2014/06/27 Network Virtualization & SDN World 2014: CSPs confirm Analysys Mason's NFV and SDN forecasts

At the Network Virtualization & SDN World 2014 event, communications service providers (CSPs) agreed with our analysis that they expect to re-use established OSS to perform service orchestration above the software layer of network function virtualisation (NFV) orchestrators and software-defined networking (SDN) controllers that control NFV and SDN infrastructure. However, the event also highlighted the lack of standards in the industry, which is preventing major vendors from developing APIs for OSS, NFV orchestrators and SDN controllers. This article considers the three main areas – OSS, security and pricing – that need to be addressed if CSPs are to adopt NFV and SDN technologies and move to vNGNs, and provides guidance for CSPs in this area.

The industry needs to address the three main barriers to CSPs adopting software-controlled networking technology

According to Analysys Mason's new report Cloud computing, NFV and SDN: worldwide market sizing and forecast 2014–2018, CSPs will be slow to spend on NFV and SDN technology in the next 5 years (see Figure 1).

Figure 1: Software-controlled networking revenue by market segment, worldwide, 2013, 2018 and 2023 [Source: Analysys Mason, 2014]

Figure 2 provides a summary of market drivers and inhibitors that we identified in our forecast.

Figure 2: Summary of market drivers and inhibitors for the software-controlled networking (SCN) technology markets – cloud computing, NFV and SDN [Source: Analysys Mason, 2014]

Spending on this technology is more likely to increase significantly after 2018, if the following issues are addressed.

• OSS standards. Analysys Mason commented in October 2013 that OSS solutions for end-to-end orchestration will be vital for linking NFV and SDN solutions and delivering maximum benefit from vNGNs.1 We also examined the important role that OSS strategies play in successful transformations to vNGNs.2 However, Tier 1 OSS vendors have been slow to react, thanks to the lack of standards. This is providing opportunities for other established, as well as new, telecoms software suppliers. The work in the ETSI NFV Management and Orchestration (MANO) working group is driving CSPs such as AT&T and NTT Communications to develop their own OSS technology. However, at TM Forum Live! in June 2014, the TM Forum launched its Zero-Touch Orchestration, Operations And Management (ZOOM) project to support the development of open, dynamic APIs, exposing standardised network and management functions at all layers of a NFV architecture, but not SDN.
• Security. CSPs will need to re-architect their software-controlled networks, which will have cloud architecture and move to a perimeter-less security architecture from the traditional perimeter-based security architecture. This will be driven by the need for security of content/data hosted in OTT service providers' cloud servers while users are in motion/transit and at rest. Reliable security will enable CSPs to transform to cloud-enabled business models and will allow suppliers of security systems to enter the telecoms space with endpoint and other security solutions.
• Pricing. The established pricing models and structures will need to change to ensure that cost savings are realised such that CSPs will not pay the same or more (capex and opex) for operationalised virtualised infrastructure than they are paying for established physical infrastructure. These new pricing models will allow suppliers to differentiate themselves from others, and CSPs can use this to differentiate their downstream pricing for digital consumers, both enterprise and residential.

CSPs must prepare their environment for NFV and SDN technology

NFV and SDN technology will have a significant impact on established telecoms infrastructure and software in the next 10 years. CSPs have already established their place in the cloud computing value chain both as suppliers and users. The benefits of virtualising standard IT systems in cloud computing are well understood. CSPs are exploring NFV and SDN to transform their networks to vNGNs during the next 10 years, which will allow them to compete with other CSPs as well as data centre and OTT service providers. However, CSPs will first need to prepare their networks, systems, operations and organisation (people, process, culture) to ensure a successful vNGN transformation.

 Source: Analysys Mason