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Much of the material you see on network functions virtualization (NFV) focuses on technical specs, with pretty diagrams about how the technology fits into the ETSI MANO architecture. But what about the business case? Let’s remember that, in the end, moving to NFV will be a business transformation, not just a technology transformation.
In the end, how the VIM connects to the MANO may not matter if global communications operators, the target of NFV technology, can’t figure out how to save and make money with it. Many operators have already done the analysis and decided to make the leap – the case for NFV business transformation is strong. As we’ve covered here in the past, NFV has many potential business benefits. The top three are:
- Capex savings by lowering the price of hardware through standardization
- Opex savings through greater automation and efficiency
- New revenue opportunities by enabling faster time to market
The most vocal global service providers have reiterated these benefits in their public declarations to move to NFV. AT&T calls the move to software-defined networking (SDN) and NFV transformative. The carrier expects to extract the efficiencies of moving to data centers – using innovations in server hardware, virtualization, cloud computing, and open source.
“Domain 2.0 is a transformative initiative, both internal and external, to enable AT&T network services and infrastructure to be used, provisioned, and orchestrated as is typical of cloud services in data centers,” wrote AT&T in its 2020 Vision white paper.
Telefónica CTO Enrique Blanco says that NFV is desperately needed to manage the surging traffic volumes from mobile networks. “For us it means that we can change how we operate, change our governance model, exploit our capabilities in the data center, reduce the total cost of operation by up to 30 percent, and at the same time upgrade our platforms,” he said in a public interview.
So how will NFV business transformation occur? Will it save (or make) money? The main belief is that it can achieve this business goal by reducing the cost of scale. ACG research has published a white paper showing that a common platform, such as NFV, can lower the total cost of ownership of the hardware by as much as 62 percent. The bulk of this savings comes by operating a “shared stack” that can be scaled incrementally to meet demand. This is the cloud model of scalability on demand – by adding modular, standardized components as needed.
Of course, proving out the return on investment (ROI) is always tougher in the real world than it appears in a white paper. But the transition is inevitable – and service providers know why. This is why operators such as AT&T, Telefónica, and others have spent a lot of time drawing up long-range architectural plans.
Some of these real-world deployments are already happening, so let’s take a moment to look at some of the NFV-based services that have been rolled out:
- Service provider Swisscom in February announced it would use HPE’s NFV platform for enterprise services that can be launched using virtual customer premises equipment (vCPE). Swisscom said by enabling services to be deployed with software only and not requiring expensive visits to customer locations, it is already realizing savings on capital and operational spending associated with physical service calls.
- AT&T has rolled out a “Functions on Demand” program, the first part of its 2020 Vision, which provides enterprise customers connectivity-based IT services in the cloud. These include virtual routing, virtual security, and WAN optimization that AT&T has delivered with technology partners including Cisco, Juniper Networks, Fortinent, and Riverbed. The NFV technology model uses a universal vCPE to deliver many network services as software.
- Vodafone has announced what it says is the world’s first NFV-based VoLTE service, which enables customers to buy access to 4G mobile services in the cloud. Vodafone partnered with Huawei on the service, which it said took only eight months to launch.
These service provider examples show that the technology is already coming to market, despite the debate that many analysts have about whether NFV will represent a carrier platform in the future. There is already strong momentum behind the vCPE model for delivering services – and projects such as CORD, backed by AT&T, indicate strong interest in the open data center model for building networks.
What will it take to get the ball moving faster? We need to carefully watch what these operators say about their business results and how NFV helps them build more efficient networks than can drive down opex and capex. As demand for network connectivity continues to scale at an unprecedented rate – and with 5G and IoT approaching – it appears the operators have no choice. They need to develop a less expensive model for scaling networks as soon as possible.