Markus Borchert Issue: Europe I 2016
Article no.: 3
Topic: Head in the Clouds? Regaining innovation leadership in telecoms
is critical for Europe
Author: Markus Borchert
Title: SVP, Market Europe
Organisation: Nokia Networks
PDF size: 167KB

About author

Networks. Previously, he was President Greater China Region, Nokia Networks (formerly NSN)
Prior to Nokia Networks, Markus Borchert was SVP Strategy and Marketing, Siemens Mobile Networks, SVP Global Customer Unit Vodafone, and multiple leadership and management roles, Siemens Nixdorf Information Systems and Siemens Business Services.
Markus Borchert holds the following degrees: Master of Science in Electrical Engineering and Information Technology, Technical University, Munich; and Master of Business Administration (Sloan Fellow), Massachusetts Institute of Technology.

Article abstract

To apply cloud to mobile broadband networks requires re-inventing telcos for the cloud, which also makes networks more agile and reduces time to market for new services from months to minutes. For end users, this means newer services can be rolled out quickly and customized to their needs. The fast pace of change in the industry means it is simply not possible to predict all requirements future networks will face. There will be many use cases that are not known today. Therefore, flexibility must be a key requirement. In short, the aim is to create an agile, programmable network infrastructure. 

Full Article

Mobile traffic continues to grow dramatically. In the last three years alone, mobile traffic has nearly doubled every year, Europe included. One of the most important mechanisms to maximize resource utilization is cloud technology. Telco networks are evolving to cloud to enhance their flexibility, scalability, configurability and adaptability, and to address the changing needs of services and connectivity.
The Shift towards Telco Cloud
Cloud computing has been transforming the IT industry over the last decade. It has helped to drive down costs, improve business agility and has enabled new business models. The gains are due to the separation of software-based applications from the underlying hardware via virtualization and a highly automated way to operate the applications on a hardware platform with a cloud management system.
These cloud design principles are being applied to telco networks and telco applications built according to the traditional infrastructure approach. This is creating the foundation for what we call the telco cloud using the main industry programs like Network Function Virtualization (NFV), Software-Defined Networking (SDN) and Mobile-Edge Computing (MEC).
Traditionally, network architecture has been built around a specific use-case. For example, GSM was built primarily for voice and LTE primarily for mobile data. In the future, this ’one use-case network fits all’ approach will be redundant and the design criteria will be to offer personalized networks built around each user because future networks need to go beyond voice and data to serve many diverse uses, services and applications. And each user needs to feel as he is the only one using the network.
To apply cloud to mobile broadband networks requires re-inventing telcos for the cloud, which also makes networks more agile and reduces time to market for new services from months to minutes. For end users, this means newer services can be rolled out quickly and customized to their needs. The fast pace of change in the industry means it is simply not possible to predict all requirements future networks will face. There will be many use cases that are not known today. Therefore, flexibility must be a key requirement. In short, the aim is to create an agile, programmable network infrastructure.
To transition towards user-oriented networks, current telco network architecture needs to undergo a fundamental transformation from a vertical to a cognitive and cloud optimized architecture. The shift towards cloud based networks implies that equipment makers will need to comply with IT standards and open source. It also means that they need to collaborate more with IT players and vice versa. The architecture itself will transform from static & vertical to dynamic & cloud optimized.
Laying the foundation for the future
While the benefits of the telco cloud are clear, the transition for operators is complex and cannot be completed in a single step. One of the key technology shifts towards the cloud and cognitive network architecture includes the evolution to 5G and its programmable multi-service architecture. This is essential to enable use cases which today’s networks have not been built for.
To provide the required data rates, latencies, robustness and connectivity, novel technologies are required for 5G. Most of these technologies are characterized by their flexibility and ability to adapt to different scenarios and use cases. In both radio and core network telco cloud, virtualization and Software Defined Networking will enable network-wide programmability, elasticity and scalability. Network orchestration enables automation across network components through centralized management of network resources.
