What innovation gives you: Marcus Weldon Q&A Part II

Marcus Weldon discusses network optimisation, the future of optical access, Wikipedia, and why a one-year technology lead is the best a system vendor can hope for, yet that one year can make all the difference. Part II of the Q&A with the corporate CTO of Alcatel-Lucent.

Photo: Denise Panyik-Dale

"The advantage window [of an innovative product] is typically only a year... Knowing that year exists doesn't mean that there is not a tremendous focus on innovation because that year is everything."

Marcus Weldon, Alcatel-Lucent

Q: Where is the scope for a system vendor to differentiate in the network? Even developments like Alcatel-Lucent's lightRadio have been followed by similar announcements.

A: There is potential for innovation and often other vendors say they are innovating in the same way and it looks like everyone is innovating at once. But when you dig down, there are substantial innovations that still exist and persist and give vendors advantage.

The advantage window is typically only a year because of the power of the R&D communities each of us has and the ability to leverage a rich array of components driven by Moore's Law that can cause even a non-optimal design to be effective.

You don't have to be the world's expert to create a design that works, and one that works at a reasonable price point. So there is a toolbox of components and techniques that people have now that allows them to catch up quickly without producing their own components.

"In wireless, historically, when you win, you win for a decade."

Innovation still exists but I believe the advantage - from the time you have it to the time the competition has it – is typically a year - it varies by domain, whereas perhaps it used to be 3-5 years because you had to design your own components.

Knowing that year exists doesn't mean that there is not a tremendous focus on innovation because that year is everything.

That year gets you mindshare and gets you the early trials in operator labs and networks. And that relationship you build, even if by the time you have completed that cycle your competitors have the same technology, you have a mindshare and an engagement with the potential customer that allows you to win the long-term business.

In wireless, historically, when you win, you win for a decade.

There is still quite a bit of proprietary stuff in wireless networks that it makes it easier to keep going with one vendor if that vendor has a product that is still compatible with their needs.

So the whole argument is that if you can innovate and gain a one-year advantage, you can gain a 10-year advantage potentially in some market segments - particularly wireless - for your product sets.

That is why innovation is still important.

What is Alcatel-Lucent's strategic focus? What are the key areas where you are putting your investments?

Clearly lightRadio is a huge one. We have massively scaled our investment in that area, the focus on the lightRadio architecture, the building of those cube arrays and working with operators to move some of the baseband processing into a pooled configuration running in a cloud.

In the optical domain we are streamlining that portfolio and focussing it around a core set of assets. The 1830 product which has the OTN/ WDM (optical transport network/ wavelength division multiplexing) combination switch in it, with 100 Gig moving to 400 Gig. So there is a strategic focus and a highly optimised, leading-edge optical portfolio which is a significant part of our R&D.

Photo: Denise Panyik-Dale

To be honest we had a bit of a mess with an optical portfolio left over from the [Alcatel and Lucent] merger and we had not rationalised it appropriately. We have completed that and have a leading-edge portfolio. If you look at our market share numbers, where we were beginning to fall into second place in optics we have turned that around.

The IP layer, of course, is another area. TiMetra, which is the company we bought and is the basis of our IP portfolio, had $20 million revenues when we bought it and now that is over a billion [dollar] business for us.

That team is really one of the biggest innovation engines in our company. It is doing all the packet processing, all the routing work for the company and has a very efficient R&D team that allows them to move into other areas.

So that is the team that is producing our mobile packet core. It is the team that owns our cacheing product. It is the team that increasingly owns some interest we have in the data centre space. That team is a big focus and IP and Ethernet expertise in that team is propagating across our portfolio. 

In wireline it is 10G PON and the cross-talk cancellation in DSL. Those are the big focusses for us in terms of R&D effort.

On the software applications and services side, we are beginning to focus around new big themes. We have been a little bit all over the place in the applications business but now we have recently redefined what our business is and it is going to have some focussed themes.

Payment is one area which will remain important but payment moving to smart charging of different services is one focus area. Next-generation communications which means IMS [IP Multimedia Subsystem] but also immersive communications - rendering a communications service in the cloud in a virtual environment composed of the end participants - is a big focus.

The thing called customer experience optimisation is a big focus. Here you leverage all the network intelligence, all the device intelligence, all the call centre intelligence and allow the operator to understand whether a user is likely to churn. And it can optimise the network based on the output of that same decision and say, 'Ah, this seems to be an issue, I’m going to optimised the network so that this user is happier'. That is a big focus for us.

We are beginning to be active in machine-to-machine [communication] as well as this concept of cloud networking, which is distributed cloud, stitching together the network and moving resources around in a distributed resource way, as opposed to the centralised, monolithic data centre, the way that other people are focussing on. 

