End-to-end network automation: Why and how to do it?

Automation, analytics and AI: A3 unlocks value for operators

STL Partners has been writing about automation, artificial intelligence (AI) and data analytics for several years. While the three have overlapping capabilities and often a single use case will rely upon a combination, they are also distinct in their technical outcomes.

Distinctions between the three As

Source: STL Partners

Operators have been heavily investing in A3 use cases for several years and are making significant progress. Efforts can be broadly broken down into five different domains: sales and marketing, customer experience, network planning and operations, service innovation and other operations. Some of these domains, such as sales and marketing and customer experience, are more mature, with significant numbers of use cases moving beyond R&D and PoCs into live, scaled deployments. In comparison, other domains, like service innovation, are typically less mature, despite the potential new revenue opportunities attached to them.

Five A3 use case domains

Source: STL Partners

Use cases often overlap across domains. For example, a Western European operator has implemented an advanced analytics platform that monitors network performance, and outputs a unique KPI that, at a per subscriber level, indicates the customer experience of the network. This can be used to trigger an automated marketing campaign to customers who are experiencing issues with their network performance (e.g. an offer for free mobile hotspot until issues are sorted). In this way, it spans both customer experience and network operations. For the purpose of this paper, however, we will primarily focus on automation use cases in the network domain.  We have modelled the financial value of A3 for telcos: Mapping the financial value.

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The time is ripe for network automation now

Network automation is not new. In fact, it’s been a core part of operator’s network capabilities since Almon Strowger invented the Strowger switch (in 1889), automating the process of the telephone exchange. Anecdotally, Strowger (an undertaker by profession) came up with this invention because the wife of a rival funeral parlour owner, working at the local community switchboard, was redirecting customers calling for Strowger to her own husband’s business.

Early advertising called the Strowger switch the “girl-less, cuss-less, out-of-order-less, wait-less telephone” or, in other words, free from human error and faster than the manual switchboard system. While this example is more than 100 years old, many of the benefits of automation that it achieved are still true today; automation can provide operators with the ability to deliver services on-demand, without the wait, and free from human error (or worse still, malevolent intent).

Despite automation not being a new phenomenon, STL Partners has identified six key reasons why network automation is something operators should prioritise now:

  • Only with automation can operators deliver the degree of agility that customers will demand. Customers today expect the kind of speed, accuracy and flexibility of service that can only be achieved in a cost-effective manner with high degrees of network automation. This can be both consumer customers (e.g. for next generation network services like VR/AR applications, gaming, high-definition video streaming etc.) or enterprise customers (e.g. for creating a network slice that is spun up for a weekend for a specific big event). With networks becoming increasingly customised, operators must automate their systems (across both OSS and BSS) to ensure that they can deliver these services without a drastic increase in their operating costs.
    One  wholesale operator exemplified this shift in expectations when describing their customers, which included several of the big technology companies including Amazon and Google: “They have a pace in their business that is really high and for us to keep up with their requirements and at the same time beat all our competitors we just need to be more automated”. They stated that while other customers may be more flexible and understand that instantiating a new service takes time, the “Big 5” expect services in hours rather than days and weeks.
  • Automation can enable operators to do more, such as play higher up the value chain. External partners have an expectation that telcos are highly skilled at handling data and are highly automated, particularly within the network domain. It is only through investing in internal automation efforts that operators will be able to position themselves as respected partners for services above and beyond pure connectivity. An example of success here would be the Finnish operator Elisa. They invested in automation capabilities for their own network – but subsequently have been able to monetise this externally in the form of Elisa Automate.
    A further example would be STL Partners’ vision of the Coordination Age. There is a role for telcos to play further up the value chain in coordinating across ecosystems – which will ultimately enable them to unlock new verticals and new revenue growth. The telecoms industry already connects some organisations and ecosystems together, so it’s in a strong position to play this coordinating role. But, if they wish to be trusted as ecosystem coordinators, they must first prove their pedigree in these core skills. Or, in other words, if you can’t automate your own systems, customers won’t trust you to be key partners in trying to automate theirs.
  • Automation can free up resource for service innovation. If operators are going to do more, and play a role beyond connectivity, they need to invest more in service innovation. Equally, they must also learn to innovate at a much lower cost, embracing automation alongside principles like agile development and fast fail mentalities. To invest more in service innovation, operators need to reallocate resources from other areas of their business – as most telcos are no longer rapidly growing, resource must be freed up from elsewhere.
    Reducing operating costs is a key way that operators can enable increased investment in innovation – and automation is a key way to achieve this.

