NFV Business Case Digest, July 2014.
Telecommunications’ digital markets are growing rapidly. We have made remarkable advances toward enabling ubiquitous access to communication networks. Better yet, we get to experience wave after wave of surprisingly innovative services with no end in sight. Unfortunately, network providers claim that massive data traffic growth and unpredictable pent up demand are taxing infrastructure and management systems key to making things happen.
Network operators face situations where they are unable to expand capacity either fast or reliably enough. This is not just about generating demand for new services but, most importantly, meeting expectations for the one that presents itself. These network effects, in economic terms, are even more acute when addressing sudden viral consumption, specially when rich and increasingly immersive media is involved.
This discussion boils down to economics. The issue is that necessary investments in infrastructure upgrades and/or technology swaps can make scaling be cost prohibitive. Long story short, this happens when becoming a victim of one’s own success, as well as that of others’ such as OTT (Over The Top) third party services leveraging the network for transport. Truth to be said, some network operators have openly shared that there have also been a number of cases where [a] marketing myopia and [b] operational latency either blindly dismissed timely progress and/or caused missing a market’s new opportunity window altogether.
NFV (Network Functions Virtualization) is an emerging technology, a game changer which is thought out to come to the rescue. So far, NFV has been confined to the labs given the need to first explore “the art of the possible.” There also is a need for preventing unnecessary hype and vaporware from undermining the conversation. Rapid prototyping and PoC (Proof of Concept) illustrating NFV’s potential under a variety of use cases happen to genuinely excite the telecommunications industry. And this is true for both technical and business sides. Therefore, the following topics are now center stage to NFV’s evolving narrative:
- service delivery levels – validating claims for improved efficiencies and dynamic network behavior while meeting SLA (Service Level Agreements), resilience, availability and serviceability at any scale
- operations lifecycle – conducting real life operations in production environments with live networks, while coexisting with complex conventional and legacy systems
- business case – translating use cases into business cases, spelling what’s achieved at each stepping stone in the NFV journey, beyond just positioning the overall vision’s end goal and theoretical impact
I’m trying to get a pulse for where the industry is regarding the third item. The “digest” that follows is based on what’s publicly available online at the time of writing this: these are materials that everyone has access to. Please let me know if there were any other worth adding.
“Houston, we’ve had a problem” – Jim Lowell, Apollo 13.
“Competition in the telecommunications marketplace is becoming more intense, network operators are still struggling with disparate systems each with different access, delivery and presentation methods. Services often come from multiple vendors, and those who use these systems, spend valuable time accessing separate information services (…) networks are populated with a large and increasing variety of proprietary hardware appliances. To launch a new network service often requires: yet another variety of box, finding the space, power… leading to increasing costs of: real estate, energy, capital investment in infrastructure, hiring manpower (necessary to design, integrate and operate increasingly complex hardware-based appliances), refresh cost (hardware based appliances rapidly reach end of life, requiring refresh cost, reintegration cost, deploy cycle to be repeated with little or no revenue benefit).” “Understanding the Business Case for Network Functions Virtualization” by calsoftlabs.
“[Today] a particular function is scaled up by adding the exact card for that function, and when you run out of room in the box, you’ve got to install and configure another box. What NFV promises is freedom from boxes, in a sense. You’d still need equipment, but a function could grow by being activated in as many instances as necessary. ‘That’s the problem. We’re running at box scaling rules and we have to get to Web scale,” Weldon said (…) Virtualization is important because it’s happening on the data-center side (…) NFV sometimes gets described as an attempt to bring cheaper hardware into telecom. But the real benefits are in scaling, not penny-pinching. By escaping that box paradigm and working on a virtualized basis, operators would be able to deploy functions more quickly, and scale them up and down at will.” “Alcatel-Lucent CTO States the Case for NFV,” and interview with Marcus Weldon by LightReading.
“What a wonderful world” – Louis Armstrong recording.
“Network Functions Virtualization (NFV) is a telecom led initiative that aims to utilize standard IT virtualization technology to consolidate many telco network equipment types onto industry standard high volume servers, switches and storage. NFV involves implementing network functions in software that can run on a range of industry standard server hardware, and that can be moved to, or instantiated in, various locations in the network as required (…) with a promise to drive significant CapEx and OpEx reductions. NFV is poised to transform the entire telco infrastructure ecosystem. Mind Commerce estimates that global spending on NFV solutions will grow at a CAGR of 46% between 2014 and 2019. NFV revenues will reach $1.3 Billion by end of 2019 (…) Early NFV deployments will target virtualization of the mobile core (EPC) and IMS (IP Multimedia Subsystem) services.” “The Network Functions Virtualization (NFV) Market: Business Case, Market Analysis & Forecasts 2014-2019” by Mind Commerce.
“The telecom industry is at the edge of a major paradigm shift and moving closer to IT industry practices and scale economies. This is driven by digitalization of all things and follows quickly on the heels of 4G network deployments and the recognition that mobile broadband networks are essentially distributed supercomputers. SDN will sweep through the IT industry and set the stage for SDN/NFV to transform the telecom mobile broadband industry. ABI Research’s view is a virtualized telecom market of $5 billion to $6 billion by 2018.” “The SCN and NFV Business Case” by ABI Research.
“Global wireless CapEx is on the rise, as operators deploy LTE and Heterogeneous Network (HetNet) infrastructure, amid growing demands for high-speed mobile broadband mobile connectivity. By eliminating reliance on expensive proprietary hardware platforms, Network Functions Virtualization (NFV) and Software Defined Networking (SDN) promise to reduce the CapEx burden on wireless carriers. In addition, both technologies can significantly slash OpeEx due to a reduction in physical space, labor and power consumption (…) By 2020, SNS Research estimates that NFV and SDN investments on the RAN segment alone will account for over $5 Billion. These investments will primarily focus on cloud RAN (C-RAN) deployments, based around the idea of replacing traditional base station modes with a centralized basedband processing pool serving a number of distributed radio access nodes.” “The NFV, SDN & Wireless Network Infrastructure Market: 2014-2020” by Signals and Systems Telecom.
