the future of network intelligence: in 2.0

The Future Of Network Intelligence: IN 2.0

Roderick K. RandallSenior Managing Director

Vesbridge Partners

Why Start or Invest in a Telecom Company?

• Why do you rob banks, Willy?

“Cause that’s where the money is”

Willy Sutton

Bank Robber

Where are the New Opportunities?

• Answer:

The Second Derivative

Second Derivative Plays

• The Base

Internet infrastructure

Starting with narrowband and moving to broadband.

• The First Derivative opportunities

Internet based companies such as AOL, Amazon, Yahoo, Google, eBay, and others

• The Second Derivative Plays

Skype - $4 Billion!

Moogle, MeBay, Mamazon, Metc.

Mass Personalization and Citizen Media

MediaCos (not Telcos or CableCos, but Network TV without the Network)

Voogle – Video Search Based TV Ad Delivery

Web 2.0

• Blogs (Weblogs) Augment if not replace traditional news sources

• RSS (Really Simple Syndication) Automated personalized assembly of web info of interest

• Online Advertising CPM (Cost Per Mil), PPA (Pay Per Action), PPC (Pay Per Call)

• Peer-To-Peer From “free” Napster to Bit Torrent and e-Donkey

• Digital Media From DRMed i-Tunes to Movielink

• Consumer Generated Media YouTube, My Space, We Media, Flickr, Face Book

• Podcasts Professional and Consumer Generated

• Vodcasts Podcasts with video

“A Network Carol”Not by Charles Dickens

• The Ghost of Network Past

• The Ghost of Network Present

• The Ghost of Network Future

The Ghost of Network Past

• Telecom was the most valuable and profitable industry in the world

When I joined AT&T Bell Labs in 1981 it was the worlds largest company and its most valuable

• We’ve since seen Divestiture and Trivestiture, (and now reassembly!) along with a tremendous growth in the competitive environments…

• Along with a dramatic surge in capacity and capability in the following 25 years..

• Spurring in turn a tremendous surge in innovations, not the least of which included the internet and the web

Worldwide Telecom Service Revenues$1.4 Trillion in 2005

Source: IDC

$1.0 Trillion

The Ghost of Network Present

• Strong demand for higher and higher bandwidth

• Increasingly Pervasive “always on” Broadband

• Enabling the 1st derivative business models to enormously prosper such as those of Amazon, Yahoo, eBay, and Google

• Google is now worth over $100 Billion, which is more than any telecom operator in the world, except for Vodafone Group, which has grown by acquiring over 26 operators

• Skype was already acquired for $4 Billion by eBay

• P2P traffic from a small percentage of subscribers dominates the internet backbone

• All telcos are planning some form of IPTV in a triple play with 10s of Mbps of BB BW

The Ghost of Network Future

• A number of potential futures

• One is where telcos ride the new wave of opportunity by radically transforming their business models to meet the new challenge

• Another is where telcos are ridden by the new 2nd derivative players, some of which are the 1st derivative players, who have evolved, and are now gear-shifting into overdrive

• Let’s look at the second one first, because that’s what Dickens would do

Key Catalysts

• Plentiful Consumer Broadband in capacities un-dreamed of 10 years ago…

• Driven by the MAD Winner-Take-All competitive threat of The Triple Play …

• Driven by the push to mix Entertainment Delivery with Telecom…

• Digitally using IP…

• At low costs…

• Even free…

• Or “apparently” free to the consumer…

• Using a new advertiser supported business model…

• Which is no longer broadcast based…

• And everything is stored on increasingly abundant cheap storage, and instantly retrievable by anyone anywhere

Magnetic Disk Storage Cost:Declining at a Rate of 45% Annually

Cost of 1G Byte of CapacityCost of 1G Byte of Capacity

1992 1994 1996 1998 2000 2002 2004 2006 2008

$1,000.00

$303.00

$92.00$28.00

$8.37 $2.53 $0.77 $0.23 $0.07

$1,000.00

$100.00

$10.00

$1.00

$0.10Source: Berghell Associates, 2001

Cost of 1GigaByteof Hard Disk Storage

What Do You Call 1,024 Petabytes?

