Top U.S telecom service providers Verizon Communications Inc. VZ and AT&T Inc. T, along with a host of globally renowned telecom operators like Deutsche Telekom, SK Telecom and others, have joined the Open Compute Project that is spearheaded by Facebook Inc. FB. The project aims to share a common data center design structure among leading data center users like Apple Inc. and Microsoft Corporation. This will enable mass production of the necessary hardware and, in turn, lower costs for telecom and Internet providers.
Additionally, this open source project focuses on energy efficiency to save operational overhead costs.
Present Scenario
Telecom providers are the largest buyers of data center infrastructure. At present, the majority of telecom operators avail traditional data center infrastructure from manufacturers like Cisco Systems Inc. CSCO and Hewlett Packard Enterprise HPE. This tends to be costly and adds little value to their operations in a competitive environment. Instead, by engaging in a more open and malleable hardware ecosystem, these telecom players hope to increase their margins on the back of an energy-efficient, low-cost yet seamless set of hardware infrastructure.
Reportedly, AT&T has already designed some of its own networking gear and aims to install the same effective Jun 2016.
Industry Trends
In recent years, several telecom operators have actively purchased data centers to counter shrinking revenues from traditional telecom services. However, persistent sub par performance in this segment has resulted in investors calling for a sale of these assets. Recently, AT&T decided to divest its data center business to International Business Machines Corporation. Windstream Holdings Inc. too sold its data center business to TierPoint last year. Verizon is also reportedly looking to vend some of its data centers while CenturyLink Inc. is looking for strategic alternatives to optimize its data center resources. While this may be a result of the recent trend whereby corporate cloud requirements are shifting toward the public cloud computing base run by companies such as Amazon.com Inc., a more open-source platform in their data center design could help the telecom companies modernize their facilities and innovate further, thus keeping them ahead of competition.
To Conclude
Telecom service providers have identified the open source platform as a potential growth driver and therefore seek to shift from traditional manufacturers to an open source environment in the near future. Moreover, through a sub-project dedicated to cater to the needs of telecom players, the Open Compute Project vies to explore different open source networking infrastructure that will help reduce cost and boost efficiency. Also, working with major software companies like Facebook, Microsoft and Apple, telecom providers may be able to gain solid operational synergies going forward. However, it remains to be seen how quickly and efficiently the telecom companies adopt the new platform and reap benefits from the same in the long term.
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