“All things are numbers” – Pythagoras. “There is no unique picture of reality” – Stephen Hawking.
“Network Functions Virtualization (NFV) explicitly targets the two biggest problems facing network operators: bringing costs in line with revenue growth expectations and improving service velocity (…) NFV was launched by network operators (…) SDN was conceived by data center operators to address data center network complexity and cost issues.” “NFV is an opportunity changing network operator’s business models,” by Michael Kenney on FierceTelecom.
“Benefits for network operators and their customers: reduced operator CAPEX and OPEX through reduced equipment costs and reduced power consumption, reduced time-to-market to deploy new network services, improved return on investment from new services, greater flexibility to scale up, scale down or evolve services, openness to the virtual appliance market and pure software entrants, opportunities to trial and deploy new innovative services at lower risk.” “What is Network Functions Virtualization?” by ETSI NFV Industry Specification Group.
“The attention has been primarily on revenue generation, with standardization bringing efficiency to the network transformations and finding what services we can drive end-to-end in the digital services space (…) It’s really about scale (…) the real value is what the operators have begun saying occurs on a network scale, taking the concept of programmable network by virtue of implementing a software defined network (SDN). But there is a great deal of programmability automation that comes with the orchestration promised in NFV.” “The business case for NFV,” a tmforum interview with Michael Sullivan-Trainor.
“The work delivered two results we had not necessarily expected. Even a simple application like DNS can benefit clearly from running on an NFV platform. Processes such as scaling, software upgrading and healing are greatly simplified, which increases agility and significantly lowers total cost of ownership (…) service providers can start small on the road to NFV. It is not necessary to deploy many virtual network functions all at once. Of course, sharing the infrastructure will provide the full benefits.” “NFV Insights: Making the [Business] Case for NFV” by Joaquin De La Vega Gonzalez-Sicilia on TMCnet Bloogers.
Read the analysis behind this table on “Business Case for Moving DNS to the Cloud” by Alcatel-Lucent.
“Toto, I have the feeling we’re not in Kansas anymore” – Dorothy, Wizard of Oz.
“The pervasive benefits of NFV can be exploited today (…) By deploying NFV orchestration, the fundamental framework to automate the network will be in place. This paves the way to incrementally adopt SDN to support NFV (…) The people challenges for NFV and SDN are not to be underestimated as manual, craft-sensitive processes are automated and operations are dramatically revamped. Exposing network programmability where it did not previous exist necessitates that networking people become software people for network operators to cross the chasm into the software-intensive NFV/SDN universe.” “NFV Insider’s Perspective, Part 2: There’s a Network in NFV – The Business Case for SDN” by Marc Cohn at sdn central.
“Nearly every operator surveyed will deploy SDN or NFV in some aspect of their network at some point. This is the year that SDN and NFV move from the lab to field trials. Over the coming months, a few operators will move to actual commercial deployments, mostly specific NFV use cases, but only a few. It won’t be until 2015 that we’ll see commercial deployments kick into motion, still most likely on a limited basis, as operators put one or two use cases to the test under real world conditions, in their live networks (…) Survey respondents rated business vE-CPE (using NFV for the delivery of services to business/enterprises) the #1 cuse case overal for NFV in 2014-2015; business vE-CPE is also ranked the top use case for revenue generation. Meanwhile, back office OSS/BSS was cited as the biggest barrier to deploying NFV by respondents.” “SDN and NFV Strategies: Global Service Provider Survey,” by Michael Howard at Infonetics Research.
“The cloud computing market is mature but the network function virtualization (NFV) and software-defined networking (SDN) markets are still nascent. We forecast that NFV and SDN drivers will start to overpower inhibitors in 2016 (…) the worldwide NFV market will grow from USD 181 million in 2013 to USD 2.4 billion in 2018; worldwide SDN speding by CSPs and data center providers (DCPs) will grown from USD 319 million in 2013 to USD 3 billion in 2018; and worldwide cloud computing spending by CSPs only will grow from USD 3.9 billion in 2013 to USD 7.6 billion in 2018.” “Cloud Computing, NFV and SDN: Worldwide Market Sizing and Forecast 2014-2018,” by Glen Ragoonanan at Analysis Mason.
“ETSI has created the NFV ISG to define the requirements and architecture for the virtualization of network functions and to address their technical challenges: ensuring that virtualized network platforms will be simpler to operate than what exists today; achieving high performance virtualized network appliances which are portable between different vendors and with different hypervisors; achieving co-existence with legacy hardware based platforms whilst enabling an efficient migration path to fully virtualized network platforms which re-use operator BSS and OSS; management and orchestration of virtual network appliances while ensuring security from attack and misconfiguration; maintaining network stability and service levels without degradation during appliance load and relocation; ensuring appropriate level of resilience to hardware and software failures, enabling the creation of virtual network appliances which will run, ideally without recompilation, on any hypervisor and hardware ‘on the fly’ into the network operators’ existing management and orchestration systems; analyzing requirements for future technical specification and standards; minimizing energy consumption.” “Network Functions Virtualization – Introductory White Paper” by ETSI NFV Industry Specification Group. Update.
Picture credits: Wikipedia. Click on the picture to display the source. Figure 17 and related report provided by courtesy of Alcatel-Lucent, see video version.