The 4 Major Drivers for Investment in NFV

Over the years, we have seen solutions from TM Forum and CableLabs that help standardize certain aspects of the CSP plant and similar initiatives in the CPE world with Reference Design Kit (RDK) and reference board designs for set-top boxes from System on a Chip (SOC) manufacturers. The problem is that key value-add services diverge from vendor to vendor. There is no standardization on how to implement vendor-specific capabilities, which often limits a CSP’s ability to offer new services in a heterogeneous environment. Ultimately, a CSP is often left with unsupported end-of-life equipment — with fork lifting the equipment to the trash as the only step forward.

This is one of the major hurdles that providers hope to cross with network function virtualization (NFV). The landscape as we know it will change forever with the introduction of this innovative technology, and now is the time to explore business drivers for adoption.

An Analysys Mason Report forecasts that NFV elements, starting in the mobile core, are likely to mature within the next three years. Here are the four major drivers for investment in NFV:

1. Reduce CAPEX and OPEX — Operators undoubtedly want to reduce costs without losing their capabilities at the network function level. By gaining flexible virtualized functions, an operator can improve utilization and power density, simplify their operations, and in turn, reduce CAPEX and OPEX investments. Analysys Mason forecasts CSPs spent USD101 billion on telecoms hardware worldwide in 2013. They expect that number to decrease with NFV and software-defined networking (SDN) hardware spending to just USD18.5 Billion by 2023.
2. Optimize network technology and capabilities — As service offerings continue to change, operators need the ability to optimize their infrastructure capabilities to maximize performance and widen their incoming revenue stream. By using virtual elements on their networks, MSOs are able to support new service priorities and then capitalize on new business opportunities.
3. Increase service agility — Gaining a flexible network is crucial for ensuring faster time-to-market for new services and adjusting functions to improve subscriber quality of service during high-usage periods. With NFV, operators gain the ability to dynamically adjust network functions on the fly while also decreasing time-to-revenue when launching new services.
4. Improving Customer QoE — Customers have clearly indicated that they want customized services and on-demand service offerings. An agile, virtualized solution not only allows customers to define their own services, but it also empowers service providers to maximize the price elasticity of demand-per-subscriber with an on-demand service portfolio.

This is by no means the complete list of the benefits offered by NFV. The technology is still quite young; however, I would expect that by the end of 2015 we will start seeing NFV production solutions available to coincide with DOCSIS 3.1 rollouts.