Operators are still taking their first steps on the long and difficult journey towards network function virtualization (NFV). A few operators are pressing ahead with the transition, but most are daunted by the multiple challenges posed by NFV, and some are pausing investment while they wait for clearer direction from standardization bodies and their peers.
Progress towards NFV has been slow or (in many cases) imperceptible, despite the compelling benefits the technology promises: a new level of business agility, lower operational costs, and the ability to compete against Cloud-based companies. We detected a collective pause in the exponential growth of this market from its small base in 2016. Operators are consolidating their achievements thus far and assessing the next round of challenges. We do not expect growth in NFV to pick up significantly for another 2 years. Operators need time to absorb early lessons, take strategic technology decisions and carry out the organizational and cultural changes that are vital to the technology’s success.
Three major challenges have overshadowed adoption of NFV from the outset. Resolution of these challenges will require extraordinary effort and commitment.
NFV involves a variety of still-evolving technologies.
Most of these are alien to telecoms operators. Operators that can draw on enterprise/IT divisions with experience of Cloud will have an advantage in implementing NFV, but even they are finding it difficult to keep up with the pace of change. Cloud technologies also need to be implemented holistically, rather than sequentially or only in part, which compounds the challenge.
NFV operations differ fundamentally from classical network operations. Operators must borrow heavily from IT in designing their operations, but make telecom-specific adaptations. The pioneers of NFV operations are following their own paths. They are developing proprietary functionality and pivoting regularly to address their individual concerns. This is causing market fragmentation and uncertainty for both vendors and other operators that want “standard” blueprints to follow.
Ignoring NFV is a high-risk strategy.
Operators that refuse to rise to the challenges of NFV risk being bypassed by competitors with the competence to apply Cloud technologies to the network. Operators may have halted investment, waiting for clearer direction from the market, but technological innovation will not stop.
Virtualization is a pervasive industrial trend. NFV democratizes networking technologies and lowers barriers to telecoms-market entry for web-scale companies, large enterprises, and new start-ups. Leading proponents of NFV among operators anticipate an unrecognizable networking landscape in 2020, due to developments in the technology that will by then have become mainstream. These developments include programmable, elastic IP/optical networks, virtualized core routers, mobile cores running on Raspberry Pis, Cloud-RANs with baseband units located hundreds of miles from cell sites, and granular container-based L4-7 network functionality, which will be consumable on-demand. These innovations will enable new, disruptive business models and services. Operators must begin the difficult transformation to NFV now or they will be left even further behind as network innovation accelerates.
Stamina and determination throughout an organization are essential for success in NFV.
It takes courage and resolve to tackle NFV, and this must be present from the highest to the lowest levels within an organization. Operators need exceptional levels of coordination across their businesses to succeed in NFV. Telefonica’s joined-up messaging, open lines of communication between executives charged with NFV, Cloud, 5G and operations, and its strong organizational vision for future network architecture, are impressive in this respect. Other operators successfully implementing NFV similarly emphasize collaboration across functional boundaries and the ability to agilely pivot their organizations.
Software mastery is key to virtualization and NFV leaders have stressed the necessity of advanced software skills in-house. Examples of this trend are AT&T’s creation of ECOMP, Telefonica’s founder membership of Open Source MANO, and investment by other operators in innovative software start-ups and Cloud companies to gain access to DevOps/agile software development skills.
We are confident that the pause in operators’ investments in NFV is temporary, caused by the realization of many that NFV requires a much more complex and far-reaching transformation than they first thought. The trailblazers in NFV reached this conclusion over 2 years ago, and have strengthened their commitment to maintain momentum. Some less-prepared operators are not currently showing the same level of commitment, but NFV is not going away, not least because a remarkable amount of progress towards it has already been made. However, not all today’s household operator names will survive this radical market transition unless they demonstrate greater commitment to the success of NFV.
For further details, see Analysys Mason’s Report Software-controlled networking: worldwide forecast 2016–2020. Visit http://www.analysysmason.com/Research/Content/Reports/SCN-software-forecast-Nov2016-RMA16/.