At OFC, Telefónica’s CTO outlined its strategy to reverse persistent revenue challenges
In sum — what to know:
Modernization focus: Telefónica is eyeing a combination of strategies to modernize the network in an effort to generate new revenue streams
Level 4 automation: The operator is targeting to achieve Level 4 network autonomy by 2030 using AI and SDN to minimize errors and automate operations
Shift toward IPoDWDM: The company plans to move 60% of its optical capacity to coherent pluggable optics by 2027, expecting to see significant cost and energy reductions
While network traffic continues to grow at a steady clip, revenues have remained largely sluggish for telcos. It’s a stubborn problem that many operators are struggling to reverse in a meaningful way.
Telefónica is intent on turning the problem around on its head. Speaking at the keynote address for the Network Operator Summit at OFC this week, Telefónica’s chief technology officer, Cayetano Carbajo Martin outlined the provider’s strategy to take on the issue.
“We are trying to implement the technical lever for increasing our revenue,” Martin stated. “We are pushing our network for increasing monetization.”
Telefónica is cranking up efforts in three key areas: automation, transport network upgrade, and a move toward coherent pluggables.
The Madrid-based provider is pursuing automation to advance from manual, error-prone environments to one that is self-optimized, efficient, and low-cost. To that end, the company launched its Autonomous Network Journey (ANJ) program, a multi-year initiative, in 2021with the goal to reach Level 4 autonomy — a high state of autonomy as classified by TM Forum — by 2030.
“Telefónica has been one of the few operators that has committed to reach Level 4 of autonomy by 2030, and we committed that in front of our self holders and analysts,” Martin said.
The company is leaning on open interfaces and disaggregation to make it happen. “We can do many more things with open interfaces than with proprietary interfaces,” he noted, adding that software-defined networking (SDN) will also be a key piece of the puzzle, and an integration point for AI.
A key element that’s aiding Telefónica in reaching its objectives is its commitment to adopt AI. Martin outlined several AI-driven use cases that are already in development, including natural language interaction, automated root cause analysis (RCA), and creation of digital twins to unlock greater degree of network autonomy. Side by side the company is also exploring federated learning approaches to tighten data privacy, a problem often linked with scaling AI capabilities.
“Artificial intelligence will come to the operation of the transport network through the SDN,” Martin said, adding that it will be easier to apply AI through a standardized interface that SDN provides.
Another major announcement that Martin made is that as part of the modernization effort, the company is targeting a major transport layer upgrade. It is moving its backbone to 400G and backhaul to 100G. “Such a big increase in speed is needed even in those operations where we have only mobile access, and for sure where we have fixed access,” he said.
Beyond that, the provider is also migrating to coherent pluggables, which was a major theme at OFC this year, with the goal to shift 20% of its optical capacity to IP over DWDM. Additionally, the company pledged to ramp it up to 60% by 2027.
There has been substantial momentum towards adoption of IPoDWDM lately with growing recognition of its higher bandwidth efficiency, scalability, and cost savings that are critical for AI-driven applications with faster data transmission requirements.
“There are a lot of barriers, some cultural and other commercial for doing so, but I think as operator, we have to take advantage of this progress and use IP over DWM,” Martin emphasized.
