Building a telco based on ‘free’ open source software is theoretically highly attractive to telcos, particularly those looking to increase their control over innovation and differentiation, and/or where cost reduction is critical. This report looks at how to address the challenges, identifies practical options and choices, and how, when and why to go about open source transformation in the real world.
Introduction: Why open source?
Commercial pressures and technological opportunities
For telcos in many markets, declining revenues is a harsh reality. Price competition is placing telcos under pressure to reduce capital spending and operating costs.
At the same time, from a technological point of view, the rise of cloud-based solutions has raised the possibility of re-engineering telco operations to be run with virtualised and open sourced software on low cost, general purpose hardware.
Indeed, rather than pursuing the traditional technological model, i.e. licensing proprietary solutions from the mainstream telecoms vendors (e.g. Ericsson, Huawei, Amdocs, etc.), telcos can increasingly:
- Progressively outsource the entire technological infrastructure to a vendor;
- Acquire software with programmability and openness features: application programming interfaces(APIs) can make it easier to program telecommunications infrastructure.
The second option promises to enable telcos to achieve their long-standing goals of decreasing the time-to-market of new solutions, while further reducing their dependence on vendors.
Greater adoption of general IT-based tools and solutions also:
- Allows flexibility in using the existing infrastructure
- Optimises and reuses the existing resources
- Enables integration between operations and the network
- And offers the possibility to make greater use of the data that telcos have traditionally collected for the purpose of providing communications services.
In an increasingly squeezed commercial context, the licensing fees applied by traditional vendors for telecommunication solutions start to seem unrealistic, and the lack of flexibility poses serious issues for operators looking to push towards a more modern infrastructure. Moreover, the potential availability of competitive open source solutions provides an alternative that challenges the traditional model of making large investments in proprietary software, and dependence on a small number of vendors.
Established telecommunications vendors and/or new aggressive ones may also propose new business models (e.g., share of investments, partnership and the like), which could be attractive for some telcos.
In any case, operators should explore and evaluate the possibility of moving forward with a new approach based on the extensive usage of open source software.
This report builds on STL Partners’ 2015 report, The Open Source Telco: Taking Control of Destiny which looked at how widespread use of open source software is an important enabler of agility and innovation in many of the world’s leading internet and IT players. Yet while many telcos then said they crave agility, only a minority use open source to best effect.
In that 2015 report, we examined the barriers and drivers, and outlined six steps for telcos to safely embrace this key enabler of transformation and innovation:
- Increase usage of open source software: Overall, operators should look to increase their usage of open source software across their entire organisation due to its numerous strengths. It must, therefore, be consistently and fairly evaluated alongside proprietary alternatives. However, open source software also has disadvantages, dependencies, and hidden costs (such as internally-resourced maintenance and support), so it should not be considered an end in itself.
- Increase contributions to open source initiatives: Operators should also look to increase their level of contribution to open source initiatives so that they can both push key industry initiatives forward (e.g. OPNFV and NFV) and have more influence over the direction these take.
- Associate open source with wider transformation efforts: Successful open source adoption is both an enabler and symptom of operators’ broader transformation efforts, and should be recognised as such. It is more than simply a ‘technical fix’.
- Bring in new skills: To make effective use of open source software, operators need to acquire new software development skills and resources – likely from outside the telecoms industry.
- … but bring the whole organisation along too: Employees across numerous functional areas (not just IT) need to have experience with, or an understanding of, open source software – as well as senior management. This should ideally be managed by a dedicated team.
- New organisational processes: Specific changes also need to be made in certain functional areas, such as procurement, legal, marketing, compliance and risk management, so that their processes can effectively support increased open source software adoption.
This report goes beyond those recommendations to explore the changing models of IT delivery open to telcos and how they could go about adopting open source solutions. In particular, it outlines the different implementation phases required to build an open source telco, before considering two scenarios – the greenfield model and the brownfield model. The final section of the report draws conclusions and makes recommendations.
- Executive Summary
- Introduction: why open source?
- Commercial pressures and technological opportunities
- Open Source: Why Now?
- What is open source software?
- Open source: benefits and barriers
- The benefits of using open source
- Overcoming the barriers to using open source
- Choosing the right path to open source
- Selecting the right IT delivery model
- Choosing the right model for the right scenario
- Weighing the cost of open source
- Which telcos are using open source today?
- How can you build an open source telco?
- Greenfield model
- Brownfield model
- Conclusions and recommendations
- Controversial and challenging, yet often compelling
- Recommendations for different kinds of telcos
- Figure 1: Illustrative open source costs versus a proprietary approach
- Figure 2: Benefits of transformation and the related obstacles
- Figure 3: The key barriers in the path of a shift to open source
- Figure 4: Shaping an initial strategy for the adoption of open source solutions
- Figure 5: A new open source component in an existing infrastructure
- Figure 6: Different kinds of telcos need to select different delivery models
- Figure 7: Illustrative estimate of Open Source costs versus a proprietary approach