Executive Briefing
The Open Source Telco: Taking Control
of Destiny
Transformation in the telecommunications industry is driving operators
to adopt open source software, but with this comes both new and
familiar challenges. How can they maximise open source’s impact?
NOVEMBER 2015
Sponsored by:
The Open Source Telco: Taking Control of Destiny | NOVEMBER 2015
Preface
This report examines the approaches to open source software – broadly, software for which the source code
is freely available for use, subject to certain licensing conditions – of telecoms operators globally. Several
factors have come together in recent years to make the role of open source software an important and
dynamic area of debate for operators, including:

Technological Progress: Advances in core networking technologies, especially network functions
virtualisation (NFV) and software-defined networking (SDN), are closely associated with open source
software and initiatives, such as OPNFV and OpenDaylight. Many operators are actively participating in
these initiatives, as well as trialling their software and, in some cases, moving them into production. This
represents a fundamental shift away from the industry’s traditional, proprietary, vendor-procured model.


Financial Pressure: However, over-the-top (OTT) disintermediation, regulation and adverse
macroeconomic conditions have led to reduced core communications revenues for operators in both
developed and emerging markets alike. As a result, operators are exploring opportunities to move away
from their core, infrastructure business, and compete in the more software-centric services layer.


Why are we now seeing more open source activities around core communications technologies?
How do the Internet players use open source software, and what are the lessons for operators?
The Need for Agility: In general, there is recognition within the telecoms industry that operators need to
become more ‘agile’ if they are to succeed in the new, rapidly-changing ICT world, and greater use of
open source software is seen by many as a key enabler of this transformation.

