Operators all over the globe have been grappling for some time with the challenges that network virtualisation brings. As part of this process, network functions virtualisation (NFV) and software-defined networking (SDN) have emerged as key strategies for Tier 1 and Tier 2 telcos that want to fundamentally transform the infrastructure they use to deliver services.
The reasons behind the adoption of this strategy are clear: operators are looking to both lower their capex and opex, and increase revenues. At the same time, they need to operate more nimbly to better compete against over-the-top (OTT) and Web-based players.
Yet while Technology Business Research (TBR) has previously noted that while cost reduction and the ability to offer services more quickly are the main drivers behind the deployment of NFV and software-defined networking (SDN), some operators also view them as critical for their long-term survival.
NTT DoCoMo, SK Telecom and AT&T have taken an early lead in demonstrating the possibilities of NFV and SDN, but European operators are hot on their heels.
Tier 1 mobile operators leading the way in Europe include Orange, Vodafone, Deutsche Telekom, Telefonica, Swisscom, and Telekom Austria. Prominent NFV and SDN vendors include Ericsson -- which has been strongly pushing a "full stack approach" -- Nokia, Cisco, Juniper, HPE and Huawei.
SNS Research noted that Telekom Austria, Deutsche Telekom and Vodafone are spearheading vEPC deployments in Europe. Many European operators including Vodafone have also virtualised their IMS and voice-over-LTE (VoLTE) platforms and the virtualised RAN (vRAN) is also beginning to gain traction.
Ocean: Vodafone's NFV strategy
David Amzallag heads up NFV/SDN at Vodafone, which is working on an NFV strategy codenamed Ocean that will form the basis for the transformation of all 26 national operators within the Vodafone group.
"This requires a very unique strategy and journey," said Amzallag, who added that the Ocean programme has involved a close collaboration among the company's operations, engineering and technology teams that has been "beyond expectation in the past year."
The drivers for Vodafone are to increase operational efficiency, become more agile, lower costs, gain a more holistic overview of the network through a new end-to-end architecture, and essentially achieve a new way to serve customers.
"Over the last two to three years we have already deployed a wide range of VNFs" such as vEPC that are "serving millions of customers already," Amzallag said.
Services for enterprises will also be a primary objective, with SDN- and NFV-based VPN the first service to be launched.
"We are working on this very aggressively," said Amzallag, although he added that there is no specific date for the launch as yet.
Enterprise services a key focus
At Orange, Yves Bellego, the director responsible for network strategy, echoed similar comments from Amzallag by saying that the implementation of NFV services depends very much on the maturity, resilience and capability of each solution.
Orange is clearly adopting a "function by function" approach that will see new solutions launched only when they bring real benefits. It has already been testing an SDN-enabled virtual customer premises equipment (vCPE) solution and plans to introduce this gradually to its customers.
Also like Vodafone, Bellego said Orange will initially focus on providing virtualised services for small and medium-sized enterprises. The company has already unveiled the EasyConnect brand covering services such as IP-VPN, firewalls, web content filtering and other services that could be controlled via a self-care portal, with first launches planned in 2016.
As for residential services, "it's not that clear," said Bellego. "It's a different story."
SNS Research estimates that that service provider NFV investments in Europe will grow at a CAGR of 40 per cent between 2016 and 2020, eventually accounting for over $2.7 billion in revenue by the end of 2020. The present market size is over $500 million, the company said.
Investments include hardware appliances, orchestration and management software and virtualised network functions (VNF) software.
James Bennett, director of SNS Research, noted that the evolved package core (EPC) has emerged as one of the most feasible examples for demonstrating the benefits of NFV in a mobile operator network.
"In Europe, vEPC investments are expected to grow from under $100 million in 2016 to over $450 million by the end of 2020, following a CAGR of 46 per cent. By 2020, SNS Research estimates that nearly 80 per cent of all new EPC investments will be virtualised," Bennett said.
Although NFV and SDN developments are in the early phases, there are already signs that operators are shifting their approaches and their expectations. In addition, there is a curious disconnect between operator rollouts and standardisation processes led by the European Telecommunications Standards Institute (ETSI) that Patrick Filkins, telecoms analyst at TBR, described as "almost unprecedented".
What's more, Filkins said he has also seen an unusually high level of vitriol against vendors, with some operators lambasting the more traditional equipment manufacturers for being slow to respond to their need to become agile cloud service entities.
"They just can't wait," he said. "This is a long process that takes between five and seven years and they need to start now."
Vodafone's Amzallag insisted that relations with vendors are healthy, but he said that Vodafone is in the driving seat when it comes to guidance for its overall virtualisation strategy.
"We are working in joint development with vendors," he said, noting that they are not providing "off the shelf" options because the technology does not exist yet. Vodafone's approach is to remain fully open to all vendors and choose the right vendor for the right solution.
"Almost all of the vendors responded well to Ocean over the last year. They are responding to our requirements and have changed their roadmaps," he said.
TBR makes a good stab at trying to explain the issues that mobile operators face and why some are increasingly frustrated with vendors. In a write-up after the NFV World Congress, analyst Michael Sullivan-Trainor said NFV essentially has two components: the VNF -- virtual network functions -- and the converged infrastructure the VNFs require that is also called NFVI.
"What has happened is that some operators have virtualised their network functions without redesigning the application logic to fully leverage the NFVI," said Sullivan-Trainor.
To take advantage of NFV, explained Sullivan-Trainor, the logic for carrier grade functions needs to be embedded in the NFVI converged infrastructure and the VNF needs to be stripped down to a lightweight set of basic functions that can be provisioned virtually as instances on demand, just like any cloud service. This is commonly thought of as the difference between 'in place' virtualisation and 'cloud native virtualisation'.
"This is why we see pushback from some operators (Telefonica, Vodafone) as vendors are trying to sell, in some cases, 'non cloud-native' solutions," Sullivan-Trainor added.
One of the reasons for this disconnect is that NFV and SDN are, frankly, very difficult to implement.
"The promise of NFV was great," said Filkins. However, the reality is that this will be a highly complex process that will take years to implement. No wonder operators want to start now.