A3 can drive savings to redistribute to service innovation

Source: Telecoms operator accounts, STL Partners estimates and analysis

  • 5G won’t fulfil its potential without automation. 5G standards mean that automation is built into the design from the bottom up. Most operators believe that 5G will essentially not be possible without being highly automated, particularly when considering next generation network services such as dynamic network slicing. On top of this, there will be a ranging need for automation outside of the standards – like for efficient cell-site deployment, or more sophisticated optimisation efforts for energy efficiency. Therefore, the capex investment in 5G is a major trigger to invest in automation solutions.
  • Intent-based network automation is a maturing domain. Newer technologies, like artificial intelligence and machine learning, are increasing the capabilities of automation. Traditional automation (such as robotic process automation or RPA) can be used to perform the same tasks as previously were done manually (such as inputting information for VPN provisioning) but in an automated fashion. To achieve this, rules-based scripts are used – where a human inputs exactly what it is they want the machine to do. In comparison, intent-based automation enables engineers to define a particular task (e.g. connectivity between two end-points with particular latency, bandwidth and security requirements) and software converts this request into lower level instructions for the service bearing infrastructure. You can then monitor the success of achieving the original intent.
    Use of AI and ML in conjunction with intent-based automation, can enable operators to move from automation ‘to do what humans can do but faster and more accurately’, to automation to achieve outcomes that could not be achieved in a manual way. ML and AI has a particular role to play in anomaly detection, event clustering and predictive analytics for network operations teams.
    While you can automate without AI and ML, and in fact for many telcos this is still the focus, this new technology is increasing the possibilities of what automation can achieve. 40% of our interviewees had network automation use cases that made some use of AI or ML.
  • Network virtualisation is increasing automation possibilities. As networks are increasingly virtualised, and network functions become software, operators will be afforded a greater ability than ever before to automate management, maintenance and orchestration of network services. Once networks are running on common computing hardware, making changes to the network is, in theory, purely a software change. It is easy to see how, for example, SDN will allow automation of previously human-intensive maintenance tasks. A number of operators have shared that their teams and/or organisations as a whole are thinking of virtualisation, orchestration and automation as coming hand-in-hand.

This report focuses on the opportunities and challenges in network automation. In the future, STL Partners will also look to more deeply evaluate the implications of network automation for governments and regulators, a key stakeholder within this ecosystem.

Table of Contents

  • Executive Summary
    • End-to-end network automation
    • A key opportunity: 6 reasons to focus on network automation now
    • Key recommendations for operators to drive their network automation journey
    • There are challenges operators need to overcome
    • This paper explores a range of network automation use cases
    • STL Partners: Next steps
  • Automation, analytics and AI: A3 unlocks value for operators
    • The time is ripe for network automation now
  • Looking to the future: Operators’ strategy and ambitions
    • Defining end-to-end automation
    • Defining ambitions
  • State of the industry: Network automation today
    • Which networks and what use cases: the breadth of network automation today
    • Removing the human? There is a continuum within automation use cases
    • Strategic challenges: How to effectively prioritise (network) automation efforts
    • Challenges to network automation– people and culture are key to success
  • Conclusions
    • Recommendations for vendors (and others in the ecosystem)
    • Recommendations for operators

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Three new telco business models: Soft-net, Cloud-net, Compute-net

Introduction

This report outlines three new telecoms business models that builds on previous research where we have outlined our vision of an emerging third age of telecoms called the Coordination Age. This is based on a global need to improve the efficiency of resource utilisation is manifesting in industries and individuals as a desire to “make the world work better”. We discuss this concept in detail in the following reports:

We believe that three new business models for telcos are emerging as part of the Coordination Age.

  • The Soft-Net: the core business remains connectivity, but the softwarisation of the network through SDN / NFV enables the network to adapt and scale to support new, advanced connectivity services. This includes third-party digital and networked-compute services that depend on the physical network connectivity the Soft-Net provides.
  • The Cloud-Net: also connectivity-focused, but with the production, delivery and consumption of services increasingly effected via the cloud (i.e. cloud-native). SDN and virtualisation enable capacity and services to be spun up, managed and delivered on demand over any physical network and device.
  • The Compute-Net: the core business is to provide distributed, networked, compute- and software-based services, often for specific enterprise verticals. These depend on SDN and NFV to deliver the ultra-fast, low-latency compute, throughput and routing capabilities required.

The three new models represent distinct strategic options for telcos looking to either: optimise and evolve their existing connectivity business; create new value from cloud-based, ‘horizontal’ platforms; or expand into new vertical markets – or a combination of all three approaches. This is illustrated here:

Interdependence between the three future telco business models

Source: STL Partners

In other words:

  • The Soft-Net operates the physical and virtualised infrastructure that delivers flexible, advanced connectivity in support of Cloud-Net and Compute-Net services (as well as well as legacy communications and connectivity services, delivered in a more scalable and cost-effective way)
  • The Cloud-Net delivers flexible, on-demand connectivity over hybrid infrastructure (including that owned by multiple Soft-Nets) in support of the increasingly complex and variable networking requirements of globally distributed, digital enterprises
  • The Compute-Net delivers vertically focused, compute-enabled processes and outcomes across all areas of industry and society. In doing so, it relies on networking and cloud platform services supplied by the Soft-Net and Cloud-Net, which may or may not be vertically integrated as part of its own organisation.

