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Connectivity Services vs Infrastructure-based Connectivity for Telcos Transport Networks

Updated: Feb 1, 2021

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In a world where more and more life functions are being digitized, notably in 2020 as the covid-19 pandemic has been influencing all parts of the globe and the society, an increasing amount of the social and business activities are being realized over the public Internet. In many countries, mobile access is the main access to the Internet for the general public. Although the Internet has grown from fixed access networks, nowadays there are more mobile Internet users than fixed Internet users (ie users that access the Internet from a fixed location) [1]. Societies have grown dependent on mobile Internet from an end-users perspective, however the traffic from the mobile devices is eventually relying on fixed networks of connections that enable the end-users to access and use the desired digital services.

With the growing demand for reliable connectivity in an era of rapid development, the telecom industry has not only evolved to become an industry of its own but it has become a necessary infrastructure for other industries and businesses to strive and for economies to flourish. However, for the telecom industry to continue evolving, it must be economically sustainable for competitors to enter the various telecom markets. We will discuss the evolution of the telecom markets and the competition aspects in a separate whitepaper.

For the general public, ie the consumers, connectivity means the Internet connection they subscribe to from the Internet Service Provider (ISP) to access digital services (which are referred to ‘Digital Service Platforms’) such as websites, social media applications, etc. (as depicted in Figure 1). It is important to appreciate that the telecom industry is one of the major enablers for a Digital Society, part of a jigsaw puzzle, thus governments and policy makers are realizing that connectivity and the telecom industry as a whole is only a part of the overall digital ecosystem that needs to be monetized through smart investments. We will deep-dive in details and explain the Digital Services Platforms and the Digital Ecosystem in a separate whitepaper.

However, what the general public does not necessarily realize, is that ISPs need to develop and maintain local and international networks on a daily basis, for such a reliable Internet service to be seamlessly accessed by consumers to reach their desired digital service platforms. In addition, enterprise customers, governments offices and large organizations have also critically grown to depend on reliable secure private connectivity (that is not part of the Internet) known as private intra-nets that are connected through what is called Private Leased Lines (PLCs), whereby telecom operators operate seamlessly for those organizations to provide their own customers, such as for example eGovernment users accessing their own personalized services on the e-government website, or consumers accessing their own bank account to realize financial transactions through a mobile app.

Telecom operators continually develop and operate their core Transport Networks, which usually are depicted with cloud icons (as in Figure 1 above) to focus on simplifying the end-to-end services traffic flow, rather than presenting a complex core Transport Telecom Network that may consist of hundreds or thousands of interconnected devices.

Key takeaway messages

This paper will deep-dive in the technologies of Telecom Transport Network clouds with the below main message:

· Telcos efficiently engineered core Transport Networks to efficiently serve the different market needs meeting consumer rapid behavior changes and Quality of Experience (QOE).

· Telcos established wholesale commercial models to meet the growing demand of their customers from different telecom markets, by offering different Passive and Active transport capacity as-a-service products.

· Regulators and policy makers are looking at new investments in Digital economies to focus on the big picture rather than only focusing on traditional telecoms connectivity, with the lens of efficiently supporting the growth of sustainable competition within the telecom markets.

[1] Source: GSMA State of Mobile Internet Connectivity Report-2020


Introduction to Core Transport/Transmission Networks

Transport Networks can easily be depicted as the roads and streets of which vehicles such as cars, buses and trucks move through. Similar to the roads networks in major cities, Core Telecom Transports Networks are designed to serve smaller roads that reach households, business premises and government buildings to be served with Telecom services. However, the main difference is that telecom operators aggregate Access lines of telecom Networks (which are the last mile connections terminated at each premises) at serving exchanges that are collocated within geographical areas such as residential suburbs or business areas.

Telecom Access Networks will be briefly highlighted below. However, more Technical details about Telecom Access Networks (and Next Generation Access Networks) can be found within our Types and Evolution of Next generation Access Networks whitepaper.

Meanwhile, similar to how a student takes a bus to reach his school using the public transport system, a customer can reach a digital services platform (such as the Internet) by using Telecom Transport Network.

The main function of a core transport network within a telecom service provider is to transport traffic of thousands of customers that are collocated at a certain geographic area (and aggregated at the nearest serving exchange) to reach a certain Service platform (such as the Internet or to establish a voice call to another customer), or to transport traffic for enterprise businesses such as a banks (data between branch A and the HQ of the bank), as illustrated in Figure 2.

