The dangers of plummeting cost

Written by on July 15, 2015 in Opinion with 0 Comments

b55e3137-e70e-4070-be9d-d4c808341c36There is one thing that we tend to leave out of discussions about innovation – and disruption – and that is cost. For far too long now we have talked about location based, real-time services (the first discussions were in 1998) and they are now here. There are, of course, issues that we did not anticipate, such as privacy, which will be a bigger and bigger issue over the next few years, and then solve itself. And, of course, the cost of computing has plummeted over the last decade.

Last year, we wrote a paper for the TM Forum about operators’ objectives over the next year or so (and the good news is that the primary objective is ‘to collaborate with OTT players’). Half way through the project, immersed as we were in graphs and spreadsheets, we suddenly had an ‘ah’ moment. What, we wondered, has happened to the cost of processing data in real-time.

We asked Openet, real-time experts, for an idea of cost. They came back with the answer that if you had to process, say, 300 million XDRs a day in real-time 10 years ago it would cost about $5 million. Now, you could do it with a server costing about $30,000. Standing on your head.

Given this dramatic drop in cost, and the even more dramatic revelation that you can run networks and IT departments on commodity hardware, the scale – and danger – of the disruption becomes clear. And the potential.

With operators having to invest in a range of networks to manage the ever increasing traffic, and the digital service providers using the extra capacity as soon as it is available, it is increasingly difficult to see how operators will survive.

Clearly they are working on a completely new cost structure but there is still the feeling that they are clutching at straws rather than fine tuning a well thought out plan. Discussions about 5G and WiFi everywhere are, well, everywhere. Will 5G solve anything that WiFi won’t? Will it get here in time? The answer is that WiFi will work in static situations, as it does now, but more so, and 5G will be the solution in fast moving situations, such as cars, which may not stand up in investment terms. That said, most networks, in the UK at any rate, are so bad that making a good old fashioned telephone call from a car or train on the move is well nigh impossible.

Let us hope that, while operators are compelled to invest in all sorts of network technology, they are also finalising plans to address new business models. So far, all the talk of Smart Cities IoT, OTT and Carrier Billing seems a little too much like early ideas and not plans.

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About the Author

About the Author: Alex was Founder and CEO of the Global Billing Association (GBA), a trade body focused on the communications sector. He is a sought after speaker and chairman at leading industry conferences, and is widely published in communications magazines around the world. Until it closed, he was Contributing Editor, OSS/BSS for Connected Planet. He is publisher of DisruptiveViews and previously BillingViews. .


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