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Verizon/AOL Merger to Promote Network Densification

By J. Sharpe Smith

From the network architecture point of view, Verizon’s proposed $4.4 billion purchase of AOL Network will add to the business case for network densification and increase the need for intelligence at the edge of the network, feeding the ability to target content and marketing to the user, Tormod Larsen, chief technology officer, ExteNet Systems, told AGL Media Group in a phone interview.


“With the acquisition of AOL by Verizon, we see the value in content delivery and the service application layer providing revenue beyond the more traditional subscriber model,” Larsen said. “With content-rich applications, we anticipate a direct correlation between the delivery of the content and increased revenue.”

As content-rich applications become more critical to revenue, the ability of the network to handle high-quality content will be critical. Densification will increase the network’s capability to provide that high-value content.

“You might even see the carriers driving the network into areas to provide service based on where it is more valuable to provide that content. It is not always the content; it is also the Big Data,” Larsen said.

Content-driven Delivery Ups the Wireless Ante

Before cellular systems were voice-centric, carriers were inclined to build the same network everywhere, but now with data-centric service, and even more so with content-driven delivery, heterogeneous networks have come to the fore. The wireless infrastructure industry has moved from coverage networks to capacity-driven networks; now the goal is smart-capacity networks.

“What we see evolving is the concept of small networks within the big networks — basically an architecture of networks within networks. For example, a stadium network has different functionality and it is is more independent of the macro environment because it is its own ecosystem,” Larsen said.

Content delivery will be tailored based on the location, whether it is a stadium, a hospital or a hotel. The content can be targeted to specific audiences at specific times, based on how the network is architected. For network infrastructure providers, it is an opportunity to provide more infrastructure because there will be more demand for network capability, especially when a carrier wants granular Big Data analytics.

“What the user expects from a network in a stadium is different from what he or she expects the network to do along the highway,” Larsen said. “With Verizon’s purchase of AOL’s platforms, the carrier can know exactly which subscriber is sitting in which seat and what their habits are, thus allowing targeted content delivery and advertisements.” Additionally, advertising and content can follow the user from the stadium to a hotel room.

Pushing Intelligence to the Network Edge Gives the Carrier an Edge

Network coverage is currently the differentiator, and each carrier has its signature coverage map. But soon those networks will be built out with LTE and the map discussion will become a moot point from a marketing standpoint. So carriers are looking to content delivery for the advantage that will allow them to shine compared with their competition.

Verizon is not alone in its foray into content. AT&T plans to leverage its relationships with automakers to offer advertiser-supported or paid content exclusively for connected car users, according to Reuters. Connected car users will see content, such as videos and games, that can be streamed onto personal mobile devices later this year.

“When you talk about the carriers, currently, you talk about the network, but when you talk about Google, you talk about the subscribers and service, not the network. Even though they have one of the most complex networks,” Larsen said. “More and more carriers are moving into the service and applications. The network will not be the differentiator going forward. The differentiator will be the service and applications that the network enables.”

The play for a distributed network provider like ExteNet is to provide the carrier with a network within the larger network, where the intelligence resides at the edge of the network, not in a datacenter states away.

“It’s about being smarter about how you route your traffic in the network based on location, who the user is, the type of content and the event,” Larsen said. “The carriers may need some partners that are more nimble to help them adjust the network in a venue for a special event. We will need to be able to support that dynamic behavior.”