However, let’s assume that the 5G hype is in the rear view mirror and we look to see what could be ahead of us in the mobile and telecom industry. At the end of the first day of this year’s MWC, I may have seen the future opportunity – and it is awesome! Pat Gelsinger asked the question “why can’t we build the telco networks like the clouds have been built for with scalability, flexibility, efficiency, and agility”? It’s a very fair question. After all, we do have Network Function Virtualization (NFV), and we will have new 5G services, so why not a new telco cloud?
I spent time with two companies that may show us a glimpse of the future network and cloud infrastructure. The first is the Israeli software startup, DriveNets with its solution “Network Cloud”. DriveNets is focused on helping service providers disaggregate proprietary routers from their networks as they move to 5G. DRiveNet’s Network Cloud solution aims to disrupt the current network business model by separating network costs (e.g. proprietary hardware functions) to create network functions from its software stack and two ‘white label’ hardware building blocks. The entire network infrastructure is software-centric allowing for agility, scalability, and normalizing costs with business growth.
However, Network DriveNets is an unusual startup in that it came out of stealth mode with $110 million in its first round of funding. The company was founded in 2015 by Ido Susan who should be familiar to Cisco watchers as he sold his first startup, Intucell (self-optimising network technology), to them for $475 million in 2013. DriveNets other co-founder, Hillel Kobrinsky founded Interwise (web conferencing) which was snapped up by AT&T for $121 million. To that end, the company is well funded and has the ability to sustain itself long enough to potentially disrupt the $50 billion network hardware business.
The second is Rakuten Mobile, a well-known name in Japan, but the first mobile virtual network operator (MVNO) to launch there in over 10 years. MNOs are not new so what makes Rakuten different? The company’s CTO, Tareq Amen explained to me that they are building the world’s first end-to-end fully virtualized cloud-native network running all of its workloads in the cloud. Being a fully virtualized network enables Network Function Virtualization to take advantage of cloud computing basis assets where a service delivery platform can be implemented, customized and scaled at speed. Finally, all of Rakuten’s core technology including its Radio Access Network (RAN – a topic that has been highly discussed at this year’s MWC) on 5G thus delivering immediate and actual 5G services. This compares to most of the rest of the industry who will have to build an uncomfortable transformation roadmap from 2/3G and LTE to 5G. While Amen’s strategy is compelling, there are a few technical hurdles to overcome. For example, enterprise-grade 5G indoor coverage isn’t fully there yet so Amen will have to rely on the operators that he is competing against who have that real estate.
So why highlight DriveNet and Rakuten in the same blog? In Rakuten’s case the CAPEX and OPEX business models for operators may be turned on their heads by the fact that its network is taking all of the competitive advantages of 5G while offering customers as disruptive pricing models and services. In a country such as Japan where traditional operators have struggled to modernize their networks, this could be a competitive threat. Equally, there could be a global rise in copy-cat pure 5G/cloud-based MVNOs spring up and fiercely compete against the incumbent local operators as well as give other MVNOs a tough time. As for DriveNets – it’s simple…it’s software and virtualization of the switch and router market which is very appealing to the service providers. It will commoditize the hardware, lowering their costs while allowing them to continue to focus on new 5G services.