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It's not hyperbolic to say that telecom trends in 2016 will reveal the direction of operator services for years to come. Three revolutionary models for service-building -- the cloud, software-defined networking and network functions virtualization -- have emerged and been tested enough in labs to validate them at the functional level.
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The challenge in 2016, however, is to validate them at the business level.
Cloud computing has been proven in the marketplace by giants like Google and Amazon, and between 2010 and 2013, carrier cloud services topped the list of strategic interests for Tier-1 and Tier-2 operators.
Cisco’s promotion of its Intercloud concept as a means of helping operators build cloud federations to expand their service opportunity is an indication of the strength of interest. Despite that, however, many operators report difficulties in realizing cloud opportunities.
Tom NollePresident, CIMI Corp.
The cloud services market is already highly competitive, and operators tend to focus on opportunities that can be realized in their home regions, despite their interest in federation. Most operators have little cloud sales and marketing experience, added to little experience with cloud operations and technical support. Rumors have circulated that at least one Tier-1 operator was looking to sell off its cloud business.
If NFV succeeds, so does carrier cloud
For operators, telecom trends indicate that 2016 will be the year they either get into the cloud in earnest or scale back their expectations of the cloud as a future source of revenue growth. And one factor that may have a great influence on carrier cloud plans is the development of network functions virtualization (NFV).
Were NFV to be deployed to its full potential, it would create the largest single driver of new data center deployments in the world, offering incredible economies of scale for each operator. The skills and tools used to operationalize NFV would be directly beneficial in reducing cloud opex and improving cloud service agility. The techniques used to create pan-provider services would also work to create pan-provider clouds.
NFV principles could give operators a lower total cost of ownership for cloud infrastructure, even discounting economies of scale. They could improve resiliency, speed new service introduction and attract software partners looking to offer software as a service. Operators are known for their historic tolerance for low ROI, and with the proper support from NFV, they could be credible cloud players. If NFV succeeds, carrier cloud succeeds.
The challenge in 2016 is transitioning NFV from point-service proof-of-concept trials to real, multiservice, optimum field deployments. A look at telecom trends to date shows that NFV success has been confined to special services with relatively little impact on profits or infrastructure for large operators. NFV needs an "umbrella" benefit case that can be built on an incremental basis as services qualify for NFV deployment and create a vision of a single operations model and a single, efficient resource pool.
By the end of 2015, six NFV vendors could credibly address capital savings, opex efficiency and service agility benefits across all credible services, including the cloud. None had fully realized their potential, particularly in the critical area of operations and management automation, upon which opex efficiency and service agility depend.
Operations and management automation needs to develop in 2016 if NFV is to make its business case and achieve optimum deployment. The industry has been groping for a focus for a multivendor NFV management and operations model, but no standard has emerged so far. In 2016, we’ll either see such a focus point develop, or we’ll see NFV progress largely through the work of vendors. In either case, look for more vendors with the "magic" NFV formula to emerge in 2016.
The NFV magic may well come from operations and business support systems (OSS and BSS) vendors and systems. Operators’ existing technology plans for 2016 point to service-specific NFV trials and deployments that invite the creation of technology silos. In theory, these silos could be joined under a common operations orchestration framework. Signs indicate that OSS and BSS vendors are looking to do that very thing. If that happens, most of the NFV business case will migrate upward into operations systems, making them a big issue for 2016.
NFV and SDN challenge traditional switching and routing
The success of NFV and carrier cloud would go a long way toward establishing software-defined networking (SDN) in 2016, as well. SDN value in a large greenfield data center is fairly easy to establish, so a large telecom investment in data centers would create a large SDN opportunity. Today, operators spend more on software than on servers, and if that changes in a big way through the use of distributed hosting, SDN gets a big boost. The trickle-down effect is that NFV and the cloud would increase SDN spending.
Operators have possible missions for SDN in the WAN, including support for tunnel and optical routing. The most compelling probably require SDN to create application communities in the data center that can then be extended to the user in virtual private network (VPN) and VLAN-type services. SDN in the WAN success with network operators, extending NFV and cloud services, would generate a significant deployment and create massive changes in operator investment at Layer 2 and Layer 3.
A mixture of SDN and NFV concepts will appear in 2016 to challenge traditional switching and routing for most business services, if existing telecom trends continue. A VPN or VLAN that is built on switch and router technology today could be created by using SDN tunnels between routers hosted as virtual CPE. Some vendors had proposals on this approach in 2015, and some operators are already trying out the approach, with several committed to significant rollouts in 2016.
Even here, we have a dependency on management and operations modernization. Any service based on virtual components creates a disconnect between managing how the service appears and the resources that actually create it. Virtual VPNs could be presented to users looking like traditional VPNs in a management sense, but network operators themselves have to see what’s really inside a service to maintain the service level agreement. Modernization of OSS, BSS and network management systems could resolve this and sustain efficient management, as well as lower TCO.
Overall, 2016 is a year when operations management could become more than just billing and customer care. If OSS and BSS vendors can link SDN and NFV silos and build service agility and operations efficiency above both SDN and NFV, the opportunities to make a business case for these critical new network technologies will migrate to OSS and BSS systems and vendors. If OSS and BSS vendors fail, then it will be up to those few NFV vendors that can make the broad business case to drive both SDN and NFV forward.
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