Virtualisation entered the consciousness of the telecoms market in 2013, with the introduction of hitherto fringe concepts like software-defined networking (SDN) and network functions virtualisation (NFV).
Throughout 2014 these new approaches to the provisioning of networks and services gathered pace, threatening to turn everything that network operators thought they knew about their market on its head. The fallout from this disruption, though, will surely be felt most keenly over the coming two or three years, as its early implications begin to take solid shape.
Meanwhile, the talk around the industry seems to be of little else: “We’re into a new year, but not a change of topic,” says David Noguer Bau, senior manager for solutions marketing EMEA with Juniper Networks.
“It’s still a hot one. On the technology side I think it’s not so much more disruption we’re going to see as development of standards and wider availability of the technology. It’s probably not going to be until 2016 that we see ‘proof of concept’ projects converting into day-to-day solutions.”
Uri Gurevitz, director of market insight and strategy at vendor Amdocs, agrees that we are still in the early phases of virtualisation despite the heavy coverage afforded to the concept: “Will we see generally accepted standards and a list of success stories by this time next year?” he wonders. “I’m not sure. We’re seeing players like AT&T, NTT DoCoMo and Deutsche Telekom pushing hard.”
It is perhaps to these early pioneers that one ought to turn for an intimation of where SDN and NFV might shortly be taking the rest of the sector.
AT&T certainly turned heads with its ambitious ‘user-defined network cloud’ plan at 2014’s Mobile World Congress.
The carrier’s stated proposal was to virtualise over 75% of its mobile network using SDN and NFV by 2020.
So how has it fared so far? “We launched a first-of-its-kind capability called Network on Demand,” says John Donovan, senior EVP, technology and operations with AT&T. “In just 80 seconds, using a self-service app, customers can adjust their network speeds as needed, and dial back down when traffic recedes.”
He claims the carrier is now building systems that don’t just respond to customer needs, but anticipate them: “SDN helps make this happen,” he explains. “In November 2014, our AT&T Labs Advanced Technologies team launched quality-of-service technology in our data centres that detects which applications a customer is running and intelligently allocates bandwidth for the most critical tasks.”
Since Barcelona, he says AT&T has also begun to virtualise critical network functions such as network analytics, domain name service, intelligent data platform and virtualised provider edge router, improving cycle times and operational efficiency: “What this means is we are laying a foundation so that we can add new features to our services faster than ever before,” he adds.
Last year fellow pioneer NTT Communications unveiled what it claimed was the industry’s first suite of cloud-based network services that can be activated online. The move followed NTT’s acquisition of cloud service provider Virtela Technology Services in January 2014 and leverages that player’s global SDN platform.
“I think 2014 was a disruptive year for the operator, but not the user,” believes Len Padilla, senior director of technology with NTT Europe. “It’s over the next year that we’ll see a true difference in the purchasing of services.”
Other incumbent names are also exploring real-life scenarios – but not in their own backyards just yet. Telekom Austria is piloting virtualisation in the eastern European markets where it has a presence, and Orange is performing a similar experiment in Moldova.
Their notion is to move beyond lab-based experimentation, but in a place where not too much damage can be done should the venture not match expectations.
It isn’t only the major incumbent names which have been busy. Tim Naramore, CTO with Texas-based network operator Masergy, explains that it experimented with the separation of its control and data plane several years ago: “It is part of our DNA now,” he says. “The software model is our way. It’s one of the ways we can compete with incumbents. After all, we certainly can’t outstaff them. We could therefore do things like bandwidth on demand before our competitors because we had that infrastructure.”
He says the company’s next initiative is to push forward with NFV: “We’re working on this in our labs with three different vendors, looking at various models,” he adds. “We’re looking at how you can co-locate NFV where you are virtualising something into the cloud – a router or a firewall.”
A NEW MODEL
NFV is starting to alter operator business models, in particular affecting areas like billing, customer service management and troubleshooting. Operators will soon be looking to deepen their end customer relationships and enable innovations like “try before you buy” and “pay as you earn”.
“It will not be long before tech-savvy, bold enterprises start to realise the benefits made possible by NFV, empowering them to get the most agility out of their cloud investments,” predicts Mervyn Kelly, EMEA marketing director at Ciena.
It is easy to imagine that 2015 will see enterprise applications become increasingly cloud-centric, bandwidth intensive and dynamic in nature, adding to the imperative for the implementation of disruptive technologies able to support greater convergence between the network and the application.
“A practical part of this fusion is the identification of the impact SDN applications and virtualised functions will have on embedded OSS and BSS capabilities,” says Bill Kautz, marketing director of equipment vendor Coriant. “Businesses will only be successful in both utilising existing and rolling our new SDN solutions if the tools already in place will be able to handle the growing demands being placed upon their business.”
