Operators take the next step with NFV

Written by on April 15, 2015 in Guest Blog with 0 Comments

male hand touching virtual screenMobile operators are struggling. For decades they have focused on expanding networks to improve capacity and coverage, attract new customers and grow revenues. During this period, billions has been invested to bolster the performance of traditional operator services like voice and SMS, then to support growing demand for data services when mobile internet became popular, and it hasn’t stopped since. Operators have continued to invest in their network deployments, with IDC predicting a collective $370 billion has been spent on rolling out 4G alone, but now the game has changed. OTT players are aggressively stealing revenues, ARPU has fallen dramatically, and operators are at risk of being labelled dumb pipes. Providing a robust and reliable mobile network is no longer enough to guarantee commercial success. Instead, being able to compete with internet players has become a necessity and Network Functions Virtualisation (NFV) holds the key.

Fuelled by growing competition from flexible internet players and the steady adoption of mobile applications in place of traditional operator services, network virtualisation has captured the attention of carriers worldwide. NFV has been making waves in recent years as it represents the evolution of mobile networking, promising to virtualise physical network infrastructure and create an environment that’s more adaptable than the legacy systems currently in use. When operators first introduced this concept as part of the ETSI ISG in 2012, hardware-related CAPEX and OPEX reductions were considered to be the main drivers behind the adoption of virtualisation. In the last six months, however, service agility has overtaken these traditional considerations to become the fundamental reason behind the move.

The problem operator’s face, and the reason NFV has become so important, is legacy networks are notoriously difficult to modify or upgrade which gives internet players a distinct advantage. As software that runs on top of a traditional hardware-based network, OTT applications can be rolled out almost immediately. They can also be ripped down overnight when no longer commercially viable. Given the popularity of IP-based voice and messaging, it’s no surprise Juniper Research has predicted that operators lost $14 billion in revenues to OTT providers in 2014 alone. Unlike these internet players, operators are constrained by the inflexible nature of physical hardware, which means launching a new service can take months. Not only is this a time consuming process, it’s incredibly expensive and doesn’t allow much room for manoeuvre when it comes to competing with OTT giants that have already made their mark on the mobile ecosystem.

What’s the benefit?

NFV is fundamental to reversing Juniper’s prediction. The transition from hardware-based to software-defined networks will simplify process management, reduce operational expenditure and let operators make changes to existing infrastructure in minutes rather than days. In essence, NFV is the key to unlocking a mobile network’s hidden potential. It’s a tool that will help operators escape being branded as data transporters or dumb pipes, and allow them instead to fulfil the role of an integrated communications service provider.

Where’s the money?

It’s widely accepted that this technology will lead to new revenue streams, with a sizeable chunk coming from enterprise-focused business units. Virtualisation will allow operators and their clients to share the burden of development, taking advantage of the increased network agility that a virtualised, server-based environment can offer to roll out new enterprise services as and when required. There’s no way this could be achieved with a legacy network as the development cycle is too long, but with NFV an operator’s enterprise customers will have the ability to quickly launch new services for their employees and customers in response to changing market developments.

The cost savings offered by NFV cannot be ignored either, especially as operators are still working to recoup their significant investments in 4G. Transforming the network environment in this way will lower the total cost of ownership through better asset utilisation and OPEX savings. There’s also a growing train of thought within the industry that network virtualisation will help operators to become truly global service providers, shedding their dependence on localised hardware and turning instead to server-based software. But this will be a gradual process, as operators cannot move to NFV overnight and are currently still reliant on the deeply engrained physical network architecture they have spent decades building.

What’s the challenge?

Despite the many benefits, NFV is not without its challenges. For one, moving to a fully automated and virtualised network environment makes network management far more complicated. So, to move as quickly as the OTT competition can, operators will need to work with a service assurance provider that can keep up. There has always been a heavy reliance on monitoring and troubleshooting legacy networks to identify where subscribers are having issues. This approach has been streamlined in recent years to the point where network problems can often be resolved before the subscriber even becomes aware of them. Adopting effective test and measurement tools is arguably even more important for a virtualised environment to ensure subscribers do not experience anything less than stellar network performance, particularly if operators will be looking to sign those subscribers up to their new branded services.

What’s next?

Perhaps the biggest challenge operators will face though is the social implications of moving to a virtual network environment, as NFV represents an organisation challenge as well as a technical one. Virtualisation will lead to a fundamental change in the way networks are controlled, which will require a completely different approach to employee management. Network engineers and support teams that have worked with physical infrastructure for decades will need to redesign their existing processes. It’s inevitable that there will be a period of adjustment for an operator’s workforce, which may generate additional jobs as new skillsets are required. Although NFV does represent a cost saving in the long run, operators will need to factor in staff training to ensure their workforce also makes the transition from a physical to a virtualised environment.

Ultimately, NFV is an enabling technology. It is not a silver bullet, but it is an essential cog in a much larger machine working to revolutionise mobile networking. Moving to a virtualised network will give operators a more flexible working environment and the ability to roll out their own branded services. But it’s only by delivering the same quality of experience that subscribers have come to expect from the legacy network that NFV will truly make its mark on an operator’s bottom line.

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About the Author

About the Author: Ravi Chittimoori is currently Senior Product Manager and lead on network virtualisation and NFV at Tektronix Communications. Ravi has an MBA from the University of Texas and a background in computer science and engineering. Prior to joining Tektronix Communications, Ravi was a software design engineer for Inet Technologies. .

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