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Summary

Network functions virtualization (NFV) is an opportunity for communication service providers (CSPs) in emerging markets to close the traditional services time-to-market gap over operators in developed markets. Traditional network upgrade cycles – for example, the migration from 3G to 4G – take around 10 years, and upgrading network service functionality was slow and cumbersome. But with NFV, operators in emerging markets can shorten the time it takes to bring a service (such as voice over LTE, or VoLTE) to market compared with peers in developed markets by a couple of years, to just three to four years.

SDN/NFV still just a tier-1 operator reality, but emerging markets build it into their new mobile-fixed network contracts

Some tier-1 CSPs have launched software-defined networking (SDN) and commercialized NFV-enabled services. For instance, since the launch of AT&T's Network on Demand in 2015, more than 1,200 businesses across multiple industries have signed up for the solution, which offers numerous virtualized services (e.g., virtualized access routers for enterprises). AT&T's goal is for 75% of its network to be NFV-ready by 2020.

On the other hand, numerous other tier-1 telcos are yet to commercially deploy SDN/NFV, but we predict 2017 will be the year that a lot more dominant operators commercialize such services. So far, SDN/NFV upgrades have been led by operators in western Europe, Japan, and the US. As is typical in Asia, a lot of other tier-1 market players are choosing to wait and see the successes of NFV before commercializing these.

Meanwhile, we are seeing more emerging market operators in Asia sign vendor contracts that involve reorganizing their fixed and mobile networks into cloud-based infrastructure, ready for 5G and IoT, and that includes incorporating SDN/NFV upgrades into the contracts. Globally, the first services that are being virtualized include EPC and IMS. Some operators are virtualizing both at the same time, while others are prioritizing one first, such as IMS, if the immediate strategic goal is to commercialize a VoLTE service.

For emerging operators, NFV allows them to bring a new service (such as VoLTE) to market faster than the old network upgrade cycle allowed, and that brings them closer to their developed market peers in terms of lowering costs and monetizing new business opportunities.

Appendix

Further reading

Future of VoLTE for Consumers,TE0009-001568 (November 2016)

Evaluating Network Strategies for VoLTE, TE0006-001257 (August 2016)

Author

Nicole McCormick, Practice Leader, Broadband and Multiplay

nicole.mccormick@ovum.com

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