The future is cloudy: NFV 2020 part II

I have received some comments after my previous post arguing that maybe the future of SDN and NFV is not as far as I am predicting. As we are all basking in the pre Mobile World Congress excitement, inundated by announcements from vendors and operators alike trying to catch the limelight before the deafening week begins, I thought I would clarify some of my thoughts.

We have seen already this week some announcements of virtualization plans, products and even deployments.

One of the main problems with a revolutionary approach such SDN and/or NFV implementation is that it suggests a complete network overhaul to deliver its full benefits. In all likeliness, no network operator is able to operate fully these kind of changes in less than a 10 years' timescale, so what to do first?

The choice is difficult, since there are a few use cases that seem easy enough to roll out but deliver little short term benefits (vCPE, some routing and switching functions...) while the projects that should deliver the highest savings, the meaty ones, seem quite far from maturity (EPC, IMS, c-RAN...). Any investment on this front is going to be just that...an investment with little to no return in the short term.

The problem is particularly difficult to solve because most of the value associated with virtualization of mobile networks in the short term is supposedly ties to capex and opex savings. I have previously highlighted this trend and it is not abating, more like accelerating.

Islands of SDN or NFV implementations in a sea of legacy network elements is not going to generate much saving. It could arguably generate new revenue streams if these were used to launch new services, but today’s focus has been so far to emulate and translate physical function and networks into virtualized ones, with little effort in term of new service creation.

As a result, the business case to deploy SDN or NFV in a commercial network today is negative and likely to stay so for the next few years. I expect the momentum to continue, though, since it will have to work and to deliver the expected savings for network operators to stand a chance to stay in business.

The other side of this coin is the service offering.  While flexibility, time to market and capacity to launch new services are always quoted as some of the benefits of network virtualization, it seems that many operators have given up on innovation and service creation. The examples of new services are few and far between and I would hope that these would be the object of more focused efforts.

At last, it seems that maybe one of my previsions will be fulfilled shortly, a friend pointed out that this year's GSMA freebee for its member at the show will be... a selfie stick.

LTE World Summit 2014

This year's 10th edition of the conference, seems to have found a new level of maturity. While VoLTE, RCS, IMS are still subjects of interest, we seem to be past the hype at last (see last year), with a more pragmatic outlook towards implementation and monetization. 

I was happy to see that most operators are now recognizing the importance of managing video experience for monetization. Du UAE's VP of Marketing, Vikram Chadha seems to get it:

"We are transitioning our pricing strategy from bundles and metering to services. We are introducing email, social media, enterprise packages and are looking at separating video from data as a LTE monetization strategy."

As a result, the keynotes were more prosaic than in the past editions, focusing on cost of spectrum acquisitions and regulatory pressure in the European Union preventing operators to mount any defensible position against the OTT assault on their networks. Much of the agenda of the show focused on pragmatic subjects such as roaming, pricing, policy management, heterogeneous networks and wifi/cellular handover. Nothing obviously earth shattering on these subjects, but steady progress, as the technologies transition from lab to commercial trials and deployment. 

As an example, there was a great presentation by Bouygues Telecom's EVP of Strategy Frederic Ruciak highlighting the company's strategy for the launch of LTE in France, A very competitive market, and how the company was able to achieve the number one spot in LTE market share, despite being the "challenger" number 3 in 2 and 3G.

The next buzzword on the hype cycle to point its head is NFV with many operator CTOs publicly hailing the new technology as the magic bullet that will allow them to "launch services in days or weeks rather than years". I am getting quite tired of hearing that rationalization as an excuse for the multimillion investments made in this space, especially when no one seems to know what these new services will be. Right now, the only arguable benefit is on capex cost containment and I have seen little evidence that it will pass this stage in the mid term. Like the teenage sex joke, no one seems to know what it is, but everybody claims to be doing it. 

There is still much to be resolved on this matter and that discussion will continue for some time. The interesting new positioning I heard at the show is appliance vendors referring to their offering as PNF (as in physical) in contrast and as enablers for VNF. Although it sounds like a marketing trick, it makes a lot of sense for vendors to illustrate how NFV inserts itself in a legacy network, leading inevitably to a hybrid network architecture. 

The consensus here seems to be that there are two prevailing strategies for introduction of virtualized network functions. 

1. The first one, "cap and grow" sees existing infrastructure equipments being capped beyond a certain capacity and little by little complemented by virtualized functions, allowing incremental traffic to find its way on the virtualized infrastructure. A variant might be "cap and burst" where a function subject to bursts traffic is dimensioned on physical assets to the mean peak traffic and all exceeding traffic is diverted to a virtualized function. 
2. The second seems to favour the creation of vertical virtualized networks for market or traffic segments that are greenfield. M2M and VoLTE being the most cited examples. 

Both strategies have advantages and flaws that I am exploring in my upcoming report on "NFV & virtualization in mobile networks 2014". Contact me for more information.