrum sharing have so far centered on innovations such as Citizens Broadband Radio Service, where multiple license modes are available to users sharing a single block of spectrum.

That provides huge economic benefits, since new users can take advantage of new spectrum resources without the cost and complexity of migrating legacy users off those bands.

Discussions of dynamic spectrum use have centered on innovations such as TV White Spaces, where cognitive radios sense where unused spectrum is and tune to those frequencies when transmitting.

Now dynamic spectrum sharing will be used in the transition from 4G to 5G, allowing existing 4G spectrum to support 5G devices, in the existing 4G spectrum. That is one more example of the way 5G builds on 4G, as well as the growing importance of new ways of allocating spectrum that are far more efficient than past methods.

source: Ericsson

"Dynamic sharing just allows you to use the same spectrum for both LTE and (5G) NR," says Igal Elbaz, AT&T SVP.

The Ericsson Spectrum Sharing software, for example, dynamically shares spectrum between 4G and 5G within the same frequency band, based on the actual traffic demand. The solution is available on all Ericsson Radio System products shipped from 2015 onwards.

More Enterprises Adding LTE 4G for Fixed Connections

Advanced LTE and emerging 5G services are set to become bigger substitutes for fixed network access over the next three years, a survey conducted by IDC of 505 mid-size and larger enterprises with 500 to 10,000 employees suggests.

Mobile network access is increasing as enterprises connect more IoT devices, vehicles and temporary network endpoints.

On average, enterprises connect 2.7 different type of endpoints, including branch locations (77 percent), IoT devices (68 percent), fleet vehicles (51 percent) and pop-up networks (50 percent). Nearly a quarter of respondents (22 percent) are connecting all of these different endpoints.

About 62 percent of the respondents plan to increase LTE usage within their WAN in the next three years.

Gigabit LTE and 5G will increase usage, the survey suggests. Fully 90 percent of respondents say gigabit LTE and 5G would lead to increased usage.

Volumetric Video as NFL and Verizon Might Use It

There are volumetric video applications for sports-themed video games, virtual reality and possibly live sports. 

51% of Seattle Homes Can Buy Gigabit Internet Access

Residential gigabit broadband internet service is available to more than 170,000 Seattle households, according to the City of Seattle.

There are about 335,000 households in Seattle. So roughly 51 percent of homes in Seattle can buy gigabit internet access service.

Beyond that, the absolute lowest rate of buying of fixed network internet access is 93 percent of homes. Keep in mind, those are take rates, not “availability.”

source: City of Seattle

Apple Video Streaming is Not First, Apple Never is First

Apple never is first to market with any new product. It was not first in personal computers, MP3 players or music downloads, mobile phones or smartphones or tablets. Apple has not been first with video streaming services, either.

And while success is not guaranteed, Apple has the scale to make a good run at the market, which continues to face new challenges. Aside from Apple, AT&T and Disney are among the firms entering the video streaming market.

Comcast still resists. The firm has stayed away from launching its own streaming service in the past, trying to protect its legacy linear services.

Comcast now is selling Xfinity Flex, but positioning it as an “ease of use” service, not a content service in a direct sense. Xfinity Flex essentially is a navigation service for customers of Netflix, Amazon Prime, HBO or YouTube, with voice commands. It does not offer access to Comcast linear content or services of competitors such as DirecTV Now.

source: S&P Global

It is probably foolhardy to believe that Apple will not gain significant share in streaming, eventually. What remains to be seen are relative market size and market share for pre-recorded (not real time) content, compared to live streaming. Live streaming might eventually be the bigger market.  

SD-WAN Proves 4X Cheaper, While Boosting Bandwidth 4X, Says Cato Networks

MPLS was four times the cost of SD-WAN while delivering about 25 percent of SD-WAN bandwidth, say executives at Centrient Pharmaceuticals.

Centrient replaced an MPLS network with SD-WAN supplied by Cato Networks, linking headquarters in the Netherlands with nine manufacturing or office locations in China, India, Spain, Mexico and inside the Netherlands, as well as smaller offices in Egypt, Cairo, Moscow and the United States

The firm’s applications include Office 365, internet access, VoIP, SAP and other cloud-based applications using Azure.

To be sure, one issue was that the firm’s MPLS connections often ran at 6 Mbps, where the SD-WAN apps often run at 20 Mbps to 50 Mbps, when multiple local internet access connections are multiplexed.

In other cases, firms with global networks also saw an improvement in latency performance, ease of adding or dropping locations and also a reduction in cost.

The SD-WAN cost advantage, in terms of bandwidth, is stark. On the other hand, creating a new SD-WAN will increase operating costs, and requires new networking gear. Over five years, SD-WAN will, in many cases, be cheaper than an MPLS solution.

source: Netmanias

U.S. Streaming Spending Flat Last 3 Years, But Change Coming?

Most would agree the subscription video business now is unstable, with major changes looming. On the other other hand, consumers tend to operate within constricted budgets, so the amount of household spending change tends to change slowly.

Parks Associates finds household spending on streaming video services has held steady for three years, averaging just under $8 per month since 2016. Some of you will find that surprising, given the growth in volume of subscriptions.

But Parks Associates has an answer: “adoption of multiple services or expensive services by some consumers is offset by a larger base of consumers who either subscribe to one or two relatively inexpensive services, including 30 percent of consumers who do not spend any money on OTT video services.”

source: Parks Associates

“The stability in average household spend belies the activity going on under the surface," said Brett Sappington, Parks Associates senior director. "2019 may be poised to break that trend.”

“One of three things will happen—more households will become OTT streaming households, rival services will begin to pull subscribers away from Netflix, or that spending number will go up," he said.

AI Impact on Jobs in IT

As has happened with earlier economic shifts such as the industrial revolution, there will be major changes in job markets, with implications for social policy as artificial intelligence possibly brings on a new and major economic era.

“Middle-level jobs that require routine manual and cognitive skilled are the ones that are most at risk,” Gartner researchers say. The big issue is workforce change.

“In the long run, initial labor displacement effects of jobs with routinised manual or cognitive skills, as in previous industrial revolutions, will be compensated for by the growth in non-routine jobs at the high and low end of the economy.”

One example Gartner cites is program and portfolio management, an information technology function.

“By 2030, 80 percent of the work of today’s project management (PM) discipline will be eliminated as artificial intelligence (AI) takes on traditional PM functions such as data collection, tracking and reporting,” Gartner says.  

New jobs will be created, without a doubt. Still, there also will be widespread job losses. A two-year study from McKinsey Global Institute suggests that by 2030, intelligent agents and robots could eliminate as much as 30 percent of the world’s human labor.

McKinsey believes that, in terms of scale, the automation revolution could rival the move away from agricultural labor during the 1900s in the United States and Europe.

McKinsey reckons that, depending upon various adoption scenarios, automation will displace between 400 million and 800 million jobs by 2030, requiring as many as 375 million people to switch job categories entirely.

What is an "OTT?"

I was reminded recently of the importance of “meaning” when we use words. Some people see terms such as 5G, IoT, mobility, satellite, undersea communications and “hear” technology. I myself “hear” businesses.

“Over the top” is that sort of word as well. Most often, the term “OTT” refers to third parties delivering products directly to buyers and users using an internet connection without paying a distribution partner for access rights.

It is synonymous with “edge provider,” a term referring to “a website, web service, web application, online content hosting or online content delivery service that customers connect to over the internet.”

It is a bit of a misnomer. On IP networks, all products, services and data are delivered direct to end user or customer irrespective of access network ownership.

Carrier-owned apps are delivered the same way, but nobody refers to such services as OTT. And that speaks to our understanding of the terms.

OTT,  to refer back to terms such as 5G, is a word referring to roles in the internet ecosystem, not technology.

In recent days, as access providers (cable TV, telco and satellite) have started to offer their own streaming services, the phrase  “direct to consumer” has been used, as compared to managed video subscriptions that rely on platforms distinct from the public internet.

That still remains imprecise, as third parties and access network owners can go “direct to consumer.”

The point is that the term OTT, edge provider or direct-to-consumer will continue to cause some confusion, as the words refer to roles or functions in the ecosystem as well as methods of product delivery.

The former makes more sense than the latter. To confuse matters even more, sometimes firms occupy multiple roles in the ecosystem. So Facebook is simultaneously a platform, an app provider, an ISP, and now a wholesale supplier of optical capacity.

Apple is a device supplier, app platform and now “OTT” itself in the streaming video and audio realms. Comcast and AT&T are ISPs and mobile services suppliers as well as providers of business communications and owners and producers of video and movie content.

There will always be some room for misunderstanding when people talk about OTT, edge provider or direct-to-consumer. The words do not carry the same meaning for everyone.