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Economics of Networks and Data Centers: the Future of Communications and Computing
Robert B. Cohen, PhD.April 24, 2013
The Current Telco Dilemma
Telcos are focusing on Cost
• ARPU is flat and there is little chance for growth.
• To survive, telcos need to change the cost curve from what is forecast.
• Software Defined Networking offers a way to do this.– It provides for better management since the control
plane and the data plane are separated.– It offers greater elasticity and surge capacity.
Google’s Network Traffic and Cost Per Bit
What the Google Network Shows
• Volume has run up from about 1-2% of total Internet traffic (500 exabytes in 2009 or 16 exabytes in 2013) to about 6% of the total in 2012.
• With SDN, the network is far more elastic and expansible.
• At the same time, key characteristics of the network make it easier to manage and to add new functionality.
Network Functional Virtualization
Scalability is the main benefit. With easier management, the sought after goal of expanding a network with declining costs becomes possible.
A Software Defined Network
Network Operating System
OPEN INTERFACE TO HARDWARE
What does this mean for Future Networks
• Economics of Networks shifts from having rising cost curves as networks scale to having flat or slightly declining costs (due to scale efficiencies, improved control mechanisms, largely due to software).
• With cheaper costs and easier management, new features will be easier to add to networks. An ability to burst, an ability to quickly add new features. These should change the competitive landscape for certain types of services (Amazon and Netflix (?) stream video into the home), and change the economics of media and services.
