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How to create
fit-for-purpose
wholesale data services
Martin Geddes
Martin Geddes Consulting Ltd
© 2013 All Rights Reserved
This presentation was given as a keynote at Asian Carriers’ Conference
in Cebu, Philippines on 3rd September 2013.
Consultancy on the future of telecoms.
Business model innovation.
Technology & product ideation.
Organisation development.
Public & private workshops.
I work with smart people on the hard stuff.
1980s
Digital fixed
voice services
Evolution of wholesale telecoms
1990s
Mobile voice
and messaging Broadband
data services
2000s
?
2010s
What’s next?
Next ten to twenty years?
Packaged cloud
services
The growth is in new kinds of managed
cloud services.
And by ‘packaged’ you mean?
• Available when and
where you need it
• At a cost you can afford
• Right quantity and
quality
• Easy to consume
Key messages
Wholesale
voice services
historically
have a
sustainable
business model

Today’s wholesale
broadband data
services are
not fit-for-purpose
for future
applications needs.

Wholesale telecoms
businesses need to
fundamentally rethink
their service offering
for the cloud.

This requires new
fit-for-purpose cloud services with
a sustainable business model.

There is a
profitable future
for those who take
this path.

Digital fixed
voice
services
Mobile voice
and
messaging
Broadband
data services
Packaged
cloud
services
1980s and 1990s
2000s & 2010s
2010s & 2020s
2010s & 2020s
Fitness-for-purpose
Purpose-for-fitness
Fitness-for-purpose
1980s and 1990s
2000s & 2010s
The thread that runs through this
presentation is ‘fitness-for-purpose’
Which we’ve lost, and need to regain.
2010s & 2020s
Packet-based
statistical multiplexing
(using IP)
Time-division
multiplexing
Best of
both worlds!
1980s and 1990s
2000s & 2010s
These changes are intimately
tied to our technology
choices, and how we share
the network’s fixed and
finite resource.
How do
networks
create value?

There are some basic things we need to get
sorted out before we begin.
Meet Alice and Bob
It’s the end users who put the money into the system, and
decide whether we are creating value worth paying for.
Alice and Bob are end users.
Alice is a sales woman
Alice Smith
Sales Director
alice@widgetcorp.com
555-125-9876
Bob is her customer
Mustn’t
run out of
widgets!
Alice wants to
communicate with Bob
I want to
meet Bob to
sell more
widgets!
Alice doesn’t have to buy a
telecommunications service
Slow and expensive 
Alice has a choice of means of
communication
Email
Post
Phone
Alice ‘hires’ a telephone call
to reach Bob
Quick and cheap 
This is a ‘task substitution’
There is a chain of delivery
Retail
origination
carrier
Retail
termination
carrier
Wholesale
delivery
carrier
Wholesale holds the
value chain together
Role of wholesaler
YOU
YOUR
CUSTOMER
YOUR
SUPPLIER
(Remember the audience for this presentation is wholesale
carriers and their suppliers.)
Money passes down this chain
Retail
origination
Retail
termination
Wholesale
delivery
$ $ $
$ $ $
PROFIT
Profit depends on four factors
BENEFIT COST
RISK INSURANCE
Are these
big or small?
Excess risk has to be
(self-)insured.
TELCOSEND USER
Benefits and Costs
BENEFIT
Made the
sales call Revenue
COST
Price of
phone call Tin, operational expenses
There are risks…
TELCOSEND USER
Risks
RISK
Didn’t make
sale
SLA breach
Unplanned capacity upgrade
Time wasted
Reputational
loss
Frustration
Churn
Regulatory non-compliance fines
TELCOSEND USER
Insurance
Second carINSURANCE Contingency fund (lawsuit, PR)
If Alice can’t rely on her communications service
delivering a good enough experience, she needs a
Plan B – and has to carry all the associated costs. For
a corporate user, that could be having multiple access
providers; for a consumer, you need to buy a DVD in
case Netflix doesn’t work.
Telcos spend a lot of
money dealing with
screw-ups.
TELCOEND USER
The whole picture
BENEFIT
COST
RISK
(failed call)
Made the sales call
Price of phone call
Didn’t make sale
Second car
Revenue
Tin, opex
SLA breach or churn
Unplanned capacity upgrade, fines
Time wasted
Reputational loss
INSURANCE Contingency fund (lawsuit, PR)
Frustration
Lots of (potentially
hidden) costs!
Who profits and why?
CUSTOMER SUPPLIERWHOLESALER
BENEFIT
COST
RISK
END
USER
END
USER
INSURANCE
Who &
how big?
How is the role of
wholesale changing?
BENEFIT
COST
RISK
INSURANCE
Voice Broadband Cloud services
Wholesale
voice
services