• And the answer is…

An Exabyte• Terabytes of Storage will become common place in the

average broadband consumer home within 5 years

• As the tendency to keep rather than discard data increases, along with more sources

• What is a Googabyte?

1 with 100 Zeroes of bytes

A New $1 Trillion Industry…

• It will be made up from the convergence and collision of three different industries

Entertainment: $72 Billion

$12 Billion Music

$60 Billion Movies

Advertising: $600 Billion

Telecom Services:$1.4 Trillion

• The Tail may be wagging the Dog

• Net Net: $2 Trillion $1 Trillion

• But, there will be a different set of winners and losers

• Key Catalysts: Read on…

Enter Googlezon

• EPIC 2014, a short film by Matt Thompson and Robin Sloan

• Ads move from broadcast TV, newspapers, print, billboards, other, to Online

NY Times shuts down, unable to support its printing costs

• Mass personalization makes advertising much more compelling both to advertisers and potential customers

• Google buys Amazon to create Googlezon

• Everything that’s bought begins with a search

• With personalized, search driven, real-time inserted, online Ads…

People get ads that they actually want to watch,

Related to something they are interested in purchasing,

Rather than are annoyed by and seek to skip

Which Becomes Googlezonage

• TV is offered for free, again, this time Pointcast over IP, not broadcast All supported by a real-time hyperlinked Mass Personalized Ad model NBC, ABC, CBS shut down, replaced by Bloggers MTV, Fox, and Craig’s List survive as the new Ad Aggregators (a la

Overture)

• Telephony rides for free on IP, leading to financial crisis in network operators

• All telcos learn to operate within bankruptcy, like the airline industry

• Google buys AT&T (out of bankruptcy) and Vonage to keep the broadband pipes flowing

• Wireless is the only surviving stand alone network business But its threatened by Googlezonage’s new Global WiFiMAX FreeNet Enter Googlezonage Mobile

It’s a MAD MAD World

• M.A.D.: Mutually Assured Destruction for telcos and cable operators

But, There’s An Alternative Future

• Telcos and Cablecos not only offer IPTV, but get involved in Internet TV

• They add intelligence in their networks to make sure they are paid for the value of connection in order to keep the pipes alive

• Nobody unsustainably gives valuable network connections away for free without someone paying the operators

• The new business models that are created involve a true payment methodology for QoS that reflects value, and that could be paid by sponsors such as advertisers

• New applications are spawned, which further institutionalize the network providers into the value chain, rather than Skype them out

• Connection will continue to be valued and paid for

The Stupid Network is a Stupid Idea

• Stupid Networks lead to stupid and unsustainable Business Models

• Stupid Networks would ultimately only have price/bit as differentiation…

• Leading to rapid commoditization…

• Which drives profitability out of all competitors…

• Which makes the business un attractive…

• Which makes it un-finance-able…

• Which makes it un-staff-able with top talent

• Which leads to collapse

Intelligent Network 2.0

Signaling and Control Control

ManagementPSTN

ContentContent• Instant Messaging

• Multimedia messaging• Network Based Security• Parental Control• Spam Filtering• Intelligent Content Delivery & Management

• AIN Services•800/900, Caller ID/Name•Voice Mail, IVR

• Mobility• SMS• SIP• Fixed/Mobile Convergence

• DNHR• Self Healing Networks• Flow Through Provisioning• MPLS

Management

IP Enhanced3-D Intelligence

IP

BSCRAN

SMSCHLR VLR Pre-Paid

U-AP

L-AP

M-AP

L-APPico Cellular

WiFi

Bluetooth

WiMax

WLAN GWY

IP

MF

W

WBSC

WiFi/SIPBSC

PSTN

SS7 HLRHLRHLRVLR

MG

SG

SS/MM

VLR

IMSHosted VoiceSvc Provider

SS

MS

MG

SG

A-Interface

GSMCDMA

WCDMA1x-RTT/EV-DO

HSDPAMSC MSC

Fixed-Mobile Convergence Architectural Environment

IP

BSCRAN

SMSCHLR VLR Pre-Paid

U-AP

L-AP

M-AP

L-APPico Cellular

WiFi

Bluetooth

WiMax

WLAN GWY

IP

MF

W

WBSC

WiFi/SIPBSC

PSTN

SS7 HLRHLRHLRVLR

MG

SG

SS/MM

VLR

IMSHosted VoiceSvc Provider

SS

MS

MG

SG

A-Interface

GSMCDMA

WCDMA1x-RTT/EV-DO

HSDPAMSC MSC

SIP PBX

Fixed-Mobile Convergence Architectural Environment

MG

PBX

Residences

RemoteOffices

Broadband

Intelligent Content DistributionEvery Song, Artist, Video, or Film Ever Recorded… On Demand

Home Media Server

Guest Room Master Bedroom

Home Theatre

DSL/CableModem

EthernetSwitch

DSL

Fiber

Cable Network EdgeNetwork Core

Intelligent Content DistributionContent Replication and Pre-Caching

Home Media Server


Home Theatre

DSL/CableModem

EthernetSwitch

DSL

Fiber

Cable

Local DVRs

• Store most recent tv shows

• Favorites

Home Media Server

• Store all purchased and downloaded content

Movies

TV shows

Pictures

MP3s

Etc.

Network Edge DVR

• Store the most popular content:

Most downloaded movies

New releases

Most popular MP3s

Network Core DVR

• Store all content:

All movies available for download

All Music available for download

All Video...

Network EdgeNetwork Core

Intelligent Content DistributionPolicy Control Servers Control Network Enforcement

Home Media Server


Home Theatre

DSL/CableModem

EthernetSwitch

DSL

Fiber

Cable

Local DVRs


• Favorites

Home Media Server


Movies

TV shows

Pictures

MP3s

Etc.

Network Edge DVR



New releases

Most popular MP3s

Network Core DVR




All Video...


Policy EnforcementPoint

Real Time Billing Policy Server

BW/QoSPolicy Server

PCS PCS

Intelligent Content DistributionSearch Based Personalized Real Time Ad Insertion

Home Media Server


Home Theatre

DSL/CableModem

EthernetSwitch

DSL

Fiber

Cable

Local DVRs


• Favorites

Home Media Server


Movies

TV shows

Pictures

MP3s

Etc.

Network Edge DVR



New releases

Most popular MP3s

Network Core DVR




All Video...



PCS PCS

Entitlement & DRM

Search based Personalization

Real Time Ad Insertion

PCS PCS

P2P Swarm Controller

Ad Server Network

Intelligent Content DistributionControlled Peer-To-Peer Swarmcasting

Home Media Server


Home Theatre

DSL/CableModem

EthernetSwitch

DSL

Fiber

Cable

Local DVRs


• Favorites

Home Media Server


Movies

TV shows

Pictures

MP3s

Etc.

Network Edge DVR



New releases

Most popular MP3s

Network Core DVR




All Video...



Entitlement & DRM



PCS PCS PCS PCS


Ad Server Network

Intelligent Content DistributionControlled Peer-To-Peer Swarmcasting



Entitlement & DRM



PCS PCS PCS PCS


Ad Server Network

Intelligent Access ControlIP TV will Dramatically Increase Network Capacity Demand



Entitlement & DRM



PCS PCS PCS PCS


1000x Increase

In Simultaneous IP Access Demand

Ad Server Network

Intelligent Content Distribution 2.0Controlled Subscriber Side Peer-To-Peer Swarmcasting



Entitlement & DRM



PCS PCS PCS PCS



Ad Server Network

Content Can Be Re-Distributed

On The Abundant Side of the Access Node

Summary: IN 2.0 Involves…

• Content and Context Aware Networks with Intelligent Policy Enforcement

• Mobile Intelligence Converged with Fixed

• Intelligent Content Distribution as well as Connection

• Rich Media Experience including Advertiser Support

• Dynamic Mass Personalized Intelligent Ad Insertion…

• Dynamic pricing by a Real Time Online Auction Market

• Distributed Storage with Intelligent SwarmCast Replication

• Content Value adds to Connection Value, rather than replaces it

$1 Trillion Market Grows to $3 Trillion

• Oops, what’s that ringing sound?

• Was that the alarm clock waking me up from this dream, or is it a nightmare???

• You be the judge

Thank You!

www.vesbridge.com

the future of network intelligence: in 2.0

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