The thriving Digital Economy we are currently seeing is the result of profound transformations engendered by the application of new digital technologies. We expect that this will continue to accelerate economies across the world, resulting in the digitalization of the productive and tertiary processes of our planet.
Two of the most significant digital technologies, which we will focus on in this analysis, are next-generation 5G telecommunications and cloud computing (in the terms of "Multi Cloud" and "Edge Cloud", i.e. with increasing capillarity). The other key elements in this process are the Internet of Things (IoT) and intelligent objects, Artificial Intelligence (AI), blockchain and cyber security.
Today, telecommunications networks are the foundations of the Digital Economy. In the past few years, we have seen the number of sensors and smart objects significantly exceed the number of telecommunication devices which enable basic communication between people. The number of connected objects has more than doubled compared to the number of mobile phones in the market, which currently sits at around six million – highlighting the connected market’s increasingly exponential growth. To support these demands, networks must evolve with ever-increasing speed.
Modern networks are made up of three components: Access, that is, the part of the most widespread network that connects mobile terminals, offices, homes, etc.; the Backbone, which is the link that connects the points of aggregation of access and includes the large long-distance communication lines, which connect the nodes of the network; and the distributed Cloud (or edge cloud), which is made up of data centers (formerly "exchanges") where network functions and applications run. These fundamental elements can also be referred to as "ABC" networks.
In each of the three segments there is strong innovation. Access is made up of communication lines connecting homes, offices and antennas for mobile communications. Initially, when networks were laid, they were built with copper cables and were designed to enable users to make phone calls. Today, access is increasingly based on optical fiber architecture that is designed to enable Fiber-to-the-Home (FTTH). In this architecture, the fibers start from Points Of Presence (POPs) which connect the terminal points within a radius of about 20 kilometers. The fibers are then split off from a fiber branch to eight, 16 or 32 derivation points to allow them to enter separate buildings, including homes and offices.
Across the world, the development of this type of network is in a tumultuous realization phase. In Europe, which aims to become the so-called ‘Gigabit Society’, the government has set the target of creating a capillarity FTTH network by 2025 to connect all residential homes to broadband speeds of above 100 Mbit/s and all businesses to 1 Gbit/s connections. In March 2015, the Italian Government launched its Ultra Broadband Strategic Plan, valuing the investments necessary to complete the country's fiber optic cabling at €12 billion. This plan is proceeding sustainably and we hope it will continue until all of the country’s 24 million households and approximately 36 million Real Estate Units are covered by ultra-fast connectivity.
In today’s modern world, connectivity has become a primary need, with users expecting ubiquitous connectivity. Access in mobility is based on a set of widely distributed antennas and transceivers. In Italy there are more than 70,000 and this figure is rapidly increasing. These systems (Radio Base Stations) are connected to POPs via mainly fiber optic connections with a Point-to-Point structure.
Mobile networks use multiple frequency bands for communication and the next generation of the network, 5G, will also use high frequencies. The lower frequencies provide greater coverage and penetration capacity of interiors, while higher frequencies increase the range and achievable network speed. Over the past few months, we have been assisting the government in completing the tender for the assignment of 5G frequencies in Italy, with the result being surprisingly significant – €6.5 billion in collections for the State. This demonstrates, once again, the potential of the development of next-generation networks.
The fifth-generation mobile access network will multiply the number of antennas in the network by ten times the amount currently installed, combining today's macro cells with smaller and smaller cells (small cells) and deploying these small cells widely across territories. My estimate is that more than one million antennas will be necessary to cover the Italian territory. The small cells will be connected to optical fiber – a detail that reiterates the relevance of a national fiber cable plan.
The third key factor for new networks is the Cloud. The Cloud (in its components of computing and storage) emerged a few years ago following the diffusion of a model of use of IT resources made available by specialized subjects (cloud providers), as an alternative to the creation of own calculation centers. Today, very distributed cloud (edge cloud) is emerging, a solution which can enable networks to process data closer to the source (end-users). This allows data to be processed faster and more efficiently which is vital for applications which require real-time responsiveness, such as video streaming, online gaming, Virtual Reality (VR) and Augmented Reality (AR).
In the distributed Cloud of new networks, the devices become virtual and automatically grow or decrease in number according to the users' needs. The technology that enables this behavior is called Network Functions Virtualization (NFV) and definitively transforms telecommunications networks into computer networks, which are connected to terminals and intelligent objects via optical fiber and through a multitude of antennas working at very high frequencies. In the new networks, the technologies of automation are applied where, based on the analysis of the use and operating data of the network, aspects such as capacity, configuration and management are automatically modified. This technology is called Software Defined Networking (SDN) and establishes the primacy of software in next-generation networks.
To handle the huge amount of information that billions of intelligent objects generate and process with almost no response time, Clouds are destined to become much more distributed than today. The Cloud model will radically change towards a federated and standardized approach. The exchange of data and applications will cross many Cloud providers according to a Cloud Network model or in other terms Cloud Federation. According to the edge cloud paradigm, this will open up new and potentially disruptive business models for network managers, as this distributed network of computers will host an ecosystem of applications also developed by third-parties.
Finally, a legal issue that concerns the fact that the data and the applications that use data vary allocation dynamically is of great concern. Depending on whether they are located in Italy or in other European, Asian or American countries, different laws may be valid for disputes and, where necessary, access to information and documentation may be granted according to the law of where the transaction occurred. This is a significant hurdle as the industry continues to accelerate towards next-generation networks and will be an open topic, as we continue to compare our current networks to the networks of the future.