The cloud is opening new revenue opportunities for content and service providers. Challenges in leveraging these opportunities, however, continue because the network and applications are not integrated.
A few different issues are at work. The metro is seeing tremendous traffic growth, of which about 80 percent stays in the metro; cloud, content and service providers must have transparency and visibility into how applications are running on the network; and the cost/revenue curves in today’s networks stink. In order to assist the infrastructure demands of today, you have to look at all sides of the problem.
Service and content providers are currently building high-capacity, resilient, low-latency metro and regional networks to enable data-center virtualization, workload mobility, business continuity and disaster recovery.
Collapsing the layers to remove significant cost-out of building these networks, while also establishing a base infrastructure, is a strategy to form the medium for monetization. Conventional metro-regional backbone networks are constructed using discrete layers of switching, routing and optical networking elements that support specific protocols and functions. Each network layer is provisioned and managed separately using distinct administrative interfaces — a costly and time-consuming process.
Monetization Outside the Data Center
Service and content providers are addressing two distinct issues: how to recover capex — or use it more efficiently — and how to make money. Both have to be embraced in order to move forward. Specifically, how does the next generation of infrastructure handle the traffic growth, gain visibility to applications, and provide a better means of monetization? Today, the market is attacking how to save money, by creating SDN networks with white box solutions within the data centers and by requesting a collapsed-layer approach outside the data center to perform the inter-connection. By delivering efficiencies inside and outside the data center, operations are improved on a single node and on a network-wide basis.
Focusing outside the data center — by creating elastic-bandwidth resources similar to what has been done with compute and storage — delivers increased network utilization as well as recurring revenue potential. Recurring revenue is possible once elastic resources are available to be utilized and increased as a resource on-demand.
Another example is spot pricing: offering network availability when it’s available and making use of potentially unused resources, like hotels seeking bookings at lower prices when fill rates are low. Examples of this are ever-present. Just look at Amazon Web Services‘ growth as the simplest example. Self-service portals are already a key to optimizing the network, but they are also the first step in monetizing the network.
Leaning forward and thinking further on how to make money off of network resources, providers need a disruptive platform that enables unprecedented economics as a start, yet will enable the next level of value for the network, which is monetization. Network innovators are working to devise ways to increase the monetization structure of the network to leverage next-generation deployments and lean toward a more personalized and flexible approach — I’m talking about recommendations models, targeted or contextual advertising, or purposeful “direction.” These tags have a level of relative negativity associated with them, so I tend to lean toward positive terminology, like recommendations models. (If you want to bring up privacy here, don’t. Our worlds are no longer private unless we move to all cash and/or a Bitcoin-only market.)
A Taste for Ads
It’s been publicly noted that people expect a certain amount of advertising in their daily lives. The question has been: If there is high-value (targeted) advertising, will it be more acceptable to deliver increasing ads across consumer platforms? No one really knows the answer to this. Common sense says yes, but recommendations have clearly been successful for the bottom lines of Zappos, Netflix, Google, and Facebook.
Now, let’s go even a step further. Cable operators and service providers are already privy to demographic information from their subscribers. Content providers are privy to data from customer purchases, searches, and emails to recommend additional “like” consumption via relatively simplistic algorithms. What if you had a platform and model to merge these together without creating partnership barriers to entry and paperwork nightmares? What if you simply enabled sharing of pertinent information within the services offerings? Wouldn’t that be a win-win situation, a simple and easy form of revenue generation?
An application-aware network can accelerate the pace of innovation and drive higher margins through better network utilization — while defining and deploying new revenue-generating services in “cloud computing” time. And providers can accomplish all this while reducing costs.