It is important to appreciate that there are Fixed Wireline as well as Wireless transport networks. Wireline (such as fiber or copper mediums) are generally preferred to be used by telecom operators to connect devices of the Core Transport Networks due to their physical nature that guarantees higher reliability compared to the Wireless connections that leverage the open air spectrum as a medium of transporting signals.

However, due to the high deployment costs of the Fixed Wireline infrastructure and its slower installation timeframes, operators will always keep on leveraging Wireless transport networks to connect remote geographical areas or to meet urgent demands instead of establishing fiber links between two locations. However, for long term connections, operators will always plan-ahead to establish fiber links to connect their devices part of the core Transmission Networks.

With the introduction of new advanced technologies such as Edge Computing (EC), digital platform providers and Connectivity Service Providers are collaborating to offload Transport Networks from data-demand strains, aiming to enhance the consumers' Quality of Experience (QoE) by bringing digital content and computing power closer to the edge of the networks (where customers are geographically densified) instead of the traditional content delivery mechanisms. Advantages of Edge Computing, distributed Cloud Computing and advancement in their business model as well as used cases for more efficient Transport Networks will be discussed within The Evolution of EC Wholesale Business Models whitepaper.



With the growing demand of data traffic towards the internet by consumers to access Digital Services, and the ever-growing demand for every device to be connected; Retail Telecom operators are leaning towards managing their own Transport connectivity to guarantee the quality of Service (QoS) to end customers and ensuring differentiated competitive services. Such engineering requirements are set in place by operators to ensure smother evolution towards Digitization of industries and public services with the near-future technology advancements, such as Artificial Intelligence (AI), Virtual-Reality (VR), Edge Cloud Computing, Network Slicing, Network Function Virtualizations (NFV), Services Defined Networks (SDN), which all will put ultra-low latency and high bandwidth requirements on the transport networks, to enable new industries to emerge such Vehicular to Everything (V2X), Smart Cities, Smart Living - Health Care, Smart Grid, Future Smart Factories, Industrial Automation, and much more.

Meanwhile, wholesale Telcos are also improving their connectivity QoS to meet Retail telecom operators demand for active connectivity services. Thus, the emergence and fierce competition among Wholesale Telecom Service Providers and not only among Retail Telecom Service Providers.

Wholesale Telcos offer many telecom services to Retail Telcos or even directly to large enterprise customers and government entities; however for wholesale connectivity services specifically, wholesalers mostly rely on each other to share the passive infrastructure when they cross borders for international connectivity services, meanwhile many telecom monopolies (especially incumbent telecom operators) do continue to dominate local telecom markets, and this is where at many jurisdictions the government intervenes by establishing Telecom Regulatory bodies mandated to regulate the telecom market and foster competition to attract investment at both the retail and wholesale telecom markets.

Many Telecom regulatory bodies prefer to only monitor and lightly intervene (where required) to ensure a fair competitive-level playing field among the Telcos; however at certain jurisdictions and where the economics of the country requires, regulatory bodies realized that it is pivotal for the telecom industry to split the dominant incumbent operator in creating an independent regulated wholesale-only telecom provider, which focuses its activities only at wholesale connectivity products offered to retail telecom operators on an equivalent basis (and does not sell connectivity and broadband services directly to the mass-market); aiming to achieve fair competitive environment to enhance the end consumer economic welfare, while developing highly efficient wholesale connectivity products by avoiding the duplication of infrastructure among Telcos. A study[1] presented that there was a greater diversity of offers in cities featuring a wholesale only passive network than in those which were characterized by competition between vertically integrated operators.

More recently, the wholesale-only model is becoming popular to unlock investment in very high capacity networks, in cases where traditional Telcos have failed to upgrade their networks due to high costs[2]. Major initiatives have focused on serving innovation hubs and improving economic competitiveness, while supporting environmental objectives by limiting disruption from civil works and enabling remote working. We will dedicate a separate paper to discuss the economic benefits of creating a National Broadband Network (NBN) that offers wholesale services and the types of connectivity services that the NBN operator needs to efficiently provide. However, telecom regulatory bodies and policy makers are increasingly realizing the need to promote streamlined network deployments to address the emerging challenges of network densification for emerging technologies to enhance customer experience and investments in the overall Digital ecosystem, instead of the tradition Telecom investments while losing the big opportunities in the Digital Economy.

[1] WIK-Consult- The implications of BB business models on choice, price and quality - 2017 [2] WIK Consult - The role of wholesale only models in future networks and applications

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