How can the use of open source software increase operator agility?
The answers to these questions, and more, are the topic of this report, which is sponsored by Dialogic and
independently produced by STL Partners. The report draws on a series of 21 interviews conducted by STL
Partners with senior technologists, strategists and product managers from telecoms operators globally.
Figure 1: Split of Interviewees by Business Area
Internal IT, 24%
Network, 29%
Enterprise IT &
Cloud, 19%
Other, 19%
Digital Services,
10%
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Executive Summary
Limited uptake of open source to date – but this is set to change
Overall, the telecoms industry has witnessed only limited adoption to date of open source software –
broadly, software for which the source code is freely available for use, subject to certain licensing conditions.
In core communications, adoption has primarily been limited to lower levels of the software stack and
integration environments in OSS/BSS, with networking itself remaining almost entirely proprietary.
However, two key developments – namely, NFV/SDN and increased operator activity in new service areas
(e.g. Cloud, IoT, OTT services) – are making open source’s strengths more relevant than ever. These
primarily centre on its ability to drive capabilities related to ‘agility’, such as customisability, faster time-tomarket, and experimentation. As a result, we have in the last 2-3 years seen a step-change in operator
interest in, and uptake of, open source software (perhaps most visibly via AT&T and its Domain 2.0
programme).
Figure 10: The Key Advantages and Disadvantages of Open Source Software
Source: STL Partners
Operators face 5 key barriers to adopting open source software
Such ‘limited’ adoption to date is in stark contrast with the Internet players, who are some of the heaviest
users of (and contributors towards) open source software, with Facebook even claiming that it is “…built on
open source from top to bottom, and could not exist without it.” 1 STL Partners has identified five key barriers
to telco adoption of open source software, in two categories (Figure 16 overleaf).
Whilst many of these barriers can (and should) be addressed, the implication here is that open source
software is set to represent more of an evolution than a revolution for the industry over the medium-term,
and these barriers need to be overcome if its promise is to be realised.
1
Facebook, June 2nd 2012
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Figure 16: Five key barriers to telco adoption of open source software
Source: STL Partners
Open source is both an enabler and symptom of telco transformation
The industry’s limited uptake of open source software to date also highlights many of the wider challenges
faced by operators as they seek to transform into more agile, innovative and platform-/ecosystem-centric
businesses: many of its barriers to adoption are not technical or economic (‘external’), but organisational and
skills-based (‘internal’).
Open source software (adoption) is therefore both an enabler and a symptom of operators’ efforts to
transform. From this perspective, its uptake can be seen as another useful (and relatively measurable) ‘lens’
or ‘proxy’ to look at transformation, alongside more traditional measures, such as revenues from new
services.
Six Key Recommendations for Operators
1.
Increase usage of open source software: Overall, operators should look to increase their usage of
open source software across their entire organisation due to its numerous strengths. It must therefore
be consistently and fairly evaluated alongside proprietary alternatives. However, open source software
also has disadvantages, dependencies, and hidden costs (such as internally-resourced maintenance
and support), so it should not be considered an end in itself.
2.
Increase contributions to open source initiatives: Operators should also look to increase their level
of contribution to open source initiatives so that they can both push key industry initiatives forward (e.g.
OPNFV and NFV) and have more influence over the direction these take.
3.
Associate open source with wider transformation efforts: Successful open source adoption is both
an enabler and symptom of operators’ broader transformation efforts, and should be recognised as
such. It is more than simply a ‘technical fix’.
4.
Bring in new skills…: In order to make effective use of open source software, operators need to
acquire new software development skills and resources – likely from outside the telecoms industry.
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Sprint, for example, is hiring PhD candidates as summer workers to develop software in what they call
‘the next workforce’.2
5.
… but bring the whole organisation along too: Employees across numerous functional areas (not
just IT) need to have experience with, or an understanding of, open source software – as well as senior
management. This should ideally be managed by a dedicated team: NTT Group, for example, has
followed this approach with its group-level ‘Open Source Software Center’. 3
6.
New organisational processes: Specific changes also need to be made in certain functional areas,
such as procurement, legal, marketing, compliance and risk management, so that their processes can
effectively support increased open source software adoption.
STL Partners believes that operators who follow these recommendations, and truly embrace open source
software across their organisation, will be best placed to outperform their competitors – both new and old.
2
3
Light Reading, June 3rd 2014
NTT Technical Review, June 2014
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Contents
Preface .............................................................................................................................................................. 2
Executive Summary......................................................................................................................................... 3
Introduction ...................................................................................................................................................... 8
Open source is less optional than it once was – even for Apple and Microsoft .................................... 8
Open source is both an old and a new concept for operators .............................................................. 9
Key Questions to be Addressed .......................................................................................................... 10
Understanding Open Source Software........................................................................................................ 11
The Theory: Freely available, licensed source code ........................................................................... 11
The Industry: Dominated by key initiatives and contributors ............................................................... 14
Research Findings: Evaluating Open Source ............................................................................................ 16
Open source has both advantages and disadvantages ...................................................................... 16
Debunking Myths: Open source’s performance and security ............................................................. 19
Where are telcos using open source today? .............................................................................................. 21
Transformation of telcos’ service portfolios is making open source more relevant than ever… ......... 21
… and three key factors determine where operators are using open source software today ............ 22
Open Source Adoption: Business Critical vs. Service Area ................................................................ 24
Barriers to Telco Adoption of Open Source ............................................................................................... 25
Two ‘external’ barriers by the industry’s nature ................................................................................... 25
Three ‘internal’ barriers which can (and must) change ....................................................................... 26
Prospects and Recommendations ............................................................................................................... 29
Prospects: An open source evolution, not revolution .......................................................................... 29
Open Source, Transformation, and Six Key Recommendations ........................................................ 29
About STL Partners and Telco 2.0 ............................................................................................................... 32
About Dialogic ............................................................................................................................................... 33
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Table of Figures
Figure 1: Split of Interviewees by Business Area .............................................................................................. 2
Figure 2: Share of consumer electronics shipments* by OS, 2014 ................................................................... 8
Figure 3: OPNFV Platinum Members ................................................................................................................ 9
Figure 4: Different attitudes of operators to open source – selected interview quotes ................................... 10
Figure 5: The Open IT Ecosystem (incl. key industry bodies) ......................................................................... 11
Figure 6: Three Forms of Governance in Open Source Software Projects..................................................... 12
Figure 7: Three Classes of Open Source Software License ........................................................................... 13
Figure 8: Web Server Share of Active Sites by Developer, 2000-2015 .......................................................... 14
Figure 9: Leading software companies vs. Red Hat, market capitalisation, Oct. 2015 ................................... 15
Figure 10: The Key Advantages and Disadvantages of Open Source Software ............................................ 16
Figure 11: How Google Works – Failing Well .................................................................................................. 17
Figure 12: Performance gains from an open source activation (OSS) platform.............................................. 19
Figure 13: Intel Hardware Performance, 2010-13 ........................................................................................... 21
Figure 14: Open source is more likely to be found today in areas which are… .............................................. 23
Figure 15: Framework mapping current telco uptake of open source software .............................................. 24
Figure 16: Five key barriers to telco adoption of open source software .......................................................... 25
Figure 17: % of employees with ‘software’ in their LinkedIn job title, Oct. 2015 ............................................. 26
Figure 18: ‘Waterfall’ and ‘Agile’ Software Development Methodologies Compared ...................................... 28
Figure 19: Four key cultural attributes for successful telco transformation ..................................................... 30
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Introduction
Open source is less optional than it once was – even for
Apple and Microsoft
From the audience’s point of view, the most important announcement at Apple’s Worldwide Developer
Conference (WWDC) this year was not the new versions of iOS and OS X, or even its Spotify-challenging
Apple Music service. Instead, it was the announcement that Apple’s highly popular programming language
‘Swift’ was to be made open source4, where open source software is broadly defined as software for which
the source code is freely available for use – subject to certain licensing conditions.
On one level, therefore, this represents a clever engagement strategy with developers. Open source
software uptake has increased rapidly during the last 15 years, most famously embodied by the Linux
operating system (OS), and with this developers have demonstrated a growing preference for open source
tools and platforms. Since Apple has generally pushed developers towards proprietary development tools,
and away from third-party ones (such as Adobe Flash), this is significant in itself.
An indication of open source’s growth can be found in OS market shares in consumer electronics devices.
As Figure 2 shows below, Android (open source) had a 49% share of shipments in 2014; if we include the
various other open source OS’s in ‘other’, this increases to more than 50%.
Figure 2: Share of consumer electronics shipments* by OS, 2014
Android
49%
Windows
14%
iOS/OS X
11%
Other
26%
0%
10%
20%
30%
40%
50%
60%
Source: Gartner
* Includes smartphones, tablets, laptops and desktop PCs
However, one of the components being open sourced is Swift’s (proprietary) compiler - a program that
translates written code into an executable program that a computer system understands. The implication of
this is that, in theory, we could even see Swift applications running on non-Apple devices in the future. In
other words, Apple believes the risk of Swift being used on Android is outweighed by the reward of engaging
with the developer community through open source.
4
Wired, June 9th 2015; Information Week, June 9th 2015
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Whilst some technology companies, especially the likes of Facebook, Google and Netflix, are well known for
their activities in open source, Apple is a company famous for its proprietary approach to both hardware and
software. This, combined with similar activities by Microsoft (who open sourced its .NET framework in
20145), suggest that open source is now less optional than it once was.
Open source is both an old and a new concept for operators
At first glance, open source also appears to now be less optional for telecoms operators, who traditionally
procure proprietary software (and hardware) from third-party vendors. Whilst many (but not all) operators
have been using open source software for some time, such as Linux and various open source databases in
the IT domain (e.g. MySQL), we have in the last 2-3 years seen a step-change in operator interest in open
source across multiple domains. The following quote, taken directly from the interviews, summarises the
situation nicely:
“Open source is both an old and a new project for many operators: old in the sense that
we have been using Linux, FreeBSD, and others for a number of years; new in the sense
that open source is moving out of the IT domain and towards new areas of the industry.”
AT&T, for example, has been speaking widely about its ‘Domain 2.0’ programme. Domain 2.0 has the
objectives to transform AT&T’s technical infrastructure to incorporate network functions virtualisation (NFV)
and software-defined networking (SDN), to mandate a higher degree of interoperability, and to broaden the
range of alternative suppliers available across its core business. By 2020, AT&T hopes to virtualise 75% of
its network functions, and it sees open source as accounting for up to 50% of this.6 AT&T, like many other
operators, is also a member of various recently-formed initiatives and foundations around NFV and SDN,
such as OPNFV – Figure 3 lists some below.
Figure 3: OPNFV Platinum Members
Source: OPNFV website
However, based on publicly-available information, other operators might appear to have lesser ambitions in
this space. As ever, the situation is more complex than it first appears: other operators do have significant
ambitions in open source and, despite the headlines NFV and SDN draw, there are many other business
5
6
ZDNet, April 3rd 2014
Comsoc, June 24th 2015
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areas in which open source is playing (or will play) an important role. Figure 4 below includes three quotes
from the interviews which highlight this broad spectrum of opinion:
Figure 4: Different attitudes of operators to open source – selected interview quotes
Source: STL Partners interviews
Key Questions to be Addressed
We therefore have many questions which need to be addressed concerning operator attitudes to open
source software, adoption (by area of business), and more:
1.
What is open source software, what are its major initiatives, and who uses it most widely today?
2.
What are the most important advantages and disadvantages of open source software?
3.
To what extent are telecoms operators using open source software today? Why, and where?
4.
What are the key barriers to operator adoption of open source software?
5.
Prospects: How will this situation change?
These are now addressed in turn.
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Understanding Open Source Software
The Theory: Freely available, licensed source code
Defining open source, open standards and open value networks
Open source software is software for which the source code is freely available for use, distribution and
modification, by anyone, for any purpose, subject to conditions detailed in a licensing agreement (of which
there are different kinds). Note that open source software is not the same as freeware: not all freeware is
open source (e.g. Internet Explorer).7 Prominent examples include Linux, Apache Hadoop, and OpenStack.
Open source is also related to the notion of an ‘open standard’ and, as we will see later, it is a highly efficient
method for defining (de facto) open standards. In general, an open standard is a description of how to build
something: a standard which is publicly available and, as with open source software, subject to conditions
detailed in a licensing agreement. However, there is no single accepted definition and interpretations (and
usage) of the term often vary with the context. Prominent examples include HTML, TCP/IP, and OpenFlow.
Clearly, ‘openness’ is the overriding concept that links open source and open standards. In fact, these twin
concepts are also spoken about in two broad contexts: ‘open IT ecosystems’ and ‘open value networks’. In
the former, they are associated with broader notions of openness in information (Figure 5). In the latter, they
are seen as key enablers of transformed relationships with partners, along the lines of interoperability,
multiple suppliers and APIs. This is a useful way to conceptualise AT&T’s Domain 2.0 strategy (see the ‘How
AT&T overtook Verizon in strategic business services’ Executive Briefing for more).
Figure 5: The Open IT Ecosystem (incl. key industry bodies)
Source: Brian Lamb, Thompson Rivers University
For some, the term ‘free software’ has its own specific meaning, although their definition ultimately refers to almost exactly the same
categories of software as open source. See here for a discussion of the differences.
7
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Note that, whilst it is not the topic of this report, there are also ‘hardware’ equivalents of the above concepts:
‘open source hardware’ and open standards (for hardware). A key initiative in the former area is the Open
Compute Project, founded by Facebook in 2011 and focused on sharing the designs of data centre products.
Business Models, and Community vs. Commercial Open Source
A key point to understand is that commercial organisations ‘open source’ their software (i.e. contribute, as
opposed to simply consume) for reasons beyond ecosystem engagement, as was the primary motivator with
Apple and Swift. As a result, a lot of open source has commercial backing, even if this occurs within the
context of a ‘community’. Some organisations, for example, seek to influence the direction of open source
initiatives in a manner favourable to themselves, and this can be of concern to participants:
“It is not clear just how independent some of the open source projects are: it increasingly
appears that many people on the boards have very specific agendas and would like to
influence the projects heavily in a way that favours them.”
Others, such as Red Hat, have successfully commercialised open source around one or more of several
business models (in some cases, all three below):