Martin Morgan, VP marketing at software vendor Openet, thinks priorities for NFV at BSS level are changing. “A year ago the main driver was reduced cost,” he observes. “While still hugely important, cost is no longer the main driver. Time to market and ability to quickly develop and launch new products and offers is fast becoming the main reason why operators are looking at NFV when it comes to their BSS.”
Virtualised technologies will allow operators to align virtualised, dynamic and elastic infrastructure with the web-based, omni-channel nature of product catalogues, service ordering and provisioning, believes Barry Hill, global head of NFV with Oracle Communications: “It’s at the intersection where network orchestration and business orchestration meet that carriers will make the most of the opportunity currently burgeoning before them,” he envisions.
“Virtualisation and orchestration will have to synchronise at this inter-connection point in terms of data models, nomenclature and descriptions. Work already is well underway, as evidenced by initiatives like TM Forum’s ZOOM project and ETSI’s MANO.”
But it’s not seen as a smooth roadmap by all. Amol Phadke, MD, network services innovation and virtualisation at Accenture, talks of virtualisation as much in terms of challenges as opportunities as operators move from early adoption to full deployment mode in 2015.
“The players that get it right the first time will be able to create a sustainable competitive advantage over the next three to five years,” he believes. “One key hurdle faced by the providers is in the area of upfront investment required to integrate the SDN and NFV components into their IT estate.”
He points out that companies such as Google have been implementing SDN for the last few years but says the lack of a “killer application” and immediately realisable new revenue opportunities are inhibiting operators from following the same track. The next step, he says, is the development of a vibrant application ecosystem: “Much like the App Store concept invented by Apple, the applications for network infrastructures are likely to be a game-changing disruption,” he says.
He expects apps in the areas of security, WAN optimisation, traffic analytics, policy and charging, and application delivery to be developed in the very near future. Already there are inevitable voices questioning the true impact of NFV and SDN.
Bengt Nordström, CEO of Northstream, a Swedish consulting firm that works with a number of MNOs, says that while virtualisation should deliver both capex and opex savings, years of competition between rival vendors have driven down infrastructure costs to the degree where capex overheads are not as high as they used to be.
“The SDN and NFV hype claims that it delivers huge efficiencies for operators,” he says. “The reality is that it doesn’t, unless operators’ adoption involves a review and improvement of their legacy processes and systems as well.”
REAL-LIFE NFV
A typical mobile operator’s cost structure for legacy systems and processes is quite high and so does need change. Identifying huge cost efficiencies in capex and particularly opex will increasingly be a priority for operators.
Years of cost-cutting and downward pressure on vendor prices have only addressed part of the cost structure that operators have.” Others think that while NFV and SDN are both as game-changing as they are disruptive, it is wrong to expect real change to manifest over 12 months.
Pravin Mirchandani, CMO of OneAccess, vendor of one-box solutions for telcos, sees real-life NFV scenarios unfolding over an extended period: “There’s lots to be done – building the infrastructure, testing, trialling, defining. Are they going to go with one of the big five vendors – Cisco, Huawei, Ericsson, Alcatel-Lucent and Juniper? Do they want an ‘end-to-end’ solution? They may be reluctant to trust one vendor, as trust basically means lock-in.”
Timo Ahomäki, CTO of vendor Tecnotree is finding at this stage that his customers have got a lot more questions than there are answers: “Every vendor you talk to has a different view of what the boundaries are,” he says.
“I think we have 24 months or so before we see anything mainstream. A lot depends on how well the initial deployments fulfil their promise. Certainly we should see the cost of building networks come down, particularly where people are using a single vendor.”
Chris Buist, director with advisory firm Coleago Consulting, sees an even longer play, believing the timeline for SDN and NFV as a true disruptive force to be more like 10 years rather than 12 or even 24 months: “People are getting excited about the benefits, but they are still working out which way to go,” he perceives.
“Ultimately these forces will reinvent the industry. We’ll see the industry move into the cloud and become more flexible, scaleable and agile. Then you’ll really see telcos competing with the OTTs.”
The real barrier to speedier deployment, he thinks, is culture: “OTTs act in days, or weeks at worst. Having the technology will only give you the success if you change the culture at the same time. The culture needs to change anyway – regardless of NFV or SDN. It should already be in the heads of telecoms management."
It seems like an opportunity worth waiting for, however long it takes to mature, if the pundits are to be believed. Analyst firms IDC and Gartner both peg the SDN and NFV market to be worth around $11 billion globally by 2018. That sounds like a game-changer by any measure.