Photo: Denise Panyik-Dale

"I also like Wikipedia, I have to say. It is 80-90% right and that is often good enough to help you quickly think through a topic"

How do you stay on top of developments across all these telecom segments? Are there business books you have found useful for your job?

I generally read technology treatises rather than business books. It is a failing of mine.

I also like Wikipedia, I have to say. It is 80-90% right and that is often good enough to help you quickly think through a topic. It gets you where you need to be and then you can go and look further into the detail.

So I would argue that Wikipedia is the secret tool of all CTOs and even product marketing managers and R&D managers.

I am a fan of the Freakonomics books. That is the sort of business book I like to read, looking at how to parse things whether they are true causal relationships or correlations, and how one thing affects another. I find those interesting and they have a business sense to them that explains how incentives motivate people.

I'm very interested in that aspect because I think in a company, the big issue a CTO has is how to influence the rest of a company. One of our roles increasingly combines our CTO and strategy teams under the same leader so we are looking at how to effectively evolve a company using the right set of incentives, and the right sort of technology bases, but you still need to provide an incentive for people to move in that new direction whatever it is you choose.

"TiMetra, which is the company we bought and is the basis of our IP portfolio, had $20 million revenues when we bought it and now that is over a billion [dollar] business for us."

I'm fascinated by how to influence people effectively to believe in your vision. Ultimately they have to more than believe, they have to move towards that and that will need to involve some sort of incentive scheme for target teams that you assign to a new project started quickly and that then influences the rest of the company. We have done that a few times. 

I don't spend a lot of time reading business books. I spend a lot of time reading technical stuff. I think about how to influence corporate behavior. And I get my financial understanding just reading around work, reading lightly on business topics and talking to colleagues in the strategy department.

My answer would be Wikipedia, Freakonomics and technical treatises. Those are the things I use. 

Much work is being done to optimise the network across the IP, Ethernet transport and photonic layers. Once this optimisation has been worked through, what will the network look like?

We were one of the founders of this vision of convergence to the IP-optical layer. Two or three years ago we announced something called the converged backbone transport which we sell as a solution, which is a tight interworking between the IP and optical layers. 

Traffic at the optical layer doesn't need to be routed; it is kept at the photonic layer. Only traffic that needs additional treatment is forwarded up to the routing layer, and there is communication back and forth between the two layers.

So, for example, the IP layer has coloured optics and it can be told by the optical layer which wavelength to select in order to send the traffic into the optical layer without the optics having to do optical-electrical-optical regeneration, it can just do optical switching.

We have this intelligent interaction between the optical and IP layer which offloads the IP layer to the optical later which is a lower cost-per-bit proposition. But it also informs the IP layer about what colour wavelength or perhaps what VLAN (Virtual LAN) the optical layer expects to see so that the optical layer can more efficiently process the traffic and not have to do packet processing.

This is the interesting part, and this is where the industry is not aligned yet. We do not think that building full IP-functionality into the optical layer or building full optical functionality into an IP layer makes sense. It becomes essentially a 'God Box' and over the years such platforms ended up becoming a Jack of all trades and a master of none, being compromised in every dimension of performance.

They can't packet process at the density you would want, they can't optically switch at the density you would want, and all you have done is pushed two things into one box for the sake of physical appearance and not for any advantage.

What we believe you should do is keep them in separate boxes - they have separate processors, separate control planes and they even operate at different speeds - and have them tightly interworking. So they are communicating traffic information back and forth taking the traffic as much as possible themselves before forwarding to the other box when it is appropriate for it to handle the traffic.

Most operators agree that in the end having two boxes optimised for each of their activities is the right architecture, communicating effectively back and forth and acting on your traffic as a pair.

You didn't mention layer two.

I mentioned VLANs. And layer two does appear in the optical layer because the optical layer has to become savvy enough to understand Ethernet headers and VLANs is an example of that.

We do not believe that sophisticated packet processing has to appear in the optical layer because if you start doing that, you are building a large part of the router infrastructure - this whole FlexPath processor 400Gbps that we announced in the core of the router. If we move that into the optical layer, the optical layer essentially has the price of the routing layer and that is what you are trying to avoid.

You are trying to use the optical layer for the lower price-per-bit forwarding and the IP layer at the higher price per bit when it needs to be about higher price per bit. The pricing being capex and opex - the total cost of forwarding that bit: the power consumption of the box as well as the cost of the box.

Photo: Denise Panyik-Dale

"TDM-PON always is good enough, meaning it comes in at an attractive price - often more attractive than WDM - and it doesn't require you to rework the outside plant."

What comes after GPON and EPON and their 10 Gigabit PON  variants?

Remarkably, as always, just as we thought we were running out of TDM (time-division multiplexing) PON options, there is a lot of work on 40 Gig PON in Bell Labs and other research institutes.

