ABI Research forecasts that spending for the virtual mobile packet core, which includes the virtual evolved packet core (vEPC), will exceed that of physical network functions by 2019, topping $8 billion by 2021.

The biggest players for vEPC include NEC, Affirmed Networks, ZTE, Ericsson, and Huawei, according to ABI Research's Mobile Packet Core VNFs and PNFs Market Data report.

Operators such as AT&T, NTT Docomo, and Telefonica are beginning to use network functions virtualization (NFV) to support more customers and services, according to ABI analyst Ahmed Ali. As a result, they are looking at vEPC.

"Given how essential vEPC functions will be to the connected world, the demand for them will continue to increase, creating the largest segment of the core market, which grows at a category annual growth rate [CAGR] of 54 percent," says Ali. In addition to vEPC, the “core market” here refers to virtual IP multimedia subsystem [vIMS], Gi-LAN, and their smaller components and gateways.

In developed markets, the Internet of Things (IoT) is a driving force behind vEPC. Operators have big plans for the IoT market which makes taking the virtualization approach necessary in order to be able to scale the network cost effectively, according to Ali.

As for developing markets, vEPC adoption is not mainly driven by IoT but rather by scaling the network economically just to meet the growing user traffic on 4G networks.

5G is also propelling vEPC. “Overall, virtualization is one of the main aspects of 5G, and operators are expected to gradually deploy more virtualized functions including EPC and aim for highly virtualized networks so they can ease the migration to and convergence with 5G networks,” says Ali.

A recent Ericsson report notes that NFV is a necessity for making 5G successful. The report said that in 2015, deployments of NFV in the core mobile networks started occurring, and the first examples of services deployed with NFV include voice over LTE (VoLTE) and Wi-Fi calling.