5G will allow for massive growth in traffic, peak data rates much higher than 10 Gbit/s (compared to 300 Mbit/s for LTE), virtually zero latency and it will integrate pre-existing technologies while lowering energy consumption. 5G will also be prepared to support applications and industries of the future such as innovative health care services and self-driving cars.
Europe has traditionally been driving the technology development in the telecommunications space. But when it comes to 4G/LTE roll-out, the center of activity has shifted in the recent years and we have seen a stronger momentum in other parts of the world. In fact, it’s now Europe who has some catching up to do.
Now, with 5G approaching, Europe has an opportunity to seize the chance and regain the technological and innovation leadership. Actually, Europe is at the forefront of 5G development – and is risking to fall behind again if implementation would lag behind due to insufficient infrastructure.
Boosting investments in telecommunications infrastructure is vital for European competitiveness beyond just the ICT industry. For most industries, connectivity and mobility are becoming critical in order to stay competitive and change the way they are doing business. An important example of this transformation effort is the so called 4th Industrial Revolution which will lead to a fully automated and flexible production process. This is the reason why we need a strong and successful telecom industry in Europe: to reinforce the competitiveness of Europe overall – all sectors – not just ICT. In other words: Europe needs a modern digital infrastructure that can be the backbone for success across industries.
On July 1, a number of research projects began within 5G Infrastructure Public-Private Partnership (5G-PPP) that is part of the largest global research and innovation program Horizon 2020. 5G-PPP is a joint initiative of the ICT industry and the European Commission to define future 5G communication systems. The research projects will facilitate the upcoming standardization of 5G by consensus building and contributing to the 5G technology portfolio.
There’s no cutting corners
Driving 5G development is essential, but 5G development is not enough. 4G is needed because 5G communications will involve a combination of existing and evolving systems, like LTE-Advanced and Wi-Fi, coupled with new, revolutionary technologies designed to meet the new requirements. There is no way to leapfrog 4G and directly go to 5G.
Areas without 4G coverage will be the 5G white spots of the future. Therefore, Europe should strive to catch up with 4G roll-out, where we are clearly behind other regions: In 2014, 13% of total connections have been LTE (4G) connections in (geographical) Europe, compared to 47% in Japan, 51% in Northern America and 84% in South Korea. Additionally, Europe reached 70% 4G network coverage (by population), whereas Northern America reached 98%, Japan 99% and South Korea 100%. This is a serious threat – not only for the European telecoms industry, but for the European economy altogether.
Korea and Japan have announced that they will launch 5G in the next few years, Korea in the Winter Olympic Games in 2018 (pre-commercial) and Japan in the Summer Olympic Games in 2020. If it takes Europe until then to roll-out LTE, Europe will fall behind again.
With the right steps to speed-up 4G roll out and continuous investment in the development of 5G, Europe can reclaim the pole position – once again.
Building Bridges between Industries
Europe has a very strong position in vertical industries, such as automotive, advanced healthcare, medical, engineering, utilities, and many more. These industries are in a transition period at the moment. Digital technologies are changing the way we communicate, manufacture goods, and drive cars, how we do sports and how we get medical treatments. Telecoms is enabling this transformation, building bridges between our physical, virtual and social worlds.
If these aforementioned industries and the strong European telecoms sector joined forces, we could create a strong momentum in Europe. The key will be collaborative innovation projects displaying what 5G can do for various industries, and the new possibilities it provides for the consumer. With this approach, there could be early traction for 5G in the European market.
Europe’s targets must therefore be ambitious. We should aim for having the first commercial full spec 5G roll-out in 2020 – in time for the European football championship. But first, we need substantial investments in Europe to close the 4G gap. And in order to encourage investments, the conditions for investing need to improve. This should be a common goal: governments and regulators should attend to creating conditions for a more innovation-friendly environment and the ICT industry needs to drive innovation leadership together with customers to bring Europe back to lead in the telecom sector. Europe needs to be ambitious – and invest on its future.