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The three telecoms business models link to NFV / SDN strategies

One of the distinguishing features of these models is the different modes of telco engagement in NFV and SDN they are potentially driven by. In previous analyses, we have identified three pathways towards NFV and SDN deployment. This is how they link to the three business models:

Figure 1: The three future telco business models and corresponding NFV pathways

Source: STL Partners, NFV / SDN deployment pathways: Three telco futures

In the rest of this report, we define these telecoms business models in more detail and illustrate how they present a pragmatic framework for telcos to focus their technology investments and develop valuable new Coordination Age services.

Contents:

  • Executive Summary
  • Introduction
  • Three telco futures and Telco 2.0
  • Chapter 1: Three telecoms business models for the Coordination Age
  • Three new business models: but why ‘telco’?
  • Business model analysis: Telcos’ vs competitors’ strengths
  • Relationship between the Soft-Net, Cloud-Net and Compute-Net business models
  • Chapter 2: Roles of the Soft-Net, Cloud-Net and Compute-Net in a ‘driverless car-as-a-service’ ecosystem
  • A driverless car-as-a-service business involves coordination of data, processes and events across a broad supply chain
  • Soft-Nets provide the mainly wireless connectivity
  • Cloud-Nets provide the hybrid, on-demand wide-area networking
  • Compute-Nets design and coordinate the ecosystem
  • Conclusions
  • The Coordination Age: A new purpose for telecoms, and three models for realising it
  • Key takeaways for telcos

Figures:

  1. The three future telco business models and corresponding NFV pathways
  2. The Telco 2.0 infrastructure and service stack
  3. Interdependence between the three future telco business models
  4. Two examples of the three new business models
  5. The three new business models overview
  6. Telcos face some fierce competition as they move up the stack
  7. Telco expansion across the three business models
  8. Advantages and disadvantages of vertical integration
  9. Mapping the Soft-Net, Cloud-Net and Compute-Net roles in a driverless car environment
  10. Types of data and corresponding compute-based services in a driverless car-as-a-service ecosystem

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Full Article: Defining the Digital Generation: Young Today, Grey Tomorrow

The myth of a youth-only digital world

Terms such as ‘Digital Kids’, ‘Digital Natives’ and ‘Digital Immigrants’ have been bandied around for the last few years in an attempt to distinguish people who are comfortable using the Internet, and adopting Web 2.0 solutions, from the rest of us who are generally considered sceptical grey-haired laggards. The former group are young and have been weaned on digital technologies; the latter are older and have discovered mobile telephony and the internet in their adult lives. Indeed, when STL Partners was planning this report its working title was Digital Kids: Understanding the Customer of the Future.

So why did we switch to Serving the Digital Generation: Innovation for a new breed of customer? Research by a non-profit think-tank, The Pew Internet Project, in the US suggests that associating digital culture with younger people is over-simplistic. Differences in internet usage and adoption of ‘Web 2.0 behaviour do not divide neatly between the younger and older generations. There are not only more and more ‘silver surfers’, but they are also displaying decidedly Web 2.0 tendencies.

Internet usage skewed towards young but oldies catching up

It is true that the younger adult generations (Generation X and Y, aged 33-44 and 18-32) are over-represented on the internet. However, Older Boomers (45-54), none of whom would have grown up with computers let alone the internet, are also over-represented. Indeed, dramatic under-use of the internet can only be found in the oldest segment (G.I. Generation, aged 73+) where, it is safe to say, age and infirmity will be preventing some people from using the internet.

digikids1.png

It is clear that there is a correlation between age and internet usage if we look at the proportion of each age segment that is online. Teens (excluded in the analysis above), lead the way, with 93% of all 12-17 year olds using the internet. They are closely followed by Gen Y (the next youngest group aged 18-32) with other segments following closely before a more substantial drop-off with those aged 64 and over.

digikids2.png

It is interesting to note the relatively small differences in internet usage between the ‘Digital Natives’ (Teens and Gen Y), who were born after the rise of the PC and Web, and the ‘Digital Immigrants’ (Gen X and Younger Boomers) who have become familiar with the digital world through their working lives. This begs the question whether internet usage is purely a function of life-stage with teens and workers using it to manage their lives and retirees finding it less useful. If this was the case, then it is likely that the older generations would be consistently under-represented over time and suggest that internet usage of today’s young will reduce as they get older.

However, this is not the case. As Chart 3 shows, internet usage has grown fastest in the least-penetrated older segments (the Silent and G.I Generations). In other words, they may be coming late to the internet party but they are coming. If we were to look at Chart 3 again in seven years time, STL Partners forecasts that there would be a gradual downward trend in internet use through the age groups and that the rapid fall-off that we currently see over age 60 would be pushed back to over 70.

digikids3.png Different (Web 2.0) activities for different ages…

If all age groups or generations are moving online, albeit at varying speeds, they are doing so for different reasons and this is reflected in diverse behaviours. This is not to say that the ‘Web 2.0’ behaviours of participation and engagement (outlined in the last section) are the domain of the younger generation, only that each generation engages and participates in distinct ways. The Web 2.0 behaviour of the Gen Y segment is different to that of the Gen X and the Boomers, but both are Web 2.0 in that they involve active engagement from users.

Chart 4 illustrates this point. The three activities at the top of the chart (Use social networking sites; send instant messages; play online games) are heavily skewed to the younger (Gen Y) age group. 67% of Gen Y claim to use social networks compared with the next highest segment (Gen X) on only 36%. There may be a definition issue here, as many Gen X users are likely to only classify consumer-oriented sites such as Facebook, MySpace and Bebo as social networking sites and would ignore business sites such as Plaxo and LinkedIn. Nevertheless, the youth skew for social networking is clear. And the situation for instant messages and playing games is similar.

digikids4.png

The reasons for lack of adoption and usage by older age groups for the three activities at the top of the chart vary by activity. STL Partners believes that there is nothing inherently alien about these ‘Web 2.0′ activities – it is just that they do not meet the specific needs of the other segments. Older segments adopt new technologies and solutions more slowly than younger ones who are more comfortable taking risks and learning new things, but these are not the reasons why oldies never adopt some things. Social networking, game playing and instant messaging are likely to remain youth-oriented not because they will always frighten older segments by their newness, but simply that they do not meet their needs as well. Social networking is a good example (see Chart 5). It mimics online what the older generations did in their bedrooms, in cafes and behind the bike sheds when they were young: experiment with their tastes, share their views on youth culture and rail against their parents’ generation with their peers. Today’s younger generation find the web, and social networking sites in particular, the best medium for these activities.

digikids5.png

This is reflected in the statistics for Facebook usage in the US which indicates that that 13-34 year olds account for 78% of users (Chart 6).

digikids6.png Source: insidefacebook.com

The desire to socialise, participate and engage remains, however, a core human need that crosses age boundaries. There is a myth that younger generations are somehow different because they participate in wikis, blogs and social networks. But older generations participate and socialise just as much. Even the 64+ year old retirees, the laggards of the internet world, want to be involved and shape their world. Visit any lawn bowling club in the UK, watch French men playing boules in the market square, or sit in on a neighbourhood meeting in the US and the story is the same: older people are taking positions of responsibility, contributing to their communities and effecting change.

As Chart 4 shows, the older generations also participate online in areas that are relevant and useful to them. They are just as likely to bank online, participate in an auction, rate a person or product, or send an email as the Gen Y crowd. But even in these areas they are likely to do so in a different way. Take email, for example, where older generations are more likely than their younger counterparts to:

• Write longer and more formal emails in the style of a letter; • Ask for a ‘read receipt’ when they send a mail; • Confirm receipt with a follow up phone call; • Become anxious or impatient if they do not receive a prompt reply. …Different attitudes and activities within age segments too

Things are complicated because, while there are differences in attitude and service adoption between generations, there are also fundamental differences within them. Several service providers now segment the 55+ age group based on fine-grained demographic and attitudinal characteristics and link this to demand for products and services. See Chart 7, below, for a typical segmentation of this age group.

digikids7.png

Just under 30% of this age group are highly engaged online and via mobile (Silver-surfing Technophiles and Entertainment Elders); 40% do so selectively (Measured Matures); and around 30% have limited engagement in digital and mobile activities except where it provides better safety for them (Safety-first Seniors and Bah Humbugs). Each age group is, it seems, an eclectic bunch.

Conclusion – Digital Generation: Young today, grey tomorrow…

It is clear that the younger generation are currently leading the digital charge. They are faster at adopting and using the internet, as well as a broad range of online activities. However, it is also apparent that, although there are clear behavioural and attitudinal differences between and within the generations, a desire to communicate with peers, participate in (online and offline) communities, and contribute to the creation of new solutions is a central part of being human.

Some forms of Web 2.0 behaviour will remain the domain of the young. Others, such as blogging, wikis and product reviews, will permeate through the generations over time. As such, the lessons of how to better foster interactivity and participation with customers, which lie at the heart of the forthcoming Telco 2.0 strategy report , will increasingly be relevant to companies providing services to all segments – young and old. In a sense, therefore, whether we aspire to it or not, we are all becoming part of the digital generation…