Industry Veteran, Tom Maguire’s New Quarterly Column —
While talking with Sharon Vollman, SVP and Editorial Director of this great magazine, about the 2017 ISE conference, she asked if I would be interested in pulling together a few words about network transformation, or NT, as it relates to outside plant (OSP). Frankly, given the reputation of Sharon and her team, I was thrilled to be asked to contribute.
(Editor’s note: No currency was exchanged for these kind words.)
Now, much has been said about OSP NT in the last few years, dating back to a particularly informative and very engaging keynote presentation during OSP EXPO 2014 in Baltimore. (Google it, or see a video at https://www.youtube.com/watch?v=S1uHQvNjdyE: OSP EXPO 2014, Eugene Agee, Vice President, Procurement and Real Estate of Sprint, as the closing keynote speaker. I guarantee you’ll find it enthralling.) So I’ve spent the past few weeks thinking about a way to frame this discussion.
Realizing that NT could mean different things to different people (all of them right, by the way), I think the best thing to do is to go back to the beginning (at least from my perspective) to review why NT is so important to the future of the industry and its customers. Again, to keep this simple, I’ll focus on what’s happening specifically with OSP; I’ll leave the other forms of NT (NFV / SDN, etc.) to people much smarter than me.
First a bit of history. For decades the industry has relied primarily on copper to carry its traffic. Copper was the best, and maybe only, option for many, many years. But truth be told, it definitely has its limitations. It is not particularly resilient in the face of terrible weather (and weather trends are definitely something to be concerned with these days) and it can only do so much in terms of carrying high-speed data.
Due to these 2 issues, customers have been leaving copper for greener pastures for some time now. Granted there may be other factors pushing customers off copper (e.g., pricing), but no tech-savvy person will argue that copper is the best technology for the future.
Realizing this, my former company (Verizon) set out to build a comprehensive program to move customers to the best available technology — in most cases this is fiber. Bob Mudge, former EVP and President of Wireline Network Operations, noted that “fiber is the perfect facility — moving existing POTS customers to fiber gives them an immediate leg-up in service, while fiber simultaneously serves as the foundation necessary to support the needs of future wireline and wireless customers.”
Verizon has not been the only company to bet big on fiber. Many companies are spending a fortune on fiber, doing their best to lock up their supplies going forward. Everyone has, no doubt, seen the articles about Verizon’s nearly $2B arrangements with Corning and Prysmian, but the rest of the industry, from AT&T to Zayo, are right behind them. In fact, Corning recently announced that they manufactured their 1 billionth kilometer of fiber (a pretty remarkable feat) while Deutsche Bank researches project that fiber spending “will total ~$175B over the next decade”.
But why fiber?
Fiber has much greater resiliency than copper. I’ve seen customer trouble rates drop by more than 80% for customers that moved from troublesome copper to fiber — all at no additional cost to the customer. And when fiber does break, those breaks are easily identified and, in many cases, just as easily resolved.
There has also been tremendous innovation in the fiber world (by many readers of this publication) that have simplified fiber installations, thus improving everything from operational costs to in-home aesthetics. Frontier’s EVP of Field Operations, Chris Levendos, observed that “Fiber-optic-based networks are critical to supporting leading edge products and services at the highest quality and performance levels. The industry needs to focus on improving the economics of fiber optic cable deployment to enable us to deploy more fiber in our markets to support wired and wireless access services.”
Looking beyond service and costs, fiber has significantly more capabilities than copper, which makes it the perfect facility to carry the traffic of the future. Customers are no longer satisfied with simply surfing the web or uploading data. Customers big and small are exploring ways to leverage broadband to improve their personal and professional lives. Just think about the ways customers use their telecom infrastructure these days:
• Streaming HD video
• Home security and camera systems
• Unified communications
And that’s just the tip of the coming iceberg. 5G will need as much fiber as it can get, power companies will seek to leverage fiber to manage their grids (and reduce their operational and end-user costs), and municipalities will monitor everything from traffic to parking.
Fiber will open new business opportunities and lay the foundation for new partnerships. You can see evidence of this today, including the work Verizon is doing in places like Boston, as well as CenturyLink’s work in Colorado.
New business will thrive, like Hotwire Communications based in Florida, a small company doing big things with FTTH through a product line called Fision Fiber. Kristin Johnson Karp, Hotwire’s CEO, identified an opportunity and decided to fill a void left by the larger incumbents. Her business model and focus on customer service is rapidly pushing luxury condos and quiet golf communities to be the next epicenter of big data. “There are an amazing number of Baby Boomers moving to Florida, and it’s pretty clear that they will be bringing a huge appetite for bandwidth.” said Johnson Karp. “What they need and want to do via the Internet is changing and today’s retiree is anything but static.”
From day trading to travel, a large number of potential data customers demand the ability to monitor and control personal businesses and seasonal properties from anywhere in the world. “We saw this as a great opportunity for Hotwire,” said Johnson Karp.
Now NT is not as simple as rolling out some fiber and watching customers flock to it. NT will require businesses to commit physical and financial resources. And beyond committing to do new things, business will also need to stop doing some things that have been second nature for decades. For example, companies will need to evaluate what they are doing with legacy services — continuing to put people on older networks while you’re trying to figure out how to get customers off that older network makes no sense.
Running 2 networks is very inefficient, so it will be critical to cap legacy growth — and this won’t be easy given that no one wants to pass on revenue. Verizon capped legacy services where it has a parallel fiber network, ensuring that they are not adding to the base of customers that will eventually be migrated to fiber, but this wasn’t a simple thing to do.
Perhaps one of the biggest issues companies will face is securing the right talent to pull all of this off. Matt Rotter, CenturyLink’s Region President – Mountain West, gave a great keynote about “workforce transformation” during ISE EXPO 2015. Matt noted that “the tenured skills leaving the business over the next 5-7 years and telecom’s poor performance in attracting new technical talent remains a significant industry challenge to accelerating through the complex network transformation environment.” So, it is clear that HR teams will need a bit of transforming of their own to ensure the industry’s success.
So now we have a good foundation to continue our discussion in the future. Going forward, I will go a little deeper on some of the OSP NT challenges I see, including:
• Required regulatory changes
• Simplifying solutions and improving operational costs
• Ensuring a great customer experience