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Keynote Speech by Ryan Ding at the Huawei Global Analyst Summit

2017-04-26

For telcos, going All-Cloud is essential, not optional.

For the past 10 years, All-IP has been at the core of Huawei's development strategy. At the 2016 Huawei Global Analyst Summit, however, we announced a shift in approach: the All-Cloud strategy, which is designed to get telco operations, services, and networks in the cloud. Technologically speaking, this includes hardware resource pooling, fully distributed software, and fully automated operations. We estimate that, by 2020, 30% of telco networks will be in the cloud. By 2025, it will be 75%.

Last year, when we talked about our All-Cloud strategy, we began with networks, and then moved on to cloudifying services and operations. Today I'd like to start by discussing cloudification and digital transformation as it applies to telcos themselves.

The industry hasn't reached a full consensus regarding telco digitization, which is perhaps the most demanding step in the cloudification process. Many telcos recognize the B2B market as a strategic business opportunity, and have built a core B2B strategy around going vertical. However, telcos currently face a number of problems in their own digitization process. For example, in Europe, it takes three to six months to apply for a VPN. The fact of the matter is, telcos can't effectively enable industry digitization with such low levels of efficiency, and the success of their B2B strategy will remain elusive. What's more, industries themselves will find it hard to go digital, too.

Huawei wants to help telcos go digital. After three years of concentrated effort, BES and IES cloudification is essentially complete. With our Telco OS platform (which contains three systems: IES, BES, and big data), we aim to provide services to telcos using both SaaS and on-premise models. 

Last year, we underwent small-scale commercial deployment of IES and BES with China Unicom Shanghai and a Spanish telco, and we plan to extend this deployment to more telcos over the next couple of years.

Now let's move onto service cloudification. Our industry is still at the virtualization stage of development. Why do we say that? Because we haven't fully realized distributed software architecture, flexible deployment, and automatic operations. Going from network functions virtualization (NFV) to network functions cloudification (NFC) is our core strategy for getting services in the cloud. So far, we have made solid progress: We have already signed 170 network cloudification contracts around the world. And at the Mobile World Congress in Barcelona last month, we won the Best Technology Enabler award. Over the next few years, we will continue to increase our investment in service cloudification to make All-Cloud services a reality.

For the past few years, whenever we mentioned All-Cloud fixed networks, we've explored them in the technological sense, talking about things like SDN and NFV. Technological drivers are of course important. But in the process of going All-Cloud, we also have to look at what's driving value. When we talk network cloudification, we're talking networks that are built for the cloud, by the cloud, as the cloud. And with these All-Cloud networks, the business value we hope to drive is clear: agile services, efficient broadband, and smart O&M.

At MWC 2017, we launched eight commercially-ready lightweight solutions for fixed networks, including CloudFAN for fixed access, CloudCampus for campus networks, CloudEPN for enterprise interconnectivity, CloudOptics for optical transmission networks, CloudMetro for metro area networks, CloudBackbone for backbone networks, CloudFabric for data centers, and our EC-IoT solution for edge computing.

Moving forward, Huawei will continue to invest in All-Cloud fixed networks. We reckon that we will be able to launch a full portfolio of All-Cloud network solutions within the first half of next year.

As for All-Cloud mobile networks, with the commercial release of CloudRAN and trial deployment of CloudAIR, we have officially moved from concept to initial commercialization of cloud-based mobile access networks in the past 12 months. Huawei is leading the pack in this domain. CloudRAN has been included in 5G architecture standards and has already been applied in 4G networks. In the meantime, over the past year we have completed verification and proof of concept. We're aiming for massive commercial deployment in 2018.

CloudAIR, a cloud solution for wireless spectrum, has six key functions. Two of them are spectrum sharing between GSM/UMTS and GSM/LTE, which have already seen commercial deployment. In Nigeria, for example, Etisalat has 5 MHz of 2G spectrum. With our CloudAIR solution, they are now able to achieve dynamic sharing between 2G and 3G spectrum resources. They can flexibly adjust spectrum allocation between 2G and 3G based on traffic fluctuation. This function alone helped the telco grow its 3G network traffic by nearly 50%.

Video is relevant now, not tomorrow.

All telcos have come to the realization that video is a source of new growth. The global entertainment video market is worth about $650 billion US dollars, communication video about $18 billion, and industry video about $350 billion. Last year, Huawei explored the idea of making video a basic telco service. That is, enabling video to be included as a service in basic telco packages. At present, 50% of the top 100 global telcos have already adopted video as a basic service.

When it comes to video, monetization is the name of the game. There are three ways to do it: monetizing pipe, monetizing experience, and monetizing the ecosystem.

