Tele2 Hopes to Awe Customers with Virtual Magic, but This Might Not Be Enough

I. Grant
I. Grant

Summary Bullets:

  • Customers should insist operators explain new technology in terms of what they care about.
  • Virtualizing network infrastructure makes it harder to charge extra for mobility support.

Arthur C. Clarke once said that any sufficiently advanced technology is indistinguishable from magic. When it comes to telecommunications, most end users like to keep it that way. Rightly, they care most about what it can do for them, not how it works.

What happens under the covers is important, because it sets the fundamental limits on what customers can do with the network. Tele2, a challenger European network operator, has just committed its entire infrastructure to the cloud and virtualization technology. Support for mobility, far from being a value-added function, is built into the infrastructure via a virtual evolved packet core application that will go live in Q3 2016.

Tele2’s justification is that this will enable it to be smarter, more user friendly, more future proof and even more cost efficient. These largely internal benefits will let it deliver a wider set of services to all its customers, including those implementing the Internet of Things (IoT). Big data and advanced analytics will also be vital parts of the implementation.

Tele2 is clearly aiming to provide customers with more, ‘better,’ cheaper alternatives that its competitors. But, these are traditional weapons in the telco wars; the real battle is elsewhere, namely what customers really care about.

One ambitious example is a ‘smart street’ pilot project in Dubrovnik by Deutsche Telekom’s Croatian subsidiary, Hvratski Telekom, now a fully IP-only operator. The smart street features public lighting with a multi-functional sensory network; several smart city applications such as traffic, parking and environment monitoring; and a variety of access technologies, from optical links to 4G and WiFi networks. These technologies will provide residents and visitors with free Internet access at 50 Mbps in the pilot’s footprint, and provide the city with data it can use to manage its services better, hopefully saving residents money.

Does Tele2’s decision mean that customers should care about virtualized network functions? This is unlikely. But, as a challenger, Tele2 needs to grab headlines and buyers’ attention to differentiate itself from the incumbents, to be seen as innovative, to offer a ‘better’ service. Customers should ask Tele2, and its competitors, what its new virtualized infrastructure really means in terms of service provision, reliability, timing, coverage and cost.

For its competitors, the question is whether its technology choices will enable Tele2 to take market share from them or to enter markets ahead them. Yet, only customers, through their buying decisions, can answer that, whatever magic is loose in the world.

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