This article was first published in VMblog on December 23, 2020. You can read the original article here.
2021 - The year cloud-native broadband networks go mainstream
By Pravin S Bhandarkar, CEO at RtBrick Inc
There is no doubt that 2020 has altered the course of many things, and the telecoms industry is no exception. As companies sent workers home to remote settings virtually overnight as a result of the pandemic's surge, and people were stuck at home under stay-at-home orders, the amount of broadband being consumed by the average home skyrocketed. Never before were so many people taking video-calls, streaming television and more at the same time, forcing telco companies to figure out a way to scale their network capacities or face service outages that would outrage customers trying to adjust to their new normal.
Nine months later, the telecom industry is still adjusting but has found its footing in some areas. And with many of the same forces that altered the status quo in 2020 set to continue well into 2021 - including the fact that many workers will be staying remote indefinitely - we now have a much better idea of what to expect in 2021. As they say, hindsight is 20/20, and from here we look ahead to what 2021 will bring to the telco world.
In 2020 we've seen major leaps in the telecom space, as carriers have started moving more towards a disaggregated, open model that mimics cloud-native companies like Amazon, Facebook and Google. Most notably, the Telecom Infra Project (TIP) called on the industry to band together and develop an Open BNG (Broadband Network Gateway), which is broadband routing software that runs on open hardware. Endorsed by industry heavyweights - including BT, Deutsche Telekom, Telefonica and Vodafone - this method of network building would allow telcos to create scalable broadband networks that mimic the corporate networks already built by major cloud companies (ex. AWS).
This shift away from legacy systems is going to be vital for telcos to remain competitive in 2021 and beyond. Companies like Amazon have already completely changed the game in other industries like retail and data storage, so there's no reason to believe that they couldn't have the same effect in the telecoms industry if they decided to make a play there. Given the progress made towards embracing a more open, cloud-based model in 2020, I can only predict that telcos will continue to move away from legacy systems in 2021. They'll learn to compete with the hyperscale, cloud companies even more.
Tight margins are nothing new for telcos, however the pandemic has pushed them to their max. As I stated above, there is more demand for broadband internet than ever before, and it's already put a real strain on carriers in 2020. Increased traffic, however, does not equate to increased revenue. In fact, it usually leads to a decrease in margins, since telcos must spend more resources to keep up with demand.
And on the flip side, customers are unwilling to pay more. Although total data consumed by the average US household has increased by 75 percent from June 2018 to June 2020, prices have remained relatively stable. This is because broadband connections have always been unlimited for users, unlike their mobile counterparts that commonly had caps until the recent prominence of unlimited plans. Even as more people cut the cord and stream high-definition or 4k video in higher numbers, they won't accept paying more to their internet provider for it.
So, where does this leave telcos in 2021? Scrambling to figure out how to keep up with the continued increase in demand and strain on their networks at a minimized cost. Their subscriber revenue is unlikely to grow at the same rate as the amount of broadband being used by customers - so creative ways to cope will be needed. This ties back into my first prediction. Scalable and cost-effective solutions like an Open BNG are needed for carriers to keep up, and 2021 will be the year they begin to adopt the technology more than ever before to help prevent further squeezing of margins.