Let's first look at monetizing pipe. By bundling video services into their service packages, telcos can sell more bandwidth and also more connections. After a European telco began providing 4K TV and online 4K sports programs, their 50MB package subscriptions went up by 40% to 50%. China Telecom is another example. After it bundled IPTV services into its optical network service packages, the churn rate of 4-Play subscribers went down from 3% to 0.3%.

Next let's talk about monetizing experience. By offering users a superior online TV experience and many value-added functions, such as fast playback, smart search, and third-party applications, Deutsche Telekom signed on 500,000 new users within just half a year. After launching five high-quality video programs, revenue from video at Korean Telecom ballooned to nearly the same amount as their broadband revenue. They estimate that revenue from video content will surpass broadband revenue in 2017.

The third level of monetization is monetizing the ecosystem. Belgacom grew their user base by one million in just a single month after combining user-generated content, social media, and the cloud. By offering video services, a Brazilian telco earned 60 million US dollars from advertising within just 10 months.

Huawei is positioning itself as an enabler of video business, helping telcos and industry customers achieve business success in video. We will not involve ourselves in video content. We offer business consulting services, advising telcos on how to develop their video business according to local regulatory policies, the maturity of their local content ecosystem, their broadband connectivity index, consumer affordability, and other factors. In the meantime, we will provide a content aggregation platform, linking up over 2,000 content providers and 400–500 telcos dispersed around the world to help them develop their video businesses better and more quickly. We are also building a platform that helps telcos more effectively manage their end-to-end video experience.

Building an ecosystem is about thriving together, not surviving alone.

In All-Cloud and video, our position is one of a technological enabler – one that works with partners to build healthy business and industry ecosystems. We are an active participant and contributor to the industry ecosystem, working primarily with industry alliances and open-source communities. In this ecosystem we are doing our best to propel the industry forward. 

Our work in the business ecosystem touches on developer support and business alliances. We are working with industry leaders to innovate together and build out unique competitive strengths. We are also cultivating a healthy developer ecosystem to get custom solutions off the ground and running.

Our core strategy for industry alliances is to grow the market with partners and promote healthy development. Last September, Huawei, Ericsson, Nokia, Audi, BMW, Intel, and other industry leaders established the 5G Automatic Association, driving the adoption of 5G in the automotive industry.

Monetizing pipe relies on healthy industry development. In 2015, Huawei unveiled U-vMOS, a set of standards for measuring video experience, which has since been adopted by ITU. In 2016, we pushed for the formation of an industry alliance that focuses on video experience in the hopes of building quality networks around video needs. In the future, Huawei will dive deeper into H.266, the next-generation video codec standard, to push the video industry forward.

In our business alliances, Huawei works with leading partners in a broad range of verticals to enable digitization. In the finance sector, Huawei worked with Yusys Technologies to develop the industry's first Internet finance cloud, which helps small and medium-sized banks provide electronic finance channels. In the safe city domain, Huawei and Hexagon work together to provide end-to-end solutions. In the transport and energy sectors, Huawei also works with leading partners around the world.

In the developer ecosystem, we announced our Developer Enablement Plan in 2015, which outlined a one-billion US dollar investment over five years to support developers. We hope to enable upwards of one million developers by 2020. Last year Huawei built 13 OpenLabs around the world. This year we will build six more in locations with abundant developer talent and a mature vertical ecosystem, including places like London and Paris. Through these efforts, Huawei aims to enable developers and partners to access nearby resources, integrate their solutions with nearby partners, and verify their solutions in nearby labs. And with our global sales and service network, we are able to readily serve developers around the world.

The final ecosystem I'd like to talk about is the open-source ecosystem. As the open-source ecosystem takes shape around the world, Huawei is actively opening up our own capabilities. We have taken the lead in forming many new ecosystem alliances, like CarbonData and OpenSDS. We are aware that we'll come up against many challenges throughout this process. If we aren't able to effectively manage them, however, disorder and fragmentation are likely to occur. We have remained focused to prevent this eventuality. 

Over the past year, Huawei has worked with numerous telcos and open-source partners, pushing for the merger of OPEN-O and ECOMP into a new community called ONAP. To drive healthy ecosystem development, Huawei has facilitated the CVP certification plan at Open NFV to enable multi-vendor interoperability. This can reduce the costs and risks associated with interoperability and foster more robust ecosystem development.

I'd like to conclude with three sentences – a quick summary of what I've talked about today.

    1. For telcos, going All-Cloud is essential, not optional.

    2. Video opens the doors to a trillion-dollar market, so companies need to get their foot in that door now, not wait until tomorrow.

    3. Building an ecosystem is about thriving together, not surviving alone.

Guided by our All-Cloud, video, and ecosystem strategies, we hope to work with all of our partners to build a Better Connected World. Thank you.