02 Mar 2015

NFV: Reducing the burn rate for operators

Ravi Chittimoori, Senior Product Manager with Tektronix Communications, looks at network functions virtualisation, NFV and how this can help operators reduce burn rate.

Operators have been feeling the pressure for some time. Today’s subscribers are making fewer calls and sending fewer texts using traditional services and instead are relying on IP-based alternatives from disruptive players like WhatsApp and Skype.

Although this has led to a steady increase in data usage year-on-year, the shift to an app-centric mobile environment and growth of universally popular “chat apps” has caused a steep decline in traditional voice and SMS revenues.

In this environment operators have found themselves on the back foot, inadvertently providing a reliable data network for OTT applications to thrive upon without seeing any reward, but in 2015 the tides look set to turn.

With ARPU falling dramatically and operators at risk of being labelled dumb pipes the ability to compete with internet players has become a necessity, and it’s widely recognised that network functions virtualisation, NFV, holds the key.

NFV background

Physical network hardware is notoriously difficult to modify or upgrade, which explains why OTT players have had a distinct advantage over operators in recent years. Introducing a software patch or rolling out a new service on a physical network can take months to complete, compared to launching a software-based internet platform that can be deployed almost immediately and run over the top of existing hardware.

Not only is upgrading a physical telecoms network a time consuming process, it’s also expensive and has left operators lagging behind their more nimble, internet-based, competitors. Therefore, to reverse declining ARPU and derive more value from their network assets, operators must be able to launch new services or update their existing offerings in a matter of days rather than months. NFV can make this a reality.

NFV has been making considerable waves in recent years as it represents the evolution of mobile networking, promising to virtualise physical network infrastructure and create an environment that’s far more adaptable than the legacy systems currently in use.

When operators first introduced this concept in November 2012 as part of the ETSI ISG, hardware-related CAPEX and OPEX reductions were considered the main drivers behind the shift to virtualising traditional network functions.

More recently however, service agility has overtaken these considerations to become the fundamental driving force behind the move, especially now the restrictive nature of legacy infrastructure is understood and the comparable flexibility of NFV has been recognised.

NFV advantages

NFV lets operators adopt the OTT culture of ‘quick failing’ for the first time, trialling innovative services in rapid succession at a much lower cost and greatly reduced burn rate. With the elasticity and flexibility offered by a virtual network, coupled with visibility into what traffic is crossing it, a virtualised network environment will give operators full control over how they prioritise their own branded services. Not only will this approach help increase loyalty as subscribers become accustomed to the greater quality of service they receive at the hands of their operator, it will also generate new revenues from the branded applications they deliver. In turn, faster innovation rates will let operators address entirely new business models and opportunities at a lower risk through the increased agility offered by their core network assets. From reducing OPEX to offering unparalleled service agility, NFV is also fundamentally important for helping operators recoup the billions of dollars they have spent on expanding LTE coverage, which IDC recently predicted to be as high as $370 billion.

Over the past 12 months several trials have been conducted and teething problems have been ironed out, which has bolstered support within the industry for replacing traditional hardware functions with software-based elements. Indeed, Infonetics predicts the NFV market will be worth $11 billion by 2018. With new reports suggesting operators are looking to implement a number of virtualised elements into their existing networks, we can expect a flurry of commercial activity in the coming months and a vastly different telecoms landscape starting to evolve by the end of the year.

NFV challenges

However, despite the many benefits, NFV is not without its challenges. For one, moving to a fully automated and virtualised network environment makes network management far more complicated. There has always been a heavy reliance on monitoring and troubleshooting legacy networks to identify where subscribers are having issues.

This approach has been streamlined in recent years to the point where network problems can often be resolved before the subscriber even becomes aware of them. So, to move as quickly as the OTT competition can, operators will need to work with a service assurance provider that can keep up.

Adopting effective test and measurement tools is arguably even more important for a virtualised environment to ensure subscribers do not experience anything less than stellar network performance, particularly if