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Highights of 2013 Cloud Connect Conference: April 2-5, 2013 in Santa Clara, CA

The four-year-old Cloud Connect conference, sponsored by United Business Media, was held   April 2 to 5th in Santa Clara, CA.   Having attended all four Cloud Connect's, this one was by far the most in depth and comprehensive treatment of Cloud Computing. At last, no more defining terms and debating methods of cloud computing, this year's conference discussed how the cloud was being used now. And also how business could leverage the cloud for more effective IT operations.  For example, many attendees wanted to know how to make use of a hybrid cloud as they migrate from private to public cloud or look to combine both.

We also examine how the Mobile Cloud has and will continue to change business operations.  It's a balancing act, with compromises needed between corporate compliance/security vs worker freedom/convenience.

Key Themes and Messages:
-There's a strong focus on reinventing the data center for cloud computing, using software defined infrastructure, such as virtualized networking and storage as well as software defined networking (SDN).  However, the legacy networking infrastructure from Cloud to Premises is not going away anytime soon.
-OpenStack is now an acceptable alternative to Amazon Web Services (AWS) for public clouds.  There was a lot of  discussion on using OpenStack for private cloud implementations as well.  Openstack was initially promoted by Cloud Service Provider Rackspace, but is now endorsed by many other CSPs, including HP. There are many new and well funded OpenStack based start-ups.
-Virtual networking and SDN are being added to the growing number of OpenStack capabilities by the OpenStack Foundation (OSF).  On April 4th, OSF issued its "Grizzly release," which contains 230 new features for running production-level cloud computing. Networking has lagged servers when it comes to being managed as a virtual resource and in most enterprises, is still tied to a set of hardware resources that are hard to modify. Virtual networking and SDN aim to change that by making the network a logical rather than physical part of the IT and cloud infrastructure. OpenStack's work on SDN "lets software change the network infrastructure for cloud computing," according to one knowledgable conference attendee.
-Amazon's Virtual Private Cloud (VPC) is now the defacto way of accessing AWS, replacing the public Internet (and in some cases) private lines. VPS lets the cloud user provision a logically isolated section of the AWS Cloud where resources are launched in a virtual network.  The customer has complete control over the virtual networking environment, including selection of  IP address range, creation of subnets, configuration of route tables and network gateways.
-Big Data (analytics) and Cloud are a paradigm shift and an architectural change that involves putting data and computing power together as a massive processing unit.  With the explosion in all types of information, businesses need data analytics to be competitive. Organizations need to analyze data from multiple sources and places to gain insights. That data can’t be stored in one place and can even be maintained outside the organization (such as in a private cloud).
-The reorganization of computing into larger, more demand-responsive cloud-based data centers run by Google, Amazon Web Services, Rackspace and others is part of a shift in business that replaces transaction systems with "systems of interactions," said Cisco Systems VP of Cloud Computing Lew Tucker.  "Analytics becomes business critical" because huge volumes of data will be generated by the Internet of Things (IoT), with billions of devices soon to be connected to the Internet. The billions of connected devices drive a need for cloud storage and cloud analytics.  The creation of big data drives business decision-making and businesses' need to keep employees in constant collaboration and communication, driving a need for a new style of internal networking: the software-defined network that responds more flexibly to changing conditions, Tucker said.
-Mobile Cloud is being used as more workers have mobile computing devices, especially tablets and notebooks.  Organizations continue to make use of mobile apps to improve productivity and business process, according to Citrix.  They deployed over 100 thrid party apps, e.g. Citrix Receiver, Adobe Reader, etc. as well as custom written apps.  Packaged, deployable mobile apps stores for the enterprise are starting to emerge. Author's Note: Mobile Cloud is covered in more detail below.
-PayPal chief information security officer Michael Barrett stated that cloud computing had changed the stakes involved in the security of computer systems. The cloud can provide the computing power to run an attack to decipher passwords. "Password hacking is now the work for script kiddies," he warned, as opposed to a challenge for skilled hackers backed by massive compute resources.
-William Ruh, VP and global technology director at General Electric said business is moving from an analog way of operating to a digital one which will change nearly every aspect of business.  Civilization is moving from the industrial revolution through the Internet revolution and into what he called "the Industrial Internet."  Machines will be connected to the Internet (IoT) and become intelligent through the software they possess that analyzes the information they're generating. That will contrast with today's industrial operations where machines are not intelligent and most of the data they generate "isn't even stored," Ruh observed. The shift will "foundationally change the way machines are built and the way data is collected on them, petabytes of information," said Ruh. The information will be fed to the operations staffs at utility power plants and other large industrial installations, who will use it to look for efficiencies that we don't know about today, he said. 
-Case studies are beginning to emerge from a variety of users. The cloud industry has moved beyond case studies from technology innovators, such as Netflix, to rank-and-file companies that are just getting their first cloud computing systems up-and-running.

The Mobile Cloud:

Before the end of this year there will be more smart phones than PCs, and in 2015 there will be more tablets than PCs as shown in the illustration below.


Mobile and cloud are combining to change how the underlying infrastructure of business. Mobile and cloud combine to change how applications are developed, tested and distributed. Mobile changes what features and user experience exists in applications while cloud changes where data should be located and how it will be accessed. Security and management will also change as businesses embrace mobile. Applications will be device aware, location aware and network/cloud aware. But they have to be purpose built, i.e. desktop/workstation apps won't run on mobile computing platforms- even with 4G access.  And because the demand for mobile cloud resident apps is uncertain, the mobile cloud must be very flexible in scaling up or down to accomodate the actual number of users for all the mobile apps being supported.

Going forward business processes will assume a multi-device landscape, cloud connectivity.  Mobile work styles are becoming the rule rather than the exception in Enterprise IT and traditional methods of securing data behind VPNs will fall short as employees demand business tools that are as easy to use and frequently updated as the ones they use at home.  Unfortunately, legal and regulatory requirements for securing data are no less stringent than they were before the mobile era. There are compliance issues with laws such as HIPAA and FINRA that apply to data sync and sharing of information/digital content.

In the future, companies will rebuild transform business applications to take advantage of a  range of by using contextual data from all connected devices, including location, time of day, presence and device type. Sensors in the latest devices will also also provide contextual information such as temperature, humidity, motion, and orientation. Applications based on business critical data from connected sensors will be used by many industries, with utility, oil and gas industries leading the way. Transforming business will require businesses to use the cloud and big data processing to turn mobile data into insight in real-time.

In an excellent presentation by Jesse Lipson, Citrix VP of Data Sharing, Managing Data in the Cloud said:  "VPNs are going away.They are clumsy and incovenient for mobile users."  Other reasons:  there's more IP outside of the firewall, Mobile Device Management (MDM) and simpler two factor authentication are combining to alleviate the need for VPN access.  Mr Lipson also sees several new trends as a result of mobile data tsunami:

-Active Directory Integration with Single Sign On (e..g. SAML 2.0)
-2 factor authentication going away; perhaps replaced by text message authentication
-Auto Log-In from mobile devices, especially smart phones
-On premises storage alive and well due to security, compliance, convenience, and ability to access existing data stores
-"Open-in..."  enable another application to open in the application being run
-Device control via MDM software deployed on all enterprise owned mobile devices
-Other mobile devices, especially laptops are getting more attention for security and control

In the end, enterprise control of mobile devices, data and apps is a balancing act between corporate compliance and security vs employee convenience and productivity (see illustration below).  Each organization must decide how to chose the necessary tools, methods and procesures to ensure that both objectives are met.


2013 Cloud Connect Part II is at:

M2M Market Opportunities, Challenges, Strategies, Industry Verticals and Forecasts


Signals & Systems Telecom (SNS Telecom; has just released a report on the Machine-to-Machine (M2M) communications market.  The report presents an in-depth assessment of the global wireless M2M market. In addition to covering the business case, the challenges, the industry’s roadmap, value chain analysis, deployment case studies, and the vertical market ecosystem, vendor service/product strategies and strategic recommendations, the report also presents comprehensive forecasts for the wireless M2M market from 2013 till 2018, including an individual assessment of the following submarkets: Network Connectivity, Application Services, Embedded Cellular M2M Modules, Network Security, Connected Device Platforms (CDP), Application Platforms (Application Enablement Platforms, AEP and Application Development Platforms, ADP), Integration Services and Enabling Technologies, across six regions.

Also provided are network connectivity and application service revenue forecasts for the following 6 vertical market segments: Utilities & Smart Grid, Automotive & Transportation, Logistics, Public Safety, Security & Surveillance, Retail & Vending and Healthcare. Historical figures are also provided for 2011 and 2012.


Despite its low ARPU, the wireless M2M market has become a key focus of many mobile network operators as their traditional voice and data markets become saturated. Likewise, government and regulatory initiatives such as the EU initiatives to have a smart meter penetration level of 80% by 2020 and the mandatory inclusion of automotive safety systems such as eCall in all new car models, have also helped to drive overall wireless M2M connections and revenue.
Consequently we expect the wireless M2M market to account for nearly $136 billion in revenues by the end of 2018, following a CAGR of 23% during the five year period between 2013 and 2018. Eyeing this lucrative opportunity, vendors and service providers across the highly fragmented M2M value chain have become increasing innovative in their strategies and technology offerings which have given rise to a number of submarkets such as M2M Network Security, Connected Device Platforms (CDP) and M2M Application Platforms.

Key Findings:

 *   The wireless M2M market will account for nearly $136 billion in annual revenues by the end of 2018, following a CAGR of 23% during the five year period between 2013 and 2018
 *   At present, the M2M value chain is highly fragmented with module OEMs, hardware solution providers, application platform providers, device platform providers, and mobile network operators and aggregators/MVNOs all investing across multiple segments of the value chain, whilst still maintaining a key focus on a specific portion
 *   Signals and Systems Telecom expects the value chain to consolidate in the future, with a smaller number of larger and profitable competitors across the M2M value chain
 *   The growing presence of wireless M2M solutions within the sensitive critical infrastructure industry is having a profound impact on M2M network security services, a market estimated to reach nearly $1 billion in annual spending by the end of 2018
 *   Driven by demands for device management, cloud based data analytics and diagnostic tools, M2M software platforms (including CDP, AEP and ADP) are expected to account for $6 billion in annual spending by the end of 2018

Key Questions Answered:

 *   What are the key market drivers and challenges in the wireless M2M ecosystem?
 *   What are the key applications of M2M across industry verticals?
 *   How is the M2M value chain structured, how will it evolve overtime, and what will be its impact on key vertical segments of the market?
 *   What opportunities does M2M technology offer to mobile network operators and other players involved in the value chain?
 *   What strategies should mobile network operators/MVNOs, module vendors, hardware solution providers, software platform providers and other players adopt to capitalize on the M2M opportunity?
 *   How big is the M2M opportunity, and how much revenue will the industry generate in 2018?
 *   What will be the installed base of wireless M2M connections in 2018?
 *   Which geographical regions and industry verticals offer the greatest growth potential for M2M services?
 *   What is the vendor market share embedded cellular M2M modules, how many units will ship in 2018 and how will declining ASPs impact the sales revenue?
 *   How will embedded cellular M2M module shipments vary by air interface technology overtime, and will LTE take a lead in 2018?
 *   What is the network connectivity and application service ARPU for M2M services, and how will this vary overtime for each industry vertical?
 *   How big is the market for M2M network security and software platforms?


For more information, including report pricing, please contact Andy Silva:

Other SNS Telecom reports are listed at:


Another recently released M2M report was by Research & Markets:

M2M: The Next Billion Mobile Connections - Essential Analysis of the Growing Wireless M2M Industry

In that report, Parks Associates analysts examine the growing wireless M2M industry and highlight opportunities in this space for mobile service providers in the U.S. and globally.  The report includes a comprehensive overview of the complex M2M ecosystem, profiles of leading M2M vendors, and analysis of carriers’ M2M strategies. The report also illuminates important trends in key verticals and provides a forecast of carrier-enabled device connections through 2016.

"Mobile service providers are facing declining revenue from traditional voice and SMS services and mobile data traffic growth that outpaces growth in data revenues," said Jennifer Kent, research analyst, Parks Associates. "In search of new opportunities, mobile service providers are expanding their presence in the Machine-to-Machine (M2M) space. Widespread consumer and enterprise adoption of broadband Internet service, wireless routers, and devices with mobile connectivity means the ingredients are there for the M2M market to take off. Plus, mobile network operators have unique assets that position them to take advantage of the growing M2M market.” 


Sprint in Deal with U.S. Law Enforcement to Restrict China Gear, especially from Huawei

Seeking to address national security concerns, Sprint Nextel and SoftBank, its Japanese suitor, are expected to enter an agreement with American law enforcement officials that will restrict the combined company’s ability to pick suppliers for its telecommunications equipment and systems, government officials said on Thursday.

The agreement would allow national security officials to monitor changes to the company’s system of routers, servers and switches, among other equipment and processes, the officials said. It would also let them keep a close watch on the extent to which Sprint and SoftBank use equipment from Chinese manufacturers, particularly Huawei Technologies. The government officials spoke about the possible agreement on the condition of anonymity because negotiations are continuing.  SoftBank, one of Japan’s biggest cellphone companies, is offering to buy majority control of Sprint for $20.1 billion.

While common to most technology investments in the United States by foreign companies, such agreements have come into sharper focus recently because of accusations by United States government officials of espionage by foreign countries.

SoftBank and Sprint have already assured members of Congress that they will not integrate equipment made by Huawei into Sprint’s United States systems and will replace Huawei equipment in Clearwire’s network. Clearwire is a discount cellphone firm Sprint is seeking to buy.

Masayoshi Son, the Chairman and CEO of SoftBank; Daniel Hesse, CEO of Sprint; and Erik Prusch, CEO of Clearwire, jointly sought to reassure United States officials that the merged company would take the steps necessary to ensure that its networks would not endanger United States communications networks.

Representative Mike Rogers, Republican of Michigan and chairman of the House Permanent Select Committee on Intelligence, said on Thursday that he also met this month with the company executives, who promised him that they would not use equipment from Huawei.

“I expect them to make the same assurances before any approval of the deal” by national security officials, Mr. Rogers said. “I am pleased with their mitigation plans but will continue to look for opportunities to improve the government’s existing authorities to thoroughly review all the national security aspects of proposed transactions.”

A recent report by the intelligence committee identified Huawei and the ZTE Corporation, another Chinese equipment provider, as possible security risks. The report cited the companies’ potential ties to Chinese intelligence or military services.






Technologies that will offer higher quality viewing experience & enable new OTT services

The use of over-the-top (OTT) solutions to deliver streaming video to the TV and second screen devices is now a reality.  Almost all Internet-connected devices (WiFi, Ethernet, 3G/4G) are capable of receiving multiple sources of OTT video- both free and subscription fee based. Though streaming video services are at the center of OTT, there  other uderlying technologies that must be present for this  market to  continues to evolve and grow.  As new, pioneering companies move from testing the water to diving in full force—the OTT industry will change, and dramatically so.  
This article summarizes several new technologies described by Cisco, Akamai, and Discretix during the 2013  OTTCON  held last week (March 19-20) in Santa Clara, CA.
OTT Sessions on Enabling Technologies:
1. OTT Technology Enablers: HEVC, CDN, and SDN, by James Field, Director of Technology, New Initiatives - NDS (now a part of Cisco).  Three of the  key technology enablers that will drive OTT innovation and growth were discussed by Mr. Field:
-HEVC is a next generation content encoding standard that provides increased compression rates to improve video throughput and quality.  The result is a much  better mobile video experience along with introduction of advanced video services, such as 3D, and ultra high definition video (up to 8192x4320 pixels). HEVC is the successor to H.264/MPEG‐4 (Advanced Video Coding). It provides a 50% bandwidth savings at equivalent video quality- or higher quality resolution or frame rate.  With this technology an operator can reach more OTT customers and also more end point devices through the same speed broadband access.   Standardized only this January 2013, HEVC silicon was forecast to be shipped by the end of this year (mostly for encoding).  Decoding could be implemented in software in the end point device, assuming it contained a fast enough microprocessor.  But embedding HEVC chips in mobile devices will be a cost sensitive market.  Hence, the first chipsets will likely target high-end "4K" Ultra HD TV sets.
-A Content Delivery Network (CDN) is a large distributed system of servers deployed in multiple data centers within the public Internet.  CDN Federation is a collection of CDNs operated by autonomous entities/service providers and interconnected via open interfaces, so as to appear as a single logical CDN.   Such a multi-footprint logical CDN may enable improved video quality while providing additional reach and OTT service revenue potential and reach.

CDNs are implemented with caching only OR with a combination of caching and network QoS that are tightly integrated (for HD content, Connected TVs, Mobile content, Live video streaming, etc).  CDN market vendors include Transit Providers (like Level 3 Communications) as well as Pure Play CDN vendors (like Limelight, Akamai, CDNetworks, etc).  Network Service Providers want to participate in the CDN value chain to generate new revenues, improve user experience and reduce network costs.
-Software Defined Networking (SDN) is an emerging network architecture where the control and data planes are decoupled (and reside in different equipment) to enable flexible configuration,  network management and  programmability. An Open Network Environment (ONE) approach to SDNs creates more resilient network intelligence and can enable more agile service delivery. Open Flow protocol is being standardized by the Open Network Foundation (ONF).
Note: This author has written numerous articles about SDN.  We believe it is too early to be used in delivering OTT content to mobile or fixed line subscribers.  Here are a few recent SDN blog posts:
2. OTT for Mobile Devices – An implementer’s Checklist, by Raviv Levi - Director of Product Marketing, Content Protection Products - Discretix
Mobile devices are a crucial element of all "TV Everywhere" deployments. Video quality and effective delivery to mobile devices require different video formats and resolutions. Wireless networks introduce both connectivity and throughput variance, requiring support for  adaptive bit rate streaming protocols. Scalable deployment across multiple platforms – The number of Android and iOS device variants is growing exponentially. Service providers cannot effectively test and debug their "TV Everywhere" application on all existing smartphones, tablets, screen sizes, OS versions and processor platforms. Cost effective deployment requires a single application that can be deployed across the entire mobile device eco-system. Security – Open devices, un-managed networks and multiple untrusted 3rd party applications, add significant complexity to the security of the "Mobile TV Everywhere" applications. Access to premium content from the major studios depends on the proper hardening of content protection technologies. In his presentation, Mr. Levi described the key technology considerations for TV Everywhere deployments on mobile devices and shared lessons learned from devices already in service across the world.
3. OTT and Scale: The Darkness and the Light, by Will Law, Principal Architect - Media Engineering - Akamai
The current architecture and distribution methods of delivering over-the-top content struggle to deliver a single live event to millions of concurrent users. How can they possibly hope to cope with even a fraction of cable's capacity? This session examined ten new technologies that can combine to help address the problem of delivering live OTT content at massive scale.
The ten technologies described by Mr Law were: 
-HEVC - will cut transport costs for OTT content only IF quality parity is maintained
-Increasing device compute capability -enabling software decoding of complex compression schemes
-Storage density growing exponentially- faster than compute capability (more local caching of multi-media content)
-Multi-cast OTT video delivery - for live sports events, election coverage, concerts, royal weddings, OTT linear TC for marquee programming, top 100 Netflix videos, etc)
-Peer assisted video delivery -get video from your peers instead of a conventional video server.  Needs overlay security and control plane
-Tiered pricing plans -already in use by most 3G/4Gmobile carriers, may spread to wireline Internet access; it's a telco business practice rather than a new technology.
-Local caching networks -caching used to only exist within CDNs. Now major telcos and other carriers (e.g. MSOs) are building out transparent cache layers within their own networks. Federation of content between cache networks is next.)
-Better optimization of mobile data traffic by wireless telcos (small cells, more LTE deployments, self organizing networks, etc)
-Fiber transit capability dramatically increasing in the core network (40G/100GE over fiber being deployed now).
In Sept 2012 NTT demonstrated transmission of 1 petabit (1000 terabits)/sec over 52.4 km of optical fiber. That's equivalent to sending 5,000 HDTV videos of two hours in a single second.  However, fiber is not being deployed that rapidly to cell towers, and (with the exception of Verizon FiOS and some independent telcos) not directly to the home.
-Scalable Video Coding  with new encoders/decoders capable of operating at mutliple bit rates/frame rates/frequencies.
Other new technologies besides the above were identified as:
4K video- a new resolution standard designed for digital cinema and computer graphics which has a horizontal resolution on the order of 4,000 pixels.
-- Increased device screen resoution (e.g. Samsung Galaxy S4 smart phone is 1080p)
– Server bits/power (Watts) is increasing which is critically important to lower power consumption & cooling in data centers.
-- Residential fiber AKA FTTH (not happening in a big way in the U.S.)
-- WiFi Carrier Offload (popular with some wireless carriers, but not others)
– HTTP 2.0 is the next planned version of the HTTP network protocol used on the WWW. It is an alternative to SPDY- an HTTP compatible protocol launched by Google and used in Chrome, Firefox and other browsers.
Editors Note:  Time  constraints and great difficulty with this website's word processor/editor prevented a more complete summary report of these three excellent OTTCON sessions.  Please contact the author if you are interested in learning more as part of a consulting project:

Oracle Acquires Tekelec to Pursue Telco Market: Manage, Control & Analyze IP Traffic

Less than two months after buying Acme Packet, Oracle has announced that it has agreed to acquire Tekelec, a leading provider of network signaling, policy control, and subscriber data management solutions for communications networks. The company has also  been an innovator in IP traffic shaping.

Tekelec specializes in critical elements of the modern IP carrier network where the networking and IT software operations converge.  This is the area where Oracle sees its opportunity to expand in the telco market - by bringing its data center and IT systems to telecos and taking on incumbent telco vendors like Ericsson.

Financial terms of the deal were not disclosed. Tekelec has been considered a potential acquisition target since it went private in November 2011. It was then acquired by a group led by private equity firm Siris Capital for $761m, a deal which many believed undervalued the company.  Tekelec made a name for itself in the 1980s and 1990s by specializing in test equipment and then converting to a VoIP software company. 

Last month, Oracle paid $1.7bn for Acme Packet, which specializes in VoIP and IP traffic equipment, notably session border controllers.  We analyzed that transaction in this article:

It appears that Oracle is building a group of software technologies  which help network operators control and manage IP traffic and analyze it in detail, in order to impose policies such as offload or premium charging - increasing the ability to monetize the exploding traffic. In particular, it is now a major force in signalling, taking players like F5, which acquired Diameter specialist Traffix over a year ago.  With the Tekelec and Acme Packet acquisitions, Oracle will be in a better position to compete with Cisco Systems, which has recently bought policy management firm BroadHop.

“In an increasingly mobile and social world, customer experience is about optimizing network performance and personalizing services based on what engages, moves, and inspires people,” said Ron de Lange, president and CEO, Tekelec, in a statement. “Together with Oracle, we expect to accelerate the pace of service innovation by helping service providers transform the way they manage and monetize the explosive growth in signaling and data traffic on their networks.”

"Oracle has in the past partnered to provide these capabilities, but by bringing them in house it will have more opportunity
to shape the roadmap and combine the capabilities in a more tightly-coupled solution," wrote Ovum principal analyst Dana Cooperson in a research note. "Expect Oracle's telecom focused competitors (Alcatel-Lucent, Huawei, Ericsson) and its IT-focused competitors (HP, SAP, SAS Institute) to do more strategic soul searching and, as their financial situation allows, to pursue acquisitions of their own."

"As connected devices and applications become ubiquitous, intelligent network and service control technologies are required to enable service providers to efficiently deploy all-IP networks, and deliver and monetize innovative communication services," said Bhaskar Gorti, general manager of Oracle Communications, in a statement.

In addition to its software products, Tekelec owns hundreds of patents and applications in the communications space. This is an area that Oracle has not hesitated to explore in the courtroom, and given the billion-dollar-plus sums involved in some patent battles, this could have bumped up the pricetag for Tekelec somewhat higher.




FBR: SDN's impact on the networks deployed by service providers and large enterprises

FBR CAPITAL MARKETS & CO sees Software Defined Networking (SDN) adoption driving sales of commodity, low-margin switches at the expense of Cisco/Juniper's conventional switch/routers. SDN separates the data (packet/frame) forwarding "switch engine" from the control plane "server" and uses the Open Flow protocol to communicate between them.  SDN revolutionizes networking implementation by using commodity hardware in both the switch/data forwarding engine (data plane) and centralized server (control plane).  All the path computation, re-routing, restoration, management, etc exists as software in the centralized compute server, which is built from off the shelf high performance compute servers. 
FBR downgraded Cisco (CSCO) to Sell  and said the company will find it difficult to offset weakening router and switching equipment demand. "We believe Cisco will become increasingly more challenged to offset weaker-than-expected routing and switching demand as it works to transition to a more software- and service-centric business model," the analyst said in its downgrade report. "Looking ahead, we see the potential for additional negative technological trends that could significantly blur the lines between routers, switches AND servers," FBR added.  "As a result, we expect: (1) a slow, but meaningful, reduction in the number of routers and switches deployed into networks; (2) the adoption of an increasingly larger mix of white box, lower-margin product; (3) the announcement of new competitive products and vendors that could negatively affect gross margins at both companies and across the space."  The investment research firm also downgraded Juniper Networks (JNPR) to underperform.  
FBR analyst Scott Thompson forecasts that there will be a 40% drop in switch/router ports deployed by service providers/large enterprises in next 18-36 months (Scott says his forecast was confirmed and considered conservative by several networking companies).
Note: We await clarification of what FBR thinks will cause the 40% drop in switch/router shipments.  Once we obtain that information this article will be updated.

FBR's research leads them to believe that the next generation of network and datacenter hardware will blur the boundaries between routing, switching, and computing, providing a single hardware platform on which network and computing functions will be delivered through software applications.

In a just issued report, the firm states:
"Whether microservers, software-defined switches, enterprise flash, or other next-generation datacenter enablers, these technologies often share similar purposes and goals. These technologies typically have the following characteristics:
 Drive power efficiencies from a total platform perspective.
 Lower the overall datacenter footprint.
 Seek to eliminate redundant or nonessential hardware and components.
 Commoditize hardware, thus driving value into “select” software and semiconductors. This new hardware attempts to eliminate the need for custom, purpose-built hardware (example: routers, switches), instead replacing this with a common but versatile computing/switching platform.
 Drive the commoditization of hardware through the scaled use of non-branded component based hardware solutions in distributed datacenter architectures (i.e., white box servers, switches provided by reference designs from the Open Compute Project [OCP]).
 Attempt to replace ASICs with “open” merchant silicon and/or drive advanced functionality into general purpose CPUs (i.e., OpenFlow enables the transfer of the control plane into the CPU).
 Seek to utilize and optimize “open source” software and hardware alternatives (OpenFlow, OpenStack, OpenCompute hardware reference designs).
 Increase infrastructure flexibility through a software approach (example: network function virtualization).
Increasingly, service providers, large enterprises, and Web-based business are working to accelerate the innovation necessary to adopt the types of commoditized support storage, routing, switching, and computing platforms available to hyper-class providers. Our research leads us to believe that the next generation of network and datacenter hardware will blur the boundaries between routing, switching, and computing, thus providing movement toward a single hardware platform on which network and compute functions will be defined through software.
This type of platform approach to networking, particularly with respect to the service provider segment, became increasingly obvious at Mobile World Congress (Barcelona) this year as it was one of the major topics of conversation during multiple carrier keynotes."
FBR: Software Defined Networking (SDN) is the next logical evolution in networking
"SDN, is a concept that essentially extracts the logical topology of a network from a switch or router and places it in a central repository or database, simplifying the networking topology and making the network easier to manage. SDN essentially splits the functions of a switch or router into two logical functions. It separates the control plane from the forwarding plane. The result drastically simplifies the networking hardware necessary to make a network operate, while
making the control plane, or the intelligence of the network, much more flexible. OpenFlow is an important piece of the SDN puzzle and serves as a protocol that delivers the information from the control plane to the forwarding plane. While SDN will likely prove beneficial to all types of organizations, we view SDN as particularly attractive to service providers and large, scaled datacenter operators as a platform from which to launch new SaaS-based services more quickly and
FBR states and forecasts that: "Web companies moved toward SDN first, carriers moving now, perhaps enterprises later. Thus far, Web-based companies have served as the largest proponents of SDN technologies, and we expect this to continue for the foreseeable future. The demands that Web-based giants have placed on traditional switching networks have stretched networks to their limits, resulting in excessive operating costs and technical constraints to growing business models. SDN presents a much cleaner and more streamlined network solution for these customers.
Our checks indicate that nearly every top 10 service provider is intently focused on the benefits SDN solutions provide."

Source: BIG "switches:" little SERVERS--FBR's Holistic View of the Coming Datacenter, written by FBR Technology, Media & Telecom research group
Cisco and Juniper Respond to SDN:
Cisco is trying to respond to the SDN threat with their Open Network Environmnet (ONE)- a portfolio of Cisco  technologies and open standards that brings programmatic control and application awareness to the network, combining the benefits of hardware and software across physical and virtual.
A Cisco Sr VP recently said that SDN will be a "game changer" for data centers:
Juniper Networks say they're executing on their SDN vision by centralizing network management
The company announced a 4-step roadmap to SDN last month:
Their CEO explained the companies SDN plans in this story:
Juniper has a free SDN Whitepaper you can download after filling out a form at:
2.  IEEE ComSocSCV had the two leaders of the SDN movement talk at one of our technical meetings last year.  Their presentations are posted in the 2012 meeting archive section of our website:
Date: Wednesday, July 11, 2012; 6:00pm-8:30pm
Title: Software Defined Networking (SDN) Explained -- New Epoch or Passing Fad?
Speaker 1:  Guru Parulkar, Executive Director of Open Networking Research Center
Subject:   SDN: New Approach to Networking
Speaker 2:  Dan Pitt, Executive Director at the Open Networking Foundation
Subject:   The Open Networking Foundation
April 10th ComSocSCV Meeting on Data Center Dynamics & Trends:

Wireless Infrastructure Market and Carrier WiFi integration with cellular networks

The wireless network infrastructure market is currently in a phase of transition as mobile network operators seek to address increasing mobile traffic demands amidst global economic uncertainties. This paradigm shift is bringing new challenges and opportunities to wireless infrastructure vendors.

In 2011, global 2G , 3G and 4G wireless infrastructure revenues were $45.9 billion. Signals and Systems Telecom (  estimates that these revenues increased 8 percent year on year (YOY) reaching $49.7 billion by end of 2012,  primarily driven by LTE investments. However, between 2012 and 2017, the market is expected to shrink to $48.6 billion.  That's because of the decline in operator spending on  2G and 3G network infrastructure, network management and related software.

Although, the new wave of 4G-LTE macrocell  Radio Access Network (RAN) and core network investments will not be able to compensate the overall declines in 2G and 3G equipment sales, operators are expected to significantly increase their spending in the evolving small cell and carrier WiFi equipment market.   Small cell and WiFi offload equipment will represent a market of $5.4 billion in 2017. Consequently the small cell and WiFi offload market segment is attracting considerable attention from both established vendors as well as startups which solely focus on the small cell market.
However, carrier WiFi will NOT be supported by all operators.  For example, Sprint and Verizon Wireless have no definitive plans to operate carrier WIFi networks.  Market research firm Informa #1 Trend for 2013 was that Wi-Fi will become a victim of its own success

"There will be a shift in operator sentiment away from public Wi-Fi as it becomes evident that the growing availability of free-to-end-user Wi-Fi devalues the mobile-broadband business model. Mobile operators will respond by articulating the value of their cellular networks better, but others not affected by this trend will double down on their public Wi-Fi investments to continue to propel the deployment and monetization of Wi-Fi."

Based on it's WiFi/cellular integration demo at the 2013 Mobile World Congress,  Telefonica d'Espagne seems to be 100% committed to Carrier WiFi.  And so is ATT&T  based on their Wayport acquisition in 2008.  AT&T  might be in the best position to provide access to a worldwide Wi-Fi network.  In that scenario, customers would pay a set amount (maybe $5 or $10 a month) for that capability.  The fact that no one has a fixed monopoly on Wi-Fi makes this a difficult trend for mobile operators to control.

Republic Wireless, a mobile virtual network operator, has created a service that primarily relies on Wi-Fi for connectivity and defaults back to the cell network. Republic sells its service for $19 a month, far less than what people pay carriers. Thus, if carriers seek to monetize their Wi-Fi offerings they are going to have to figure out how to create a service that’s better than what most users cobble together on their own.

IEEE ComSocSCV had a great technical meeting debating the pros and cons of Carrier WiFi along with the new features and functions of IEEE 802.11ac.  Presentos will be posted at the archive section of the Chapter's web site:


Bell Labs (ALU) narrows its R&D focus to be more product-oriented & realize "near term gains"

What's left of Bell Laboratories is focusing on software product development on behalf of its parent company, Alcatel-Lucent. "We want to still be the innovation arm of Alcatel-Lucent (ALU) that continues to amaze and surprise people. But I think in order to do that we do have to change somewhat," said Bell Labs' Gee Rittenhouse. He added, "As the industry moves toward dynamic networks, distributed systems, Bell Labs also has to move toward those directions." 

Last month, ALU appointed Rittenhouse as the new leader of the nearly 90-year-old Bell Labs, known for inventing the first transistor, along with a whole host of other technological innovations and discoveries. During his tenure, Rittenhouse plans to steer Bell Labs more toward software products related to networking and cloud computing.

Increasingly, Bell Labs is collaborating with outside partners to solve major technological problems facing the IT industry. One such effort is the GreenTouch Consortium, which is focused on dramatically reducing the power needs of today's telecommunication networks. Bell Labs and Alctatel-Lucent's rivals like Huawei and ZTE, among others, are members of the group.

To bring more products to the market, Rittenhouse said Bell Labs will choose long-term projects that can result in near-term gains for the market. Although he declined to reveal specific projects at Bell Labs, he pointed to "immersive communication" as one area the research division has heavily invested time in. This involves examining what makes face-to-face conversations genuine, and how that experience can be replicated over long-distance communication.

"So research in applications, multimedia is just as important as research in physics," Rittenhouse said. "Because if you are only in math, physics, optical, you are missing this big sea change," he added.

AW Comment: The days of pure research are long gone. Today, companies have a very short time horizon and must get product to market quickly to maintain a competitive edge.  This is especially true in the telecom equipment business, where low cost Chinese vendors Huawei and ZTE, have taken considerable market share from the previous incumbents and forced some (e.g. Nortel) out of business.

Here are a few articles on Bell Labs as the standard for innovation (may no longer be true):!ut/p/kcxml/04_Sj9SPykssy0xPLMnMz0vM0Y_QjzKLd4w3MXMBSYGYRq6m-pEoYgbxjggRX4_83FT9IH1v_QD9gtzQiHJHR0UAaOmbyQ!!/delta/base64xml/L3dJdyEvd0ZNQUFzQUMvNElVRS82X0FfNDZL

France Telecom & Vodafone team up to challenge Telefonica in Spain's FTTH/High Speed Broadband Access market

France Telecom (FT)/Orange and Vodafone will invest up to up to 1 billion euros (=$1.3 billion) in the joint development of a fiber optic network in Spain, Vodafone-Spain's Antonio Coimbra told Reuters on March 13th.  The Financial Times reports that Vodafone and FT/Orange plan to offer their own high speed broadband services to customers, in addition to bundled services with mobile, fixed line and TV that are becoming increasingly important in gaining and keeping customers.  The fiber-to-the-home network will reach 800,000 households and workplaces by March 2014, 3m by September 2015, and 6m by 2017.

The new network will challenge Telefónica d'Espagna in the high-speed broadband access market.  But the deal will still need permission to use Telefónica’s network to reach individual homes.  The planned jointly built fiber optic network is intended to reach 6m premises across 50 major cities by September 2017. Vodafone and FT/Orange will each deploy fiber optics in separate but complementary areas to share the network scale. The fiber optic lines will be owned independently but will work as a single network.  The combined capital expenditure needed to reach 6m homes and workplaces is expected to reach €1bn, according to the companies.

Vodafone, which has traditionally been viewed as a purely mobile operator, has slowly established a pan-European fiber optic network through either partnering existing fixed line owners, building its own network as in Portugal or buying companies with fibre or cable assets.  Vodafone and FT/Orange said that the agreement would increase the efficiency of fiber optic deployment and maximize returns on investment for both operators. The agreement is also open to third parties willing to co-invest.

Paolo Bertoluzzo, chief executive of Vodafone’s Southern Europe region, said: “This agreement demonstrates Vodafone’s commitment to provide high-speed unified communications services to our customers coupled with our willingness to invest when there are positive returns.”


KC FTTH network was described at the Feb 13th ComSocSCV meeting.  Ken Pyle of
Viodi View wrote: 
"A step function improvement in capability," is how Milo Medlin described Google’s Kansas City fiber project at the February 13th IEEE ComSoc meeting in Santa Clara. That huge improvement in customer experience is in contrast to the incremental gains of MSO [Multiple System Operator] and telco broadband networks which have much lower access speeds.  Medlin, who is VP of Access for Google, described a Gigabit/second fiber network that eliminates the bottleneck between the home and the cloud, unleashing new applications and devices both in the home and by implication, throughout a city. Google’s biggest innovation may not be in technology, but it in its ability to improve the provisioning process, create a simplified offering and use grass-roots marketing to promote its high speed fiber access
offering.  The story of Google Fiber is pretty well-known by now. Google issued an RFI a couple of years ago to which 1,100 cities responded he test bed for Google’s fiber to the home project. What isn’t so well-known is that the motivation for this was the middling price/bandwidth performance of the U.S. as compared to other countries.
Hopefully, Ken's write-up of this IEEE ComSocSCV Feb 13, 2013 seminar will be published at in the near future! 

Medlin, who was a key figure in the early success of cable modems, through
his affiliation with @Home, suggested that, instead of complaining to
government, Google decided to solve the problem. The unexpected response of so
many communities was also a surprise to Google and was an indicator of a pent-up

Interestingly, government turns out to be part of the reason for their
success, but not in the form of subsidies or tax breaks. The techniques Google
and the local city are using to streamline the permit process and literally work
together is saving an estimated 2% of the build cost. Similarly, attachment of
fiber to the poles is made somewhat easier because the local utility is

Mobile World Congress (MWC) 2013 Report: OTT Services & LTE Networks

Source:  Wireless Intelligence

Mobile Network Operators face up to regulatory and OTT challenges

Many of the operator CEOs speaking at the 2013 MWC in Barcelona commented on the phenomenal pace the industry is currently moving.  But what was also apparent was how those same network operators have been much slower than over-the-top (OTT) players, OS developers and in some cases device manufacturers in taking advantage of the opportunities that these changes have brought about.

Taking advantage of rapidly increasing smartphone penetration, OTT messaging services such as Viber, WhatsApp and KakaoTalk have grown exponentially during the past year. Operators have been unable to respond quickly to the challenge of these IP-based players and are feeling the effect in their SMS (texting) ARPUs. Network operator CEOs object that OTT players benefit directly from operator investment in networks without incurring any of their own costs. According to CEO Talmon Marco, Viber, whose users have increased to more than 170 million from 90 million in July 2012, costs just $200,000 per month to run.

As well as the OTT threat, operators voiced concern that excessive regulation and inefficient spectrum allocation were hampering their efforts to develop the infrastructure required to satisfy the everincreasing demand for data.

Key Data Points:
• Network Operators stressed that the regulatory environment needs to be in sync with network investment cycles in the
• Network Operator revenues are stagnating in developed markets, but increasing capex is required to build out 4G LTE infrastructure
• OTT players are eating into operator revenues, and they benefit from operator investment at no cost to themselves
• Current regulation seeks to increase competition but operators say there is too much competition in many countries already, especially in Europe

Spectrum was also high on the agenda for operators, with GSMA chairman Franco Bernabè calling for more efficient allocation as well as greater harmonisation of spectrum for LTE. These are crucial issues, notably in Europe where LTE technology currently accounts for less than 1% of mobile connections in the region - compared to more than 10% in North America, Japan and South Korea.

Operators require a portfolio of frequency bands to ensure that economically viable infrastructure solutions can be deployed nationwide. At present, pieces of the puzzle are missing, with digital dividend frequencies yet to be assigned in several European countries. Availability of spectrum in the 800 MHz band in the region is critical to ensure that LTE coverage is sufficient to meet escalating demand for data services.

There were a number of announcements from European operators focused on network expansion to accomodate greater demand for mobile data services.

Key Data Points:

• O2 UK announced a partnership with Ericsson to deploy LTE this year
• In the UK, EE announced that around a quarter of its customers living within range of its 4G LTE network have upgraded to one of its 4G plans
• O2 Germany is launching an LTE network in Munich and Berlin on 31 March 2013, followed by four other large cities in Q2 2013
• Unlike its competitors that started by covering ‘white spot areas’ (rural zones underserved with broadband connectivity) under licence obligations, O2 Germany says it will focus on large cities
• Vodafone Germany already reports 60% LTE coverage by area and said that 20 million households now have access to its highspeed network
• Telstra claimed that demand for LTE is exploding as one in five Australian smartphone owners plan to buy a 4G handset in the next 12 months. There are 19 LTE devices available on the market
• Telstra has sold 1.5 million 4G LTE devices since September 2011 and aims at increasing coverage to two thirds of the population by June 2013
• China Mobile claimed that its TD-LTE network will be launched in Q3 2013

LTE pricing models vary between operators and regions. Most operators in North America focus on consumption-based tariffs while operators in Europe tend to include a speed-based element to their data plans. In the latter region, competition is intensifying around LTE tariffs, notably with operators such as 3 (Hutchison) promising no LTE premium to consumers in the UK.
O2 Germany claimed that “the German consumer is comfortable with paying for quality of service and different speeds
with data”. The operator unveiled four new O2 Blue tariffs aimed at smartphone users that will better prepare it for an LTE future. The two premium plans support download speeds of rates up to 50 Mb/s and data allowances of up to 5 GB, as well extra SIM cards to enable data to be shared between a smartphone and tablet or laptop. The entry-level plan starts at €19.99 per month, while unlimited voice and SMS is included in all new plans. Bolt-on options are also provided to
enable subscribers to add extra data at LTE speeds.

Wi-Fi hotspots occupy an increasingly important place in the data-centric world that mobile operators are creating, to help manage mobile data traffic, network capacity and high-speed data network coverage. Telefónica demonstrated during Congress a technology that enables smartphone and tablet users to move between Wi-Fi and mobile networks without losing coverage, and said this service could be available in the next year.

Sunil Bharti Mittal, Chairman of Bharti Airtel (India), challenged network infrastructure vendors to offer integrated networks with support for both TD-LTE and FDD LTE technologies - alongside support for various frequency bands - in order to control its infrastructure cost. Bharti has over 20,000 TD-LTE customers in India, and is looking to deploy the technology in the 1800 MHz band using the FDD LTE variant in the near future.

For the complete report, visit:


On 11 March 2013, Yankee Group presented their Mobile World Congress Wrap-Up webinar.  You can replay that Yankee Group webinar at:

There are other webinars shown on the top of that website which may be of interest to our readers.