Facebook Inc (NASDAQ:FB) has proposed the Telco Infra Project which aims to make hardware and software for communications networks open source. The company is working with telecom equipment companies like Nokia Corporation (NYSE:NOK) and Intel Corporation (NASDAQ:INTC) on the disruptive project that will change the nature of telecom and how telecom companies like Ericsson (NASDAQ:ERIC) and Cisco Systems, Inc. (NASDAQ:CSCO) do business.

The end game of TIP is to create a modular approach to telecommunication networks, allowing for faster and more advanced technologies to provide better service to end users. This will also prevent Telco vendors from selling their conventional highly integrated systems. The project focuses on three parts of telecom networks, the access, backhaul, and core. The access helps the end user connect to the network using cell towers, etc. and other infrastructure which receives and handles the signals. The backhaul takes these signals to the internet through fiber optics or means of communication as data packages and while the data packets move to and from users the core handles them, keeping track of the data allowing telecom operators to manage, route and bill the data packages.

However, this system is old and comprised of telecom technology which is too cumbersome and very inefficient at what it’s doing since layer upon layer of hardware has been added. The changing nature of the Internet and the introduction of new services mean that it is hard to monetize services for carriers. However carriers are held back from upgrading their systems by the fact that they are dependent on their vendors and their products and it is at the liberty of the vendors that innovation occurs. Both end users and carriers thus have to carry the cost of a lack of alternate solutions and Facebook aims to change that.

Carriers like AT&T are switching to a cloud based approach such as AT&T’s software defined infrastructure for which the company is re-engineering its whole network and which is aided by the new wireless solutions of Intel and Ericsson. Facebook is working with Intel, Telekom, Nokia and other companies to create an all new network architecture that bypasses the complexity of traditional networks by applying a modular approach. While vendors like Nokia are heading the change, other more traditional vendors such as Ericsson, Huawei and Cisco will face the fallout of the shift in demand towards more modular technologies.

TIP’s aim is to create an open standard for modular networking equipment that will hopefully lead to reduced costs and greater efficiencies for carriers. Vendors will have to adapt to the change in direction towards modularity in their product offerings. While the open standards fuelled interoperability will certainly hurt companies like Cisco that consolidate business through highly integrated offerings, for now it seems that both sorts of networks will remain as it might too expensive for all carriers to change their networks to open standards in the short term.