Support Model: Providing support for a fee (e.g. training, implementation, troubleshooting, etc.). From
the customer’s perspective, this is very similar to a traditional relationship with a proprietary vendor.

Freemium Model: Dual license, where the non-commercial (often lower functionality) version is open
source, but the ‘full’, commercial-grade version is proprietary.

Hosting Model: Where a company sells a subscription to a cloud-based instance of the software.
The result is three distinct forms of governance for an open source project, as detailed below:
Figure 6: Three Forms of Governance in Open Source Software Projects
Source: STL Partners, adapted from SDxCentral
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Open Source Software Licensing8
The concept of ‘content licensing’ is central to open source software. A key idea in content licensing is that of
copyright, which is a legal right granting the creator of original content exclusive rights for its distribution
(usually for a limited time only).
A book, for example, can be copyrighted for a certain period of time – purchasers of the book can read it
however they want, but they are not allowed to redistribute the content (either for profit or not-for-profit).
Moreover, even if a purchaser took the book’s content and added a new chapter, thereby creating a
‘derivative work’, they still cannot distribute this new piece of work without permission from the copyright
holder.
Similar logic applies to proprietary software (the book) and its source code (its content, or chapters), except
the product is the result of the source code rather than the code itself. In general, however, copyright is a
significant obstacle to creating works in a collaborative fashion, because multiple authors can own multiple
copyrights, and thus there is no central authority controlling the entire code base’s distribution.
Open source licenses (of which there are many), however, attempt to get around this issue – and therefore
encourage collaboration. Three key license types are described below, and summarised in Figure 7:

GPL* (e.g. Linux): Permission to use, redistribute and modify the source code, but any modifications you
make, or software you redistribute with it, must also be made available as open source software licensed
under the GPL (a concept known as ‘copyleft’).

LGPL/MPL** (e.g. OpenOffice, Firefox): Similar to the GPL, but designed more for software libraries
where you allow non-GPL applications to utilise the libraries. If you modify the library’s software you
must make the modified source code available, but you are allowed to use it within a proprietary offering
(unmodified) without making the source code for your proprietary offering available.

Apache/BSD*** (e.g. Apache, FreeBSD): Very permissive licenses, effectively allowing full use,
redistribution and modification without restriction.
Figure 7: Three Classes of Open Source Software License
Source: STL Partners
8
*
Parts of this section are based on this essay by OpenACS
GNU General Public License ** GNU Lesser General Public License / Mozilla Public License
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***
Berkeley Software Distribution
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The Industry: Dominated by key initiatives and contributors
Major Open Source Initiatives: BIND, MySQL, Apache…
Open source software uptake has increased rapidly during the last 15 years, most famously embodied by the
Linux operating system (see Figure 2), but there are numerous others which have either become dominant
(and hence become a de facto standard) or developed a strong market share, such as:

Firefox: Web browser developed by the Mozilla Foundation and its subsidiary, the Mozilla Corporation

Asterisk: Telephony switching and private branch exchange (PBX) service for Linux

BIND: The most widely used Domain Name System (DNS) software on the Internet

MySQL: The second most widely used relational database management system (RDBMS)

Apache Hadoop: Framework for distributed storage and processing of very large data sets (big data)

Apache Web Server: The world’s most widely used web server software (see Figure 8)
Figure 8: Web Server Share of Active Sites by Developer, 2000-2015
Source: Netcraft
Although open source software has predominantly been an IT phenomenon, it is now beginning to filter
through into industries which are becoming increasingly software-centric, such as automotive and, as we will
see, telecoms.
Note that there is also a very long tail of small, ‘loosely-aligned’ community open source initiatives, although
many of these are now inactive.
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Key Contributors to Open Source: Red Hat, Facebook, Google…
Despite the scale of the open source software ecosystem, its economics have proved to be very different to
that of traditional, proprietary software. Red Hat, for example, is the largest commercial vendor of open
source software, and one of the major contributors to the open source community (especially Linux) but, as
Figure 9 shows, its scale is only a fraction of the traditional software companies.
Figure 9: Leading software companies vs. Red Hat, market capitalisation, Oct. 2015
Source: Yahoo! Finance
Of course, this does not mean that the true ‘value’ it is generating is a similar fraction of that generated by
Microsoft and others, but rather that open source has proved more difficult to directly monetise than
expected at the turn of the millennium.
In fact, the Internet players, are some of the largest users of, and contributors to, open source software –
although, understandably, they have not open sourced most of their core systems (e.g. advertising/search
engines). Facebook, for example, is “…built on open source from top to bottom, and could not exist without
it. As engineers here, we use, contribute to, and release a lot of open source software, including pieces of
our core infrastructure…” 9, and began 107 open source software projects in 2014, up from 90 in 2013.10
Likewise, two of the world’s most significant open source projects, Android and Chromium (the open source
core of the Chrome web browser), are heavily influenced and financed by Google.
So, what are the advantages driving the Internet players towards open source software?
9
Facebook, June 2nd 2012
For more information on the specifics of Facebook’s activities in open source software, see here.
10
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Research Findings: Evaluating Open Source
Corroborated almost unanimously by the 21 interviewees, the key perceived advantages of open source
software centre on its ability to drive capabilities related to ‘agility’, such as customisability, faster time-tomarket, and experimentation.
By having access to the source code it enables organisations to iterate faster, accelerate time-to-market,
customise the solution to both their needs and the market’s, interoperate more comprehensively, and more.
Given the dynamic nature of the Internet players’ markets, where agility is paramount, it is therefore of little
surprise that they rely heavily on open source software.
“The key advantage of open source is the fact that it’s flexible: it enables you to iterate
quickly and, in some cases, differentiate from your competitors.”
However, open source software does have its disadvantages, notably concerning a (potential) lack of
support and complications around intellectual property. The two key areas of performance and security,
which are often thought of as lower in the open source context, cannot easily be generalised – and must be
evaluated on a case-by-case basis.
Figure 10: The Key Advantages and Disadvantages of Open Source Software
Source: STL Partners
Open source has both advantages and disadvantages
Advantages: Customisability, time-to-market, experimentation…
1.
Customisability: A defining characteristic of open source software: it is possible to customise the
software to both your needs and the market’s needs. This is a key advantage of Linux, for example,
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because you can cut it down to exactly what you need – hence why Linux is doing well in the power
consumption-sensitive M2M/ IoT space. It is also a reason why open source software is often found in
integration/middleware environments. Depending on the software’s license (i.e. if it doesn’t require you
to share your code), it might also be possible to differentiate your offering from your competitors.
2.
Faster time-to-market: Rather than being tied in to the proprietary vendor’s release cycle, or having to
engage with them (or a systems integrator) for custom development, it is possible to modify the
software’s source code immediately. One interviewee, who migrated a client-facing system to an open
source platform, reported that new releases now take ‘days’ or ‘weeks’ to roll out rather than ‘months’ or
even ‘a year’.
3.
Ease of experimentation: Because open source software is free and customisable, it is ideal for
experimentation in laboratory (i.e. non-commercial) environments.
“Freedom to experiment is a key advantage of open source in general, and this is often
the key reason to adopt open source in the first instance.”
4.
Accelerate innovation: Community open source initiatives are sometimes more on the ‘cutting edge’ of
technology, particularly given that they usually have less of a vested interested in legacy technologies
(as vendors might, e.g. SDN was initially pioneered by the Internet players)
5.
Reduce vendor lock-in (or increase interoperability): Proprietary vendors do not have a tradition of
putting truly standard APIs on their systems to make third-party integration simple, because they have
incentives to try to either monetise any integration work themselves or upsell the customer to more
advanced capabilities on their own platform.
6.
Faster standard-building: Open source represents a new approach to standards. Rather than going
through industry standards bodies and working on large specifications for years, open source both
promotes and enables an approach more around building de facto standards (e.g. those embedded in
Linux, BIND, Apache, etc.) by launching prototypes quickly and learning about technical and market
requirements in real-time. This is important given the speed at which the ICT world is now changing,
and reflects the pragmatic approaches taken by the Internet players today:
Figure 11: How Google Works – Failing Well
Source: How Google Works
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7.
Long-term cost savings: If such a standard-building process is successful, it can lead to substantial
long-term cost savings on an industry level. This is reflected, for example, in the current initiatives
looking to develop a common, free, and open source SDN controller. However, in the short term open
source is unlikely to generate substantial cost savings, due to the need for support (either provided
internally or by a third-party) and ongoing development costs.
“We have our own development teams here, and I see that we still invest quite a lot in
maintaining open source software ourselves, or integrating it into other components. If
you buy off-the-shelf software, usually that’s a problem you don’t have. So we didn’t
select open source from a cost perspective.”
8.
Input into the development roadmap: In community open source initiatives, it is possible to favourably
influence their direction of development via contributions and participation in the governance structure.
Other advantages include: Commercial open source software represents a shift from capex to opex, which
can help the business case for non-revenue-generating activities (e.g. analytics); putting existing proprietary
suppliers under pressure; insulation from discontinuation of a proprietary vendor’s product (with open source,
you always have the code); and finally, that proprietary software can sometimes essentially be re-packaged
open source software.
Disadvantages: Concerns around support and intellectual property
1.
Level of support: For most organisations, who do not have significant internal development resources
(e.g. operators), the guarantee of support from a third-party is crucial in the software procurement
process. Some (especially ‘community’) open source initiatives, however, do not have any structured
support and instead primarily rely on contacting the initiative’s members directly.
“The distinction between commercially-supported and community open source is crucial,
and operators will always go for the former if there is a choice [unless it is already a de
facto standard].”
2.
Customisation can jeopardise support: Whilst customisation is a key advantage of open source
software, many commercial organisations will cease to support your software if you have customised it
outside of certain parameters (e.g. Red Hat and its Enterprise Linux distribution).
3.
Intellectual property concerns: In a large organisation, it can be a costly and complicated process to
ensure full compliance with the numerous open source licensing terms across several initiatives and
areas of the business. LinkedIn, in its 2011 SEC filing, therefore noted that: “From time to time, we may
face claims against companies that incorporate open source software into their products, claiming
ownership of, or demanding release of, the source code… These claims could also result in litigation,
require us to purchase a costly license or require us to devote additional research and development
resources to change our solutions.”11
11
For a discussion, see here
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4.
Lack of documentation/GUIs: Some open source initiatives provide insufficient documentation and
graphical interface capabilities. NTT’s Open Source Software Center, for example, reported issues in
promoting the use of the open source KVM hypervisor across the group because of a lack of a graphical
user interface (GUI), resulting in many commands having to be entered through a command-line user
interface (CUI) and therefore making simple tasks needlessly complex.12
5.
The Prisoner’s Dilemma: A theoretical issue with community open source initiatives is that, because
each contributor’s action is for the good of the group (as opposed to just themselves), this might lead to
an overall under-contribution of code to the project.
Other disadvantages include: Open source initiatives, depending upon their maturity, sometimes lack a
formal development roadmap.
Debunking Myths: Open source’s performance and security
Open Source Software’s Performance (and Scalability)
Depending on the context, the ‘performance’ of a piece of software might centre on latency, throughput,
utilisation of computing resources, availability, bandwidth, scalability, and more. It is sometimes remarked
that open source normally achieves lower levels of performance than its proprietary counterparts; in reality,
there is evidence supporting both perspectives:

Open Source as High Performance:

STL Partners has collected real-world benchmark data (Figure 12 below) from an operator on the
performance improvements it experienced when testing a proprietary activation platform (an element
of their OSS systems) against an open source platform (Linux + PostgreSQL). As the data shows,
activation time decreased dramatically for every line of business with one (as it happens,
comparatively small) exception. Based on these results, the migration went ahead.
Figure 12: Performance gains from an open source activation (OSS) platform
% Change in Activation Time
100%
90%
50%
0%
-50%
-30%
-51%
-47%
-52%
-47%
Service 5
Service 6
-72%
-100%
Service 1
Service 2
Service 3
Service 4
Service 7
Source: STL Partners interviews
12
NTT Technical Review, June 2014
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


There are also numerous examples of open source software being found in high-performance
environments, such as OKL4 (a microvisor for embedded systems specifically designed for
performance and deployed in over 2 billion mobile devices 13), KVM (some operators reported this as
performing better than VMWare in current NFV tests), and Apache Hadoop.
Open Source as Low Performance:

There are also examples of open source software being criticised for ‘low performance’ in some
contexts. A well-known example here is Asterisk, the telephony switching and private branch
exchange (PBX) service for Linux. Asterisk has been extremely successful with enterprises but less
successful with carriers due to its difficulty in maintaining its performance at the scale needed for a
core carrier switching platform.14

In other words, Asterisk is currently ‘enterprise-grade’ but not ‘carrier-grade’. For this reason,
deployments by carriers have been sparing and typically focused on specific applications or services
with lower scale requirements.
Performance as Implementation-Dependent:

Some interviewees further qualified this debate by arguing that the performance of a system is
heavily dependent on how it is implemented, both as a general rule and given recent advances in the
design of hyperscale systems (see, for example, Facebook’s Fabric data centre designs, which show
that you don’t need ‘five nines’ hardware to design a reliable super-system).
“Most of the problems I’ve seen with performance are people making bad choices.”
Open Source Software’s Security
Similar to performance, there is little compelling evidence that open source software is ‘in general’ more or
less secure than proprietary alternatives. Whilst it is easy, due to the nature of open source software, to find
high-profile examples of security vulnerabilities, such as Heartbleed in OpenSSL, it is still possible to find
questions being raised about proprietary software.15
One of the few ongoing studies focused on this topic is conducted by Coverity in its annual ‘Open Source
Reports’, which use static and dynamic code analysis tools to test a number of open source and proprietary
(confidentially shared) source codes for bugs and security defects. In its latest report, it even rated open
source software as less defective than proprietary software, with a defect density of 0.61 per 1,000 lines of
code (as opposed to 0.76).16
There are also good theoretical arguments on both sides of the debate: freely inspectable code, for example,
makes vulnerabilities easier to find both by those who plan to report issues, and those who plan to exploit
them.
13
General Dynamics website
One VoIP provider in Australia migrated away from Asterisk in 2012 for this reason. See here for more details.
15
See, for example, this article on a potential malware issue Cisco might have with its routers
16
Coverity, Open Source Report 2014
14
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Where are telcos using open source today?
Overall, there has been only limited adoption of open source software in the telecoms industry to date:

In core communications, which represents the majority of telcos’ revenues (and software), adoption
has primarily been limited to lower levels of the software stack and integration in OSS/BSS, with
networking itself remaining almost entirely proprietary – although NFV and SDN are set to change this.

In new service areas, such as Cloud, IoT, analytics, and OTT services, and less ‘business critical’
activities, however, we have seen considerable adoption of open source, and this is set to continue.
Transformation of telcos’ service portfolios is making open
source more relevant than ever…
Open source software has many strengths, primarily customisability, faster time-to-market and
experimentation. In fact, the last 3-5 years have seen two key developments in the telecoms industry which
make open source’s strengths even more relevant, and important to capitalise upon, than ever:
1.1 Core Networking – Technological Progress: Advances in networking technologies, especially
network functions virtualisation (NFV) and software-defined networking (SDN), are closely associated
with open source software and initiatives, such as OPNFV and OpenDaylight. Consider NFV:
Historically, telecoms operators have run their networks on specialised, proprietary hardware and
chipsets (paired by vendors with proprietary software) because they offered performance and
capabilities that commodity solutions could not; while-off-the shelf processors were good enough to
handle the control plane of a device (route acquisition, human interface etc.), they typically did not have
the ability to process data fast enough to build a viable device.
However, the industry has developed rapidly. Vendors like Intel have placed emphasis on improving the
data plane performance of commercial off-the-shelf (‘COTS’)-based devices, and their performance has
risen exponentially. Figure 13, for example, demonstrates that in just 3 years (2010–2013) a tenfold
increase in packet processing (or data plane performance) was achieved.
Figure 13: Intel Hardware Performance, 2010-13
.
Source: ETSI & Telefonica
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NFV is being pushed forward by telecoms operators and seeks to leverage the enhanced capabilities of
COTS-based devices, alongside virtualisation and open source software (which would not function on
specialised, proprietary devices), to bring the same technologies that revolutionised the IT sector to
networking. The ambition is to reduce the cost of networking equipment and, more importantly, avoid
vendor lock-in ‘this time around’, thereby increasing operator agility. For some operators (besides
AT&T), this opening of their value network has already begun 17:
“We [have] started looking at less traditional vendors – vendors that offer software stacks
that we can set up and even change the specs ourselves.”
1.2 New Services – Driven by Financial Pressure: Over-the-top (OTT) disintermediation, regulation and
adverse macroeconomic conditions have led to reduced core communications revenues for operators in
both developed and emerging markets alike. As a result, operators have been exploring opportunities to
move away from their core, infrastructure business, and become active in new (service) areas. Three
categories of non-mutually-exclusive opportunity are also promoting a greater adoption of open source:

Cloud Opportunities (e.g. IaaS, PaaS): Since IT is the ‘home’ of open source software, it is
unsurprising that many operators are making use of viable open source initiatives in this space, such
as open source hypervisors (e.g. KVM) and so-called ‘Cloud OS’s (e.g. OpenStack).

Ecosystem-Centric Opportunities (e.g. Internet of Things or ‘IoT’): Due to open source’s strengths
in building (open) standards, ensuring interoperability, and therefore building ecosystems, it is seen
as a crucial part of the IoT’s development in the coming years. Perhaps unsurprisingly, however, the
predominantly siloed, non-ecosystem-centric M2M services of today are almost entirely proprietary.

Non-/Pre-Revenue Opportunities (e.g. internal analytics, OTT IM): Many new internal operator
activities, such as those around big data analytics, do not generate ‘accounting’ revenues, and
therefore make business cases challenging to construct and sell internally. As a result, credible
(free) open source projects like Apache Hadoop are very appealing in this space. Similarly, many
pure-play over-the-top (OTT) service areas, such as OTT IM, do not generate revenues immediately
despite the cost – and open source initiatives, such as ejabberd, are actively in use by operators.
We can therefore reach two conclusions. Firstly, whilst open source adoption was previously very low in core
networking, it is set to increase in the coming years with the advent of NFV and SDN. Secondly, open source
has an important role to play in new service areas, such as Cloud, IoT and OTT services, with some areas
also clearly tending towards greater adoption (e.g. IoT will see considerably more open source than M2M).
… and three key factors determine where operators are
using open source software today
Beyond the service area dimension identified in the previous section, two more domains were identified
during the interviews which inform the likelihood of a specific area being open source today:
2.
17
Business Critical: In general, operators have been more reluctant to adopt open source software in
‘business critical’ applications (e.g. core OSS/BSS applications), unless it is highly mature and
commercially supported, such as Red Hat Enterprise Linux. Instead, we have seen many open source
Several operators have even begun experimenting with predominantly open source mobile core networks
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tools being used in non-business critical areas, such as applications which are employee-facing (e.g.
enterprise document management, portals), non-real-time (e.g. data visualisation), or more business
intelligence-centric (e.g. internal analytics).
“In non-mission critical areas, we can use open source in the plain vanilla way –
download it from a Github repository and use it. We don’t care that much about support
from a supplier because we can manage it ourselves. In mission-critical areas, the whole
support strategy is very important. For instance, we are using Red Hat Linux. Why are we
not using the real plain vanilla open source of it? Because Red Hat is also responsible for
the support, security, updates…”
3.
Lower in the Software Stack: In general, operators have also adopted open source more widely in the
lower levels of the software stack – namely operating systems (especially Linux in OSS/BSS, although
this is not universal), databases (e.g. MySQL, PostgreSQL) and application/web servers (e.g. Apache).
This is because of the greater maturity of open source lower down the software stack – here it is
relevant to IT and telecoms alike, whilst higher levels of the telecoms stack are more specialised.
“For compute and storage, the demand is so high because everyone needs servers –
that’s why there are so many variations around that realm (Linux) that were open source.
But in networking, and specific telco applications, the return to developers is that much
lower.”
Figure 14: Open source is more likely to be found today in areas which are…
Source: STL Partners
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Open Source Adoption: Business Critical vs. Service Area
The preceding analysis is summarised in Figure 15 below, which estimates the position of selected areas of
operator activity on a matrix plotting the ‘new service areas’ domain against the ‘business critical’ domain. As
expected, open source software is more frequently used as we move into less business critical and/or newer
service areas (across the software stack). Activities are colour coded as follows:

Green: Open source software frequently used, considered equally alongside proprietary software

Yellow: Some use of open source software, but often limited to certain areas or operator types

Red: Limited, if any, evidence of open source currently being used
Figure 15: Framework mapping current telco uptake of open source software
Source: STL Partners
* Connected Device Platform
** Application Enablement Platform
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Barriers to Telco Adoption of Open Source
It was noted earlier that the Internet players are heavy users of open source software, with Facebook even
claiming that it is “…built on open source from top to bottom, and could not exist without it.” 18 And yet,
despite the fact that telecoms operators are some of the largest companies in the technology ecosystem, the
industry has only seen limited uptake. So, what is holding adoption back?
“If you are in the Internet business, then open source is not something that you discuss
very much… because you will be using open source in almost every project.”
STL Partners has identified five key barriers to telco adoption of open source software, in two categories:

External: A consequence of the industry’s nature

Internal: Though informed by the external barriers, these are primarily organisational (and addressable)
Figure 16: Five key barriers to telco adoption of open source software
Source: STL Partners
Two ‘external’ barriers by the industry’s nature
1. Complex Legacy Systems: Unlike some organisations and industries, telecoms operators have
extremely complex core systems and, because they are mostly comprised of proprietary software, the
switching costs for core systems can be extremely high (‘vendor lock-in’). As a result, the potential
‘return’ from migrating to an open source solution, as opposed to staying with the same vendor(s), can
sometimes be negated. This is a particularly acute barrier for core OSS/BSS applications, for example,
18
Facebook, June 2nd 2012
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due to their high number of integrations between different components, such as CRM and call centre
automation (although they are now increasingly mediated by an enterprise service bus, or ‘ESB’).
2. Specialised Industry and Carrier Requirements: Telecommunications is a highly specialised industry
and, as a result, open source software is typically more mature lower down the software stack because
here it is relevant to IT and telecoms alike, whilst higher levels of the telecoms stack are more
specialised. Asterisk PBX, with its scaling issues, is an example of this: it was designed with enterprises
(‘enterprise-grade’) rather than carriers (‘carrier-grade’) in mind, so operators would need to develop it
further to make it suitable for their core telephony platform.
“Without a carrier-grade option, it is very hard to convince the business to put any money
on it.”
Three ‘internal’ barriers which can (and must) change
1. Lack of Software Development Skills: Due to operators’ close, ‘buyer-supplier’ relationships with
proprietary vendors, they typically do not employ a large number of software developers. As a result,
software development is usually outsourced when it is needed, and this can make it considerably less
profitable to develop, implement, and maintain open source software – and software in general. More
subtly, such outsourcing can also lead to a type of ‘vendor lock-in’ because the development company
can support its own code best. This is a key difference relative to the Internet players who keep
development in-house by employing a considerably higher percentage of software developers (and
software engineers). Figure 17 presents LinkedIn data that, while imperfect, shows a clear disparity:
Figure 17: % of employees with ‘software’ in their LinkedIn job title, Oct. 2015
Source: LinkedIn
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“As a company, we are buyers of software not builders of software. So we don’t have a
large amount of development resource, and we don’t have a lot of people focused on the
software side of the business… We recognise that needs to change.”
Another attribute of the Internet players is that much of their senior management are experienced in
software development and, therefore, are well acquainted with the complexities of using open source
software. This is less frequently the case in operators, however, and (non-technical) senior
management are therefore less likely to invest in its development if they are unaware of its difficult-toquantify benefits, such as customisability and ease of experimentation.
2. Mindset & Culture: The traditional (incumbent) telco mindset and culture puts in place rigid controls and
structure to reduce perceived risk, emphasises industry competition rather than cooperation or
‘coopetition’, and stymies the enthusiasm for innovation and change. This is the opposite of that
associated with open source software development:

Collaboration: Open source software is often the result of a collaborative activity, or designed to
enable such collaboration, but operators have generally proved reluctant to collaborate outside of
core standardisation activities (e.g. GSM) – and successful partnerships have proved rare (e.g. the
dismantling of the Verizon-AT&T-T-Mobile Softcard joint venture in the USA19).
When open source initiatives have licenses requiring code to be made available (e.g. the GPL),
operators have proved more reluctant to develop (and therefore contribute code) in the first place
due to concerns of competitors free-riding on their work. Operator collaboration in various NFV/SDN
initiatives is encouraging from this regard, but the outcome of these initiatives is still unclear and it
remains to be seen whether this filters through to other business areas.
“OpenDaylight and OPNFV were made in such a way that says: look, there is another
way to make standards, using open source development that starts with code first
instead of specifications. So in the future, I think those are a precedent for other things
that will show up… But what I’m hoping for the next step beyond OPNFV is something
that does the VNF.”

Risk: Open source software development is in some regards associated with increased risk because
the developer is responsible for their own codebase. In fact, externalising this risk is implicitly
something you pay for when procuring from a proprietary vendor. However, operators are highly riskaverse, and this is a key barrier to adoption – some community open source initiatives, for example,
might not have the level of ongoing support operators typically demand.
3. Organisational Structure and Processes: Related to their mindset and culture, telecoms operators are
highly bureaucratic and known for their slow and deliberate decision-making. This is reflected in the
industry’s traditional, ‘waterfall’ approach to product development. However, open source software, and
software development in general, is seen as requiring a more ‘agile’ approach, characterised by adaptive
planning, continuous development, early delivery and rapid and flexible response to change. For
19
The Verge, March 5th 2015
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example, such an approach can be found in Spotify’s ‘tribes and chapters’ approach to its organisation.20
Increased open source software adoption will also require changes in various operator functional areas,
such as:

Procurement: Establishing processes to fairly evaluate open source software against proprietary
competitors: some of its benefits do not have direct financial impacts, and the communities behind
‘community’ open source software will not respond to an RFP.
“If you haven’t thought about procurement then you can’t really be serious about going
into open source.”

Risk management: Open source has a different risk profile, and sources of risk, to proprietary
software. It must therefore be evaluated differently.

Legal: Establishing the processes to ensure transparency in open source software’s use across the
organisation, and therefore compliance with its licensing terms.
Figure 18: ‘Waterfall’ and ‘Agile’ Software Development Methodologies Compared
Source: Axian
“If you have a slow organisation then open source does not make much sense.”
20
Spotify, March 27th 2014
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Prospects and Recommendations
Prospects: An open source evolution, not revolution
Overall, the telecoms industry has witnessed only limited adoption of open source software to date. In core
communications, which represents the majority of telcos’ revenues (and therefore software), adoption has
primarily been limited to lower levels of the software stack and integration environments in OSS/BSS, with
networking itself remaining almost entirely proprietary.
However, two key developments – namely, NFV/SDN and increased operator activity in new service areas
(e.g. Cloud) – are making open source’s strengths more relevant than ever. As a result, we have in the last
2-3 years seen a step-change in operator interest in, and uptake of, open source software.
Nevertheless, due to five key barriers faced by operators (e.g. legacy systems, lack of software development
skills), open source software is set to represent more of an evolution than a revolution for the industry over
the medium-term, and these barriers need to be overcome if its promise is to be realised.21
“I don’t see an operator in the next twenty years running fully on open source. Or, that
company isn’t a traditional telecoms operator.”
Open Source, Transformation, and Six Key Recommendations
Open source is both an enabler and symptom of telco transformation
The industry’s limited uptake of open source software to date also highlights many of the wider challenges
faced by operators as they seek to transform into more agile, innovative and platform-/ecosystem-centric
businesses: many of its barriers to adoption are not technical or economic (‘external’), but organisational and
skills-based (‘internal’).
For example, during the Telco 2.0 Transformation Index benchmarking exercise STL Partners defined four
key ‘cultural’ attributes for successful telco transformation (focus, system, skills, leadership), and open
source uptake has been shown to either enable or require changes along each of these domains. These are
outlined in Figure 19 overleaf.
Open source software (adoption) is therefore both an enabler and a symptom of operators’ efforts to
transform. From this perspective, its uptake can be seen as another useful (and relatively measurable) ‘lens’
or ‘proxy’ to look at transformation, alongside more traditional measures, such as revenues from new
services.
Of course, adoption also depends on operators’ success in new service areas. To date, this has generally been mixed. For more
information, see the Telco 2.0 Transformation Index.
21
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Figure 19: Four key cultural attributes for successful telco transformation
Source: Telco 2.0 Transformation Index
Six Key Recommendations for Operators
1.
Increase usage of open source software: Overall, operators should look to increase their usage of
open source software across their entire organisation due to its numerous strengths. It must therefore
be consistently and fairly evaluated alongside proprietary alternatives. However, open source software
also has disadvantages, dependencies, and hidden costs (such as internally-resourced maintenance
and support), so it should not be considered an end in itself.
2.
Increase contributions to open source initiatives: Operators should also look to increase their level
of contribution to open source initiatives so that they can both push key industry initiatives forward (e.g.
OPNFV and NFV) and have more influence over the direction these take.
3.
Associate open source with wider transformation efforts: Successful open source adoption is both
an enabler and symptom of operators’ broader transformation efforts, and should be recognised as
such. It is more than simply a ‘technical fix’.
4.
Bring in new skills…: In order to make effective use of open source software, operators need to
acquire new software development skills and resources – likely from outside the telecoms industry.
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Sprint, for example, is hiring PhD candidates as summer workers to develop software in what they call
‘the next workforce’.22
5.
… but bring the whole organisation along too: Employees across numerous functional areas (not
just IT) need to have experience with, or an understanding of, open source software – as well as senior
management. This should ideally be managed by a dedicated team: NTT Group, for example, has
followed this approach with its group-level ‘Open Source Software Center’. 23
6.
New organisational processes: Specific changes also need to be made in certain functional areas,
such as procurement, legal, marketing, compliance and risk management, so that their processes can
effectively support increased open source software adoption.
STL Partners believes that operators who follow these recommendations, and truly embrace open source
software across their organisation, will be best placed to outperform their competitors – both new and old.
22
23
Light Reading, June 3rd 2014
NTT Technical Review, June 2014
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About STL Partners and Telco 2.0
STL Partners delivers original and strategic research, consulting and advisory services for telecoms,
technology and media businesses that seek transformational success in the digital economy. It:

Helps clients create opportunities, make new connections, deal with threats, and drive strategy,
plans and effective actions.

Specialises in changing business models, driving innovation and growth, and is the behind ‘Telco
2.0’ – the leading visionary benchmark for success in Telecoms.

Key practice areas include: Transformation; Disruptive Strategies in Communications, Content and
Commerce; Cloud and Enterprise ICT; and Future Networks.
To get involved, please call +44 (0) 247 5003 or email [email protected] to engage with us through:

STL Partners Research, which includes the Telco 2.0 Executive Briefing Service, in-depth streams
on the key practice areas, and the widely read Telco 2.0 industry blog and newsletter

Bespoke Consulting and analytical services, typically helping clients evaluate opportunities, develop
new propositions and business models, and develop ‘go to market’ strategies.

Expert and interactive support for specific engagements with key market contacts and new
connections.
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About Dialogic
Dialogic inspires the world’s leading service providers and application developers to elevate the performance
of media-rich communications across the most advanced networks. 48 of the world’s top 50 mobile operators
and nearly 3,000 application developers rely on Dialogic to redefine the possible and exceed user
expectations.
Follow Dialogic on Twitter @Dialogic, and visit www.dialogic.com and our social media newsroom for the
latest news, videos and blog posts.
Dialogic is a registered trademark of Dialogic Corporation or an affiliate or subsidiary thereof (“Dialogic”).
Other trademarks mentioned and/or marked herein belong to their respective owners
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