Cisco Systems Inc.’s (CSCO) Visual Networking Index, released yesterday, has enough big numbers in it to make your head spin. Internet traffic will increase 200 exabytes between 2014 and 2015; network-connected devices will outnumber people by 2:1; and the word “zettabyte” is mentioned. (A zettabyte is equal to sextillion bytes or a trillion gigabytes for those who understand what that sentence means.)
For me, it means opportunities for operators, regardless of whether they choose to be a dumb pipe or a smart one. Carrying all of this traffic is the very foundation of the connected society. Cisco points to four drivers for the increased outlook: more devices, more people connected, more video and more speed.
The smartest operators will respond to this increased traffic by building out faster/better/bigger networks, but they also need to respond operationally as well, which may be the larger challenge. At the Telecommunications Industry Association’s convention last month, two key statements stuck out in my mind: AT&T’s Tim Harden said the operator expected video will be 90% of the consumer traffic going across its network by 2013, and Verizon Communications Inc. CTO Tony Melone said customers and application developers need to “value the cost of transport.”
Valuing the cost of transport – and the sheer scale of that transport as video continues to explode – means operators are going to have to find new business models and new partners to capitalize on this data explosion. I interviewed the TM Forum CEO Martin Creaner for a feature report posted online today about this very issue and he noted that 100-year-old companies are going to have to start becoming more flexible. There are tons of opportunities for operators (healthcare, smart grid, etc.), it is just deciding which opportunities are best to pursue. Equally important are new partnerships, which operators don’t seem to have embraced as much. No one handles micropayments and billing better than operators. That seems to point to new partnerships, whether it is with third-parties like the pizza chain or the utility.
Not every operator is going to respond the same way. But even those that choose to become dumb pipes can probably be successful if they force the rest of the ecosystem to value the cost of the transport.
