Two of the key initiatives in the communications industry are upgrading wireless networks to 5G and virtualizing networks. Ideally, they would be interrelated, but instead they are merely parallel. While one of the key benefits of virtualization is that it will free telcos from dependence on one or two key vendors, the unanticipated difficulty of virtualizing coupled with the race to commercialize 5G as soon as possible is driving some service providers to rely on those exact same vendors – for the near term at least.

Managing the tension between these parallel desires is going to be one of the biggest challenges for telcos in the near future. ABI believes it can be done, and in a new report is predicting that large-scale telco cloud deployments will reach global critical mass after 2020, in parallel with the deployment for 5G.

With the announcement of the report, "Telco Cloud Framework and Deployment Roadmaps," ABI Research Director Dimitris Mavrakis explained that telcos are discovering that virtualization is “much more challenging than anticipated.”

SDxCentral caught up with Mavrakis via email and asked him to expand on some of the issues raised in the new ABI report.

What are some of the unanticipated challenges facing telcos looking to virtualize?

Mavrakis: There are several challenges facing telcos who want to run cloud-native networks, with the most important being operational issues. Technology is a big problem, but the industry will eventually work out ways to make things work. For example, telcos can choose a single end-to-end NFV framework from a single vendor today. This enables the agility, flexibility and cloud-native part of the telco cloud story, but in some cases, it sacrifices the vendor-agnostic philosophy.

However, deploying a cloud-native platform is useless if the telco can’t operate in an agile and open way to create new services. If this happens, NFV will suffer the fate of IMS and will be another expensive upgrade that just brings cost savings to the table, rather than service innovation and new business opportunities.

In the technology domain, NFV and telco cloud are currently facing interoperability and multi-vendor integration issues, while trying to identify the best way to introduce open source software into the network. Another major challenge to solve is software licensing business models and how vendors will ensure that they don’t cannibalize their existing hardware-based business but at the same time, create a lucrative business case for telcos to deploy telco cloud.

How are solutions to those challenges evolving?

Mavrakis: There are several initiatives aiming to solve these problems. Several telcos are transforming faster than others, with AT&T and Telefonica being two examples that are embarking on an operational transformation that involves everything between OSS and cloud nodes. Telecom vendors are starting to embrace cloud-native platforms and working with their peers to address the telco demand to reduce lock-in. However, we expect there always will be a tradeoff between a fully vendor agnostic approach versus risk, accountability, and in some cases, cost.

The most recent launch of ONAP that consolidates OpenECOMP and Open-O will provide an industry milestone and will illustrate whether open source can truly be useful in the critical domain of network orchestration, policy, and analytics.

Are any vendors or service providers particularly well-positioned to benefit as the market develops?

Mavrakis: For now, it seems that the large telecom vendors are getting the most business out of NFV and telco cloud, but this may change once initial deployments reach a critical mass. One thing to consider is that each deployment will be tailored to each individual telco (who will mix a unique blend of legacy components, virtualized components, IT infrastructure, open source software, small and large network vendor VNFs), meaning that only large equipment providers have the manpower and capital strength to build significant knowledge and experience to replicate other telcos.

It’s a similar story with telcos also. The Tier-1s have the capital and manpower required to perform an operational transformation, which may create a polarized market. The Tier-1 telcos may become value enablers in new verticals, e.g. transport, logistics, AR/VR, while Tier-2s and Tier-3s may remain in the access business, which will still be profitable. The Tier-1s have the opportunity to 'un-telco' their business and sell to technology end-users directly.

In the short term, telcos are preferring to rely on their trusted vendors to continue this journey.

Photo of ABI Research Director Dimitris Mavrakis.