There are schemes that allow you to do 40 Gig TDM-PON. So once again TDM will survive longer than you thought, but there are options being proposed that are hybrids of WDM and TDM.

For example, it is easy to imagine four wavelengths of 10G PON and that is a flavour of 40G PON. In FSAN (Full Service Access Network), they have something called XG-PON2 which is meant to have all the forward-looking technologies in there.

Now they are getting serious about that because they are done with 10G PON to some extent so let's focus on what is next. There are a lot of proposals going into FSAN for combinations of different technologies.

One is pure 40G TDM, another is four wavelengths of 10G, and there are many other hybrids that I've seen going in there. But there is a sense that it is a combination of a TDM and a WDM solution that might make it into standards for 40G, and it might not.

And 'the might not' is always because you have to redo your outside plant a little bit because you need to take the power splitters for TDM and replace them with wavelength splitters. So there is some reluctance by operators to go back outside and upgrade their plants. Very often they say: 'Well, if I can just do TDM again, why don't I do it that way and reuse the infrastructure already deployed'.

That is always the tension between the two.

It is not that WDM ultimately isn't a good option - it probably is - but TDM always is good enough, meaning it comes in at an attractive price - often more attractive than WDM - and it doesn't require you to rework the outside plant.

But at some point there will be a transition where WDM becomes a more economically attractive than TDM and does merits going back to your outside plant and changing out the splitters you deployed.

It is not clear how operators will make money from an open network so how will Alcatel-Lucent make money from open application programming interfaces (APIs)?

It is something, in all honesty, we have wrestled with. I think we are coming to a firm view on this.

To start, I'll answer the operator question which is important since if they aren't making money, it is very unlikely we'll be making money.

Operators are beginning to see that open APIs are not just about allowing access to their network to what you could call the over-the-top long-tail of applications, although that is part of it.

Netflix, for example, could be over-the-top but you would not call it long-tail because it has got 23 million subscribers. Long-tail is any web service that the user accesses and that might want to access network resources - it might need location information, or it might want the operator to do billing or quality-of-service treatment.

But it is also [operators allowing access] to their own IT organisations so they can more rapidly develop their own set of core service applications. I think of it as the voice application or video application; they open it to their own IT department which makes it much easier to innovate.

They open it to their partners, and those might be verticals in healthcare, banking or some sort of commerce space where they are going to offer a business service. And it is an easier way for partners to innovate on the network. And then of course it is also open to third parties to innovate.

So operators are beginning to see that it is not just be about exposing to the long-tail where it might be hard to imagine any revenue coming, because the business models of those long-tail providers may not even be profitable so how can they pay for something if they are not even profitable?

But for their partners and own IT, it is a no-brainer. 

Think of it as the new SDP (service delivery platform) in some ways. It's a web service-type SDP where they expose their own capabilities internally and you can, using a web services approach - which you can think of as a lightweight workflow where you make calls in sequence - you don't have a complex workflow engine that you are using as an orchestrator. They [operators] see that this is a much more efficient way to innovate and build partnerships. 

So that makes it interesting to them. That means they will buy a platform that does that. So there is a certain amount of money for Alcatel-Lucent in selling a platform that does that. However the big money is probably not in the selling of that platform, it is in the selling of the network assets that go with it.

There is a business case around that which falls through to the underlying network because the network has capabilities that this layer is exposing. So there is clearly an interest we have in that.

It is very similar to our philosophy about IP TV.  We never really owned preeminent IP TV assets. We had middleware that we acquired from Telefonica that we evolved but most of the time we partnered with Microsoft. And the reason we decided to partner was  because we saw the real value in pulling through the network and tying into the middleware layer, but not needing to own the middleware layer.

There are people that believe it makes sense to own the exposure layer because it is a point-of-importance to our customers. But in fact a lot of the revenue is probably associated with the network that that layer pulls through.

There is one more part of the API layer that is very interesting.

When you sit in that layer, you see all transactions. And you don't now have to use DPI (deep-packet inspection) to see those transactions - they are actually processing the transactions. Think of the API as a request for a resource by a user for an application. If you sit in that layer, you see all these requests, you can understand the customer needs and the demand patterns much better than having to do DPI.

DPI has bad PR because it seems like it brings something illicit. In the API layer you are doing nothing illicit as you are naturally part of processing the request, so you get to see and understand the traffic in an open and interesting way. So there is a lot of value to that layer.

Can you monitise that? Maybe.

Maybe there is a play in analytics or definition of the customer that allows you to sell an advertising proposition. But certainly it helps you optimise the network because you can understand the traffic flows.

If you have those analytics in the API layer you can dynamically optimise the network which is then another value proposition to better sell the network but also an optimisation engine that runs on top of that network.

So there are lots of pull-through effects for open APIs but there is money associated with the layer itself.

For part one of the Q&A, click here.