What are the risks?
Retail
origination
carrier
Retail
termination
carrier
Wholesale
delivery
carrier
End user risk
Alice only pays her telco for a
successful phone call
$
Retail telco risk passed to
wholesaler
Retail telco only pays wholesaler
for a successful phone call
$
Wholesale telco risk is transferred
Wholesaler only pays terminating network
for a successful phone call
$
The delivery technology was
(and often still is) TDM circuits.
No overlaps or collisions!
This isolated flows and assured end user
outcomes – audible voice calls.
Composable value chain with SLAs
Retail
origination
carrier
Retail
termination
carrier
Wholesale
delivery
carrier
Predictable application outcome
How did we do?
Retail
origination
carrier
Retail
termination
carrier
Wholesale
delivery
carrier
    
TELCOSEND USERS
Why?
BENEFIT
COST
RISK
INSURANCE







 







Low risk!
Predictable experience
• MOS or PESQ
score model
• Strong
understanding
of relationship
to network
properties
Predictable capacity requirement
Voice erlangs
VOICE SUMMARY
Telcos get paid for
delivering
fit-for-purpose
voice services
VOICE SUMMARY
Wholesaler
mitigated both
end user QoE
risk and supply
chain capacity &
SLA risk
VOICE SUMMARY
Resource efficiency
Flowefficiency
LOW HIGH
LOW
HIGH TDM
(core)
TDM
(edge)
Very profitable
wholesale business!
How hot can
we run the
network?
How well can we
deliver the flows
within acceptable
loss and delay?

Broadband
data
services
Resource efficiency
Flowefficiency
LOW HIGH
LOW
HIGH
MULTIPLEXING
TDM For bursty
data, TDM is
highly
inefficient, ev
en if it is very
effective
So we changed technology…
Time-division
multiplexed
circuits
Packet-based
statistical
multiplexing
TELEPHONY BROADBAND
Lost phase and flow isolation!
We gained higher resource efficiency,
but at the cost of losing flow efficiency
What a great deal
for Alice and Bob!
COST COST
Statistical multiplexing
gain makes everything
cheaper!
What a great deal
for Alice and Bob!
BENEFIT
BENEFIT
So many more rich
applications to choose
from!
But…
There’s a
catch!
What is the effect on Alice?
Alice now ‘hires’ a web
conferencing system to reach Bob
Richer, modern and more effective
This is a ‘task substitution’
End user risk
Alice bought ‘bandwidth’
(speed and mechanisms like 4G and FTTH)
$
ISP is blind to Alice’s needs
No visibility of application outcomes
$
Retail telco risk passed to
wholesaler
Retail telco buys ‘bandwidth’ transit.
Has no means of expressing
needs for application outcomes.
$
Wholesale telco risk is transferred
Wholesaler connects to receiving ISP,
but is carrying effective risk
of application failure
$
And what about Bob?
His ISP has no visibility of whether the
service is delivering a good outcome.
What are the risks?
Retail
origination
carrier
Retail
termination
carrier
Wholesale
delivery
carrier
QoE
RISK
QoE
RISK
PLAN B PLAN B
What are the risks?
Retail
origination
carrier
Retail
termination
carrier
Wholesale
delivery
carrier
Churn Churn
What are the risks?
Retail
origination
carrier
Retail
termination
carrier
Wholesale
delivery
carrier
Capacity
upgrade
risk
Capacity
upgrade
risk
And the wholesaler?
Incentivised to find cheapest means
of delivering ‘bandwidth’,
regardless of impact on user or rest of supply chain
Current wholesale data business is
structured in an unhelpful way.
1.Has become
disconnected from the
value end users are
seeking.
2.This misallocates cost
and risk.
Why?
Broadband is like a statistical
‘game of chance’
There price we had to pay…
Time-division
multiplexed
circuits
Packet-based
statistical
multiplexing
TELEPHONY BROADBAND
Game of
chance
was easy
Game of
chance is
hard
Can’t compose services
& create strong SLAs
Retail
origination
carrier
Retail
termination
carrier
Wholesale
delivery
carrier
Unpredictable application outcomes
Resource efficiency
Flowefficiency
LOW HIGH
LOW
HIGH
HEAVEN
How to think about the problem
HELL
Network feels
empty to
users, even
when full and
making lots of
money.
Network feels
congested
even when no
other
customers
around
Resource efficiency
Flowefficiency
LOW HIGH
LOW
HIGH
IP
(access network)
Access network has poor QoE and
utilisation
Resource efficiency
Flowefficiency
LOW MEDIUM
LOW
HIGH
HIGH
IP
(access network)
HEAVENHEAVEN
Heaven gets further away
Over-provision to resolve
contention problems
Resource efficiency
Flowefficiency
LOW MEDIUM
LOW
HIGH
HIGH
Current approaches are
infeasible to schedule at
high load
IP
(access network)
Can’t assure applications with
strong scheduling requirements
Resource efficiency
Flowefficiency
LOW MEDIUM
LOW
HIGH
HIGH
IP
(access network)
Network collapses
Can’t run network ‘hot’
SUPPLY CHAINEND USER
Benefits, Costs and Hazards
RISK
Significant
High
INSURANCE Significant
High
BROADBAND SUMMARY
Telcos offering
purpose-for-fitness
data services
BROADBAND SUMMARY
Wholesaler is
exacerbating
user QoE and
supply chain cost
risks
Resource efficiency
Flowefficiency
LOW HIGH
LOW
HIGH
IP
(access network)
IP
(core)
Wholesale biz
constrained by
weakest link
BROADBAND SUMMARY
How did we do?
Retail
origination
carrier
Retail
termination
carrier
Wholesale
delivery
carrier
    
TELCOSEND USERS
Why?
BENEFIT
COST
RISK
INSURANCE







 







Lots of risk due to application
performance hazards.
Opportunity!
Leaves a lot of
potential value
unrealised.

The re-think
Effective task substitution is
very sensitive to QoE hazards
BENEFIT BENEFIT
Benefits to the user of both
methods are similar
COST
COST
POTENTIAL PROFIT POOL
The costs are very different
COST
COST
ACTUAL PROFIT POOL
RISK
Hazards to the user take value and
profit out of the system
INSURANCE
Retail
origination
Retail
termination
Wholesale
delivery
$ $ $
$ $ $
PROFIT
Operator profit is also very
sensitive to the QoE hazards
RISK RISK
Operator cost risks
Our experience is that these
hazards are poorly modelled in
broadband networks (if at all)
SLA breach
or churn
Unplanned
capacity upgrade
Summary so far
BENEFIT COST RISK
1. There is value in
effective task substitution
2. There are associated
benefits, costs & risks
3. It matters how big these
are, and how they are
allocated
Where do these come from?
RISK
Resource efficiency
Flowefficiency
LOW HIGH
LOW
HIGH
QoE hazard
Cost hazard
Resource efficiency
Flowefficiency
LOW HIGH
LOW
HIGH
Requires lots and lots
of good coincidences
& very few bad
coincidences
HEAVEN
Resource efficiency
Flowefficiency
LOW HIGH
LOW
HIGH HEAVEN
By tipping the odds
through effective
scheduling
Summary so far
Failed call
Plan B
SLA breach or churn
Unplanned capacity upgrade
TELCOSEND USER
Resource efficiency
Flowefficiency
LOW HIGH
LOW
HIGH
HELL
HEAVEN
1. Networking is a statistical
game of chance
2. That schedules resources
and determines
application performance
3. That controls the QoE and
cost hazards for both the
user and network operator
How can we get the best
of TDM and IP?
1. How can we increase benefits
(substitute for more valuable tasks)?
2. How can we lower costs by running
networks hotter?
3. How can we quantify, mitigate and
allocate hazards appropriately?

Cloud
services
The cloud economy
Different demands to
those of voice and
today's broadband.
Understanding the nature of future demand, and how to create
appropriate supply, is the key to future success. People want to achieve
higher-value task substitutions: teleworking, education, healthcare. These
require dependable networks and application outcomes.
What has to change?
NOW FUTURE
PURPOSE-FOR-
FITNESS
FITNESS-FOR-
PURPOSE
The Cloud Economy
We must
assure application
outcomes
RISK INSURANCE
What do we need?
“Application
Erlangs”
Alice ‘hires’ a Lync application
to reach Bob
What has to change?
NOW FUTURE
SUPPLY-PUSH
Selling
commodity
bandwidth
inputs
DEMAND-PULL
Selling
differentiated
application
outcomes
End user risk
Alice buys an assured
Microsoft Lync cloud service
$
What has to change?
NOW FUTURE
MONOSERVICE
NETWORKS
Weak
exploitation of
stat mux trades
POLYSERVICE
NETWORKS
Strong
exploitation of
stat mux trades
Multiple classes of service
Economy Standard Premium
Airlines offer multiple tiers of service, based on comfort, rather than arrival
time (bar a bit of queue-jumping at check-in). In networks, the tiers of
service are based on how much you can time-shift traffic.
Resource efficiency
Flowefficiency
LOW HIGH
LOW
HIGH
IP
(access network)
Run access network hotter
and also get good QoE
IP
(access network)
Retail telco risk passed to
wholesaler
Retail telco buys assured transit
to its final destination
$
What has to change?
NOW FUTURE
UNASSURED
DELIVERY
Qualily and cost
unbounded
ASSURED
DELIVERY
Quality and
cost bounded
Wholesale telco risk is transferred
Wholesaler buys assured
termination suitable for Lync
$
What has to change?
NOW FUTURE
TRANSPORT
SERVICES
Locally
optimised
delivery
LOGISTICS
SERVICES
Globally
optimised
supply chain
New value chain
YOU
YOUR
CUSTOMER
YOUR
SUPPLIER
Although these might
be new market
entrants coming from
a cloud and
distributed computing
angle…
What has to change?
NOW FUTURE
WEAK
CONTRACTS
Boundaries
misallocate risk
and cost
STRONG
CONTRACTS
Risk quantified
and costed
end-to-end
Quality Transport Agreements
Strong and composable statistical delivery contracts
Profit!

Example services:
Bulk content cost reduction
$
$
$
BULK DATA DELIVERY
Bulk content providers are paid to mark time-shiftable traffic
to reduce peak loads and network cost for ISPs. Wholesalers
are ‘market makers’.
Example services:
Small cell assured backhaul
ASSURED BACKHAUL
$ $
3GPP standards were all built for a TDM world. Things are not working out that well
moving to IP. Quality-assured IP backhaul would restore the necessary properties for
small cells to work well.
Retail
origination
carrier
Retail
termination
carrier
Wholesale
delivery
carrier
    
CLOUD SUMMARY
CLOUD SUMMARY
Telcos get paid for
delivering
fit-for-purpose
application services
CLOUD SUMMARY
Access suppliers
and customers
fully exploit
statistical
multiplexing
CLOUD SUMMARY
Wholesaler
becomes digital
logistics supply
chain manager
CLOUD SUMMARY
BENEFIT
COST
RISK
INSURANCE




New ‘application erlang’
wholesale business model
Think logistics, not transport
It’s all about the trading space, matching supply to demand, offering a variety of
quantities, qualities and cost, and doing it over multiple timescales.
www.martingeddes.com
Learn more, subscribe to my newsletter.
Martin Geddes
mail@martingeddes.com
Get in touch to do business.

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How to create fit-for-purpose wholesale data services

Hinweis der Redaktion

  1. Small cellsHome workingEducationOTT voice and video delivery partnerships
  2. I have four simple messages from this presentation
  3. We will look at some of the potential service offerings.
  4. Every network access involves creating value by substituting for something less beneficial or more costlyThe alternative could be another online or digital experience; it does not have to be offlineDoing it well means making good experiences common, and bad ones sufficiently rare.Asymmetry between success modes and failure modes.Alice defines the whole value of this substitution; not the operator
  5. Excess risk has to be (self-)insured
  6. TDM for voice had highly-utilised network cores, and low peak-to-mean at the network edge
  7. TDM for voice had highly-utilised network cores, and low peak-to-mean at the network edge
  8. TDM for voice had highly-utilised network cores, and low peak-to-mean at the network edgeEveryone made money!
  9. However, TDM is not a suitable basis for delivering bursty data applications, because it leaves the network empty most of the time. When we switched to packet data broadband services, we gained resource efficiency through statistical multiplexing gain.
  10. If it doesn’t work, Bob complains or churns.
  11. TDM for voice had highly-utilised network cores, and low peak-to-mean at the network edge
  12. at the network edge, where there is high contention between flows.
  13. We will look at some of the potential service offerings.
  14. TDM for voice had highly-utilised network cores, and low peak-to-mean at the network edge
  15. Run the network hot, and deliver good experiences
  16. TDM for voice had highly-utilised network cores, and low peak-to-mean at the network edge
  17. TDM for voice had highly-utilised network cores, and low peak-to-mean at the network edge