Contributed by Prayson Pate, Chief Technology Officer and Senior Vice-President of R&D, Overture
Over-the-top (OTT) services cause fear and heartburn for wireline Communication Service Providers (CSPs) because of the revenue they take as well as the network load that they create. Rather than fearing OTT services, CSPs should leverage new technologies such as Software Defined Networking (SDN) and Network Functions Virtualization (NVF) to deploy their own OTT services, running on their existing network.
Applications such as Netflix, iTunes, BitTorrent, and others use internet connections to deliver services that are in demand by users. Because they use the existing network for delivery by going “over-the-top” (OTT), the costs are low and margins are high. However, this situation creates a problem for Communication Service Providers (CSPs) due to the traffic load. A 2013 Bloomberg BusinessWeek article reported:
On a normal weeknight, Netflix (NFLX) accounts for almost a third of all Internet traffic entering North American homes. That’s more than YouTube, Hulu, Amazon.com (AMZN), HBO Go, iTunes, and BitTorrent combined.
OTT is not limited to Netflix and the others listed above. A recent Fierce Telecom story notes “revenues from over-the-top video services will more than double in the next six years, reaching $42.3 billion by 2020.”
This OTT traffic is a double whammy for CSPs. Not only does it drive them to expand their backbone and access capacity, but they typically don’t see any of the revenue. One interesting exception was Comcast, which was able to reach a deal with Netflix to speed up access. However, terms of the deal were not disclosed and it is unlikely that this is a valid going-forward revenue model for CSPs.
So how can CSPs compete with OTT players? By creating their own OTT services and leveraging their infrastructure to make those services more valuable. What would these CSP OTT services look like? We will discuss a few examples, but first a quick reminder on NFV.
NFV: Replace Appliances with Applications
Many of us did not realize that we needed a smartphone until we got one. The smartphone has enabled us to replace multiple appliances – watches, cameras, music players, GPS, and more – with a single device and downloadable apps.
Likewise, NFV lets us replace multiple network appliances, like routers, firewalls, security devices, and WAN optimizations, with downloadable software apps running on a standard server.
By moving from appliances to apps, CSPs can start to develop innovative new OTT services that don’t require the delivery and installation of an appliance, which is today’s standard mode of operation. Instead, they can deliver services on demand by installing apps on standard servers, and spinning up services in minutes rather than months. But what kind of services might they create and how would they be deployed? Here are some examples.
Managed Services for Small and Medium Businesses (SMB)
Today, CSPs provide a wide range of managed services that are delivered using fixed-function appliances deployed at the customer site, as shown below.
These services include:
- Managed router/firewall
- Virtual private network (VPN)
- Security services, including web email filtering, intrusion detection and prevention and mitigation of denial of service attacks
- Voice services, including soft PBX, session border controller and unified communications
These types of managed services are widely deployed, and their drawbacks are well understood:
- Initial cost of the appliance
- Cost and time to deploy the appliance, including a truck roll and onsite work
- Cost to maintain the device
- Lack of any pay-as-you-go or usage-based model
CSPs can remove these drawbacks by using NFV to virtualize the network functions:
The managed services are now delivered in an OTT fashion, without requiring a truck roll. However, the CSP has the advantage of hosting these virtualized services in a data center or central office that has high-speed access to the customer, assuring the service in a way that a pure OTT service can’t match.
Dynamic Private Cloud
The use cases and benefits of cloud computing are well known. However, a typical cloud-based application is hampered by the need to reach the hosting datacenter via the public internet. CSPs are in a great position to provide dynamic private connections from customers to the cloud services. Doing so can expand the use of cloud to include business-critical applications that don’t fit today’s best-effort connectivity model.
On Premise Cloud
Remote cloud-computing resources meet the needs for many applications, but some have requirements that can only be met by using resources located on the premise. Can CSPs expand their cloud offerings by placing compute resources on the customer site in the form of Infrastructure as a Service (IaaS)? The answer is yes, and those resources can also be used to provide other managed services:
The presence of on-premise compute makes this more of a hybrid approach rather than a pure OTT model. But, the availability of that compute opens the door for all sorts of innovative services that can then be delivered without the need for a software upgrade or a truck roll for installation of a new appliance.
Replace Opposition with Opportunity
By embracing new technologies such as SDN and NFV, CSPs can make the most of their existing network to deliver lucrative new services. The OTT model enables this transformation by decoupling the services from the underlying infrastructure, contributing to the speed and efficiency of service innovation.
About the Author
Prayson Pate is Chief Technology Officer and SVP of R&D at Overture, where he is also a co-founder. Prayson is a technology leader and evangelist with a proven track record leading teams and delivering products. Since 1983 he has been building Carrier Ethernet and telecom products for service providers and network operators around the world - both as an individual developer and as a leader of development teams. Prayson spends much of his time driving adoption of Overture's new Ensemble Open Service Architecture, which includes aspects of automation, virtualization, SDN and NFV. He has a BSEE from Duke, an MSECE from NC State and is the holder of nine US patents