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THE PARADOXES OF MODERN TELECOMMUNICATION NETWORKS
levlev Oleg Pavlovich,
Vice-rector for international activity of Moscow Technical University of Communications and Informatics, Ph. D., associate professor, Moscow, Russia, ievlev@mtuci.ru
Keywords: broadband service provider, Internet, telecommunication network business model.
From the very beginning the Internet and used technologies have a permanent impact on the development of telecommunications. Despite the tremendous changes in the market image of traditional operators, introduction of new services and radical transformation of value creation chains and significant investments in existing and new infrastructure services (such as IMS), most incumbent operators still rely on business processes and information systems of 10 - and even 20 years ago. Over time, operators may turn from the dominant service provider into a transparent "bit pipe". Rich VAS services market is no longer under the control of operators; existing and planned infrastructure services become obsolete and lose competitiveness in relation to new and current Internet technologies; market share of access equipment to telecommunications services and the associated revenue is rapidly declining. Such developments have devastating consequences in the long term for traditional telecommunications services market. The objective necessity of taking into account changes in the Internet ecosystem, as well as integration of ISP and content providers' solutions by traditional Telecom operators raised a number of paradoxes, which in turn, lead to a paradigm shift in models of network construction and business models of operators. The article contains analysis of paradoxical situations taking place in the world of telecommunications, due to the influence of changes in the Internet ecosystem on the activities of the traditional communication networks operators and leading to the paradigms' shift in principles of organization of telecommunication networks and business models of operators.
Для цитирования:
Иевлев О.П. Парадоксы современных телекоммуникационных сетей // Т-Сотт: Телекоммуникации и транспорт. - 2015. - Том 9. -№5. - С. 86-90.
For citation:
Ievlev OThe paradoxes of modern telecommunication networks. T-Comm. 2015. Vol 9. No.5, pp. 86-90. (in Russian).
7Тл
The first paradox of the communications networks known from publications is "The paradox of the best network", which was developed in the works of David Eisenberg and other authors, in particular [1, 2], at the end of the last century. It says: "The best network is the hardest one to make money running".
At this time two opposite vectors of development of communication networks and business strategies coexisted, which divided service providers, equipment vendors, investors and end-users into two fundamental camps. On the one hand the construction of the network is based on the concept of Intelligent networks (IN), which were the evolutionary continuation of the centralized principle of construction of traditional telephone networks, on the other hand -the development of computer networks based on attributes of the Internet - the principle of "transparency" or end-to-end principle [3]) and TCP/IP stack protocols. On the one hand -the concentration of the control and processing logic and services in the network core, on the other side- distribution of intelligence on the periphery, in the end-user terminals, home routers, hubs.
The paradox arises from the meaning of "the best network", which the authors insert, namely network, which "transmits the bits in the largest volumes at the highest speed", and which is open to innovation and implementation of new services. We are talking about the Internet, which is contrasted with the traditional networks, optimized for the specific type of data and services, particularly telephony. These networks, according to the authors, are closed and completely controlled by the operators (both in terms of services provided, information about users and generation of income), transfer relatively small flows of information. The introduction of new services in such a network, although standardized, but pseudo openly, as determined by the interests of network operators and vendors.
In the Internet, thanks to the principle of "transparency", the main source of income is concentrated at the periphery of the network - in applications running at terminal equipment of users. The core network (the Internet as a transit network and as a network of networks), is built on typical generic non intelligent elements, performs simple routine functions to support transparent user connections to network resources and interconnections. This is provided by the core network service or "connectivity" [4]), which is ubiquitous, affordable within network and which has passed the commoditization (conversion of earlier unique properties of goods and services in the ordinary because of the saturation of the market [5]). It costs nothing, and is implied as value component of overlay services. So, using this service in "the best network" is the hardest way to make money.
The paradox of "the best network" reflects tectonic shifts that shook the very foundations of the industry: channel switching technology began to give way to packet switching, data traffic has sought to exceed voice traffic, the characteristic of the price - performance of computer technology has been radically improving, and users began to take control of the services. Since the publication of the article by David
Eisenberg it has been more than 15 years. It is a long time, especially in the field of computer and telecommunications technologies. In connection with this some questions are raising. Whether there is a critical contrast which existed between traditional networks and the Internet (Intelligent network is "dumb" terminal and the "stupid" network - intelligent terminal) now or perhaps this is a false dichotomy? Whether the Internet continues to be "unintelligent" and "stupid network [6]" and whether it is seeking to become intelligent? Whether there is converging of earlier opposite vectors of networking?
It seems logical to have intelligent terminals interworking within smart network, as for example, within a heterogeneous network, including Wi-Fi and 4G, with possibility of seamless handover between them. The user and operator will both have benefits. Or, for example, if we take the service of sharing files in a peer to peer network such an innovative approach, as ALTO [7] (traffic optimization application level) can help in selecting the most effective location hosting content instead of removing the copy of the file from geographically remote host
If before, the user addressed to the Internet non-intelligent nodes (browser) for non-intelligent data (HTML) located in non-intelligent network (Web), today the situation has been changed. Now the data becomes "smarter" (e.g., XML/ XHTML/ Javascript/ Java/ ASP) and informs the web browser how it should be displayed (text editor, multimedia player, applications GUI).
Obviously, the data has to be smarter. It should convey the information for the network node, how to be better displayed (to present to the user), but also should contain data for analysis and further actions. The data contains more information about itself and the user's preferences. A vivid example is the development in the area of Semantic Web [8].
Still there are many non-intelligent nodes and a number of "smart" nodes in network, such as newspapers servers, social networks, search engines, VoIP servers. If we assume that intelligence (functionality) of a single node is determined by the "height" of the OSI model layers on which it is able to operate, the sufficiently intelligent nodes (that implement the protocols of levels up to seventh) could be found in the core network. These nodes perform, for example, functions of IP routing, QoS support, firewall function, additional functions such as Deep Packet Inspection (DPI) [9]. The last function, unlike firewalls, analyzes not only packet headers but also the full content of the traffic on the OSI model layers from the second and higher that allows detection and blocking of malicious apps, viruses, filtering information that does not meet the specified criteria.
Recently gaining popularity the software - defined networks [10] (SDN) is a new approach of construction and operation of computer networks, allowing significantly improving the efficiency of network equipment and reducing operating costs. In SDN, the levels of network control and data transmission are separated by transferring control functions of the nodes (routers and switches) into applications running on a separate server (the controller) with installed
operating system. The result is a solution with a logically centralized network management implemented in the center of network!
What is happening now in the camp of "the enemy"?
Today solutions of traditional network operators are Next Generation Networks based on packet switching and the concept of IMS. Though still, all processes in the network remain under the control of the operator, the principle of intelligence distribution is rather decentralized than centralized. Main intelligence is still concentrated in the core network (IMS Core), which manages the establishment of connections and sessions, and also implements functions of maintenance and operation of network. However, at the edges of the network the potential is building up through the use of powerful, intelligent user terminals (smart phones, SIP phones, softphones, tablets, computers, etc.), access modules, gateways, controllers, etc.
In IMS, there is a set of application servers that can reside within or outside network- this is the decision of network operator. One of the main objectives of the IMS is the desire to make access to services at the edges of network open to third-party service providers. Thus, new services can be introduced easily and quickly. For example, successful project i-Mode [11] implemented in Japan by operator DoCoMo.
One of the organizations involved in the construction of infrastructure applications for IMS is the Parlay Group. The group includes software vendors, such as BEA and IBM, companies - vendors of solutions, such as Ericsson, Alcatel -Lucent and operators, such as BT, Sprint. Standardized APIs allow implementation of universal application, so that applications developed "under" one operator can be implemented in networks of other operators without any changes. Especially interesting is the Protocol Parlay X which offers a base for quickly creation of Web services without deep knowledge of network procedures' functioning.
The implementation of Web services requires a standard way of interacting with application servers using the Web as a transport data interface in the form of XML. This is the basis for the so-called Web 2.0 APIs that are published for example by Google. Software vendors (Oracle, IBM, BEA) use this approach to implement large - scale ICT applications.
Thus, there is a tendency to blur the intelligence of the network, to the convergence of previously opposing tendencies of construction and operation of networks, as from the point of view of architecture, as from the point of view of spectrum and ways of services delivering.
The above trends lead to a paradigm shift of "paradox of the best network". To paraphrase the paradox we can say that now "the worst network" is the hardest one to make money running.
Currently leading Telecom operators of the world are facing to the problem of reducing growth in the field of fixed and mobile communications, which is tried to be compensated by intensive development of broadband access to the Internet. The revenue from the provision of broadband services is a significant part of large world convergent operators' budget. In particular, Rostelecom which management believes broad-
band access is the company's profiling business [12].
However, despite high growth rates in the number new users and support of the state the following paradoxical situation raises: if even the operators' revenues from sailed broadband services are increasing, but not in proportion to the growth of subscriber base [13], and according to some operators, in particular, national operator of Italy, Telecom Italia, even significantly reducing [15].
The factors that cause this paradox are the following.
Last years the broadband access technologies have become a major trend in developed countries. Many countries are coming up to complete coverage by broadband, e.g. France, Canada, Romania.
In addition, capacity-building of broadband access occurs in parallel with the introduction of advanced technologies that complement the traditional solution of operator. These include "Mesh Networking" [17] (full-mesh topology network based on IEEE 802.11s), "Ad - hoc Networks" [18] (wireless dynamic self-organizing network), "P2P Networks" [19] (peer-to-peer peer-to-peer overlay network), "Opportunistic Networks" [20].
All of these technologies are able to adapt, optimize and implement the sharing of network resources between users, and in addition they can be applied for a sufficiently large number of users (for example, in case of P2P networks -even millions end users). An example is the FON project [21]-the world's largest Wi-Fi community. Other examples are hotels, bars, shops, which provide free communication as competitive tools to attract more customers to their goods and services. There are cases of simple and free exchange of connectivity for users to their attention to the services and solutions proposed by operators. For example, a new Finnish mobile virtual operator Blyk, which provides its subscribers with a free link in exchange for agreeing to receive advertisements on mobile phones [22] or the operator "Company "XXI century - TV", which offers developmental network of free GSM payphones in Moscow region [23]. The largest operator of USA, Virgin Mobile, basing on agreement with the largest national advertisers, has launched a program [24], in which subscribers receive advertisements from the operator in exchange of free minutes.
As a result, the phenomenon of commoditization mentioned above for "the best network" emerges. Decrease in the value of broadband access occurs. The increasing availability of communications (e.g. home networks), low cost of network equipment and terminal devices, permanent reduction of connections price in mobile networks will make communications always available, cheap and always with the desired bandwidth. Within network the "pervasive" applications based on principle of "Always Best Connected" [25] (ABC) will dominate; they are available both in sense of bandwidth and prices, accessed as from user terminals as sensors.
This in turn leads to important paradox of income: the more the network is using, the less it is bringing income. Today users can choose from numerous packages of service offerings. Many providers offer packages of services in the
form of "All - you - can - eat". Any investment in network will provide a low ROI because users do not feel the visible effect of any service improvements. An example is the constant increase in bandwidth offered to users on xDSL access. Any subsequent increase of bandwidth may require huge investments into the network to increase its capabilities (i.e., the transition from xDSL to FTTH). However, end users do not intend to pay in proportion to any increase in bandwidth and the price of transmitted megabits progressively continues to fall, leaving ARPU at the same level or even lower. Many operators are forced to invest in new (and expensive) access network to provide ultra broadband (replacement of copper on optics for fixed networks or the transition to LTE for wireless access), but the "Killer Application" cannot be found to justify investments.
The second factor of the paradox is the policy implied by traditional operators. Introducing widespread broadband Internet access, constantly increasing speed of access, service providers are creating new opportunities for other players -their competitors at adjacent markets of pay-TV, telephony and video applications, Internet service providers, including Over- the - Top (OTT) providers. The number and influence of these players which use as legitimate (copyrighted) as public content is increasing. Among them it should be mentioned as domestic providers, such as Now.ru, Omlet, Zoomby, Cristal as foreign TV - Netflix, Amazon.com, Inc., Apple Inc. Blockbuster , Inc., Comcast (football fancast), Disney, BBC I-Player), Google/YouTube, Microsoft Corporation, Netflix, Inc. (Online Video Service), Sony (OTT Service), Comcast, Skype. According to a study by Ovum by the year 2020 OTT only VoIP providers will consume 7% of total revenue of the global Telecom [26]. Services providers bring a great traffic on operators' network and this traffic is constantly growing. For the operator, this situation looks paradoxical - the own network resources are using by another provider for free, and even bring him income! The situation is aggravated by necessity of constant escalation of network bandwidth to meet demand of subscribers and promised quality of service.
Due to ongoing tactics focused on providing user-specific content and offering free of charge services the outflow of subscribers takes place. Examples of these free services range from voice service and instant messaging to free access to the networks. This is another paradox: charged services in one provider's network are offered free in another. Service providers respond immediately to the needs of the user, forming its profile through a variety of campaigns, surveys and advertising. Their business model aims to attraction of users by offering interesting and cheap functions and services, and simultaneously on collection of information about users and their preferences. Moreover, users who are not paying for services, impose fewer demands on functionality and quality of provision of the service, and even help the provider to customize and improve the service through feedback.
As a consequence, there is a paradox of standardization: service providers use the standards in different ways. While traditional service providers use standards to guarantee the quality of provided services, other service providers, includ-
ing OTT, use standards as a mean of imposition (pushing) to market their technical solutions and services. Since each service provider can potentially cover the entire market (even a very small service provider can provide universal services via Internet to end users all around the world), he is not worried about the standardization of the services or their compatibility with other providers. Instead, they imply innovative technology to differentiate themselves from other providers. They can impose their "proprietary" standards and they do not need to spend time, human and other resources for standardization and compatibility testing. This makes possible the implementation of the strategy "winner takes it all" (taking into account the dominant position for example of Microsoft on the operating system market or Google on the market search engines and advertising). This approach is characterized by using of beta release [27]- product that is not the final version; a public testing is done at the sole risk of the user, and the service provider takes no liability for possible damage.
Thus, the operator becomes involved in a new chain of services' delivery where even regardless of his wish; he becomes only a "transparent" link, providing access to resources of external service provider.
Finally, the third factor of the "paradox of income" is determined by the adequacy of pricing models [28] applied by the operators to the existing demand and achieved ARPU of users.
Until recently, the dominant pricing model of the leading global operators (e.g. Telecom Italia, AT&T) has been the Flat Rate [29], aimed at maximizing the use of broadband access. However, the implementation of this model has brought to the fore the technical and technological problems of bandwidth readiness of existing fixed and mobile networks and the adequacy of income to the investments made by operator. With increasing saturation of broadband access, many operators have switched to a model based on the actual traffic consumption and the imposition of restrictions on the volume and speed of traffic/ But this approach was not welcomed by a large group of users and led to their outflow.
Then the next model of pricing appeared. It was based on consumer value of services (Value - based pricing" [29]) . Special attention is paid to individual needs and requests of end users; differentiation of proposals is carried out by price, number and content of services.
Most recently, to enhance customer loyalty and as a reaction to the overflow of revenues to OTT, the proposal of several major operators (Vodafone, Verizon) contains a pricing model which is based on free telephony. Thus, traditional basic service of operator for over one hundred years which brought him a basic income becomes a free appendage offer to other services.
Mentioned above paradoxes lead to such a situation in the world of Telecom, in which the core business (voice), is although prevalent (80% of total income for most operators), but constantly and, perhaps, is irrevocably declining. However, this reduction is so slow that the operators still have time to reflect and make difficult decision of how and when to change the traditional business model to other new ones (that may be will cause a new series of paradoxes?).
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ПАРАДОКСЫ СОВРЕМЕННЫХ ТЕЛЕКОММУНИКАЦИОННЫХ СЕТЕЙ
Иевлев Олег Павлович, проректор МТУСИ по международным связям, к.т.н., доцент, ievlev@mtuci.ru
Начиная с момента своего возникновения, Интернет и используемые в ней технологии оказывают постоянное влияние на развитие телекоммуникаций. Несмотря на колоссальные изменения рыночного облика операторов традиционных сетей связи, внедрение новых услуг и коренную трансформацию цепочек формирования стоимости, значительные инвестиции в существующие и новые инфраструктуры предоставления услуг (таких как IMS), большинство традиционных операторов связи по-прежнему опираются на бизнес-процессы и информационные системы 10- и даже 20-летней давности. С течением времени, операторы могут превратиться из доминирующего поставщика услуг в прозрачную "битовую трубу". Богатый рынок услуг VAS больше не находится под контролем операторов; существующие и планируемые инфраструктуры услуг устаревают и теряют конкурентоспособность по отношению к новым и актуальным технологиям Интернет; доля рынка оборудования доступа к телекоммуникационным услугам и соответствующий доход стремительно сокращается. Такой ход событий имеет разрушительные последствия в долгосрочной перспективе для традиционного рынка телекоммуникационных услуг. Объективная необходимость учета изменений в экосистеме Интернет, а также интеграции решений поставщиков услуг Интернет и поставщиков контента традиционными операторами связи вызывает ряд парадоксов, которые в свою очередь, приводят к смене парадигмы моделей построения сетей связи и бизнес-моделей операторов. Проводится анализ парадоксальных ситуаций, происходящих в мире инфокоммуникаций, вызванных влиянием изменений в экосистеме Интернет на деятельность операторов традиционных сетей связи и приводящих к смене парадигм принципов организации телекоммуникационных сетей и бизнес- моделей операторов.
Ключевые слова: широкополосный доступ, оператор связи, Интернет, телекоммуникационная сеть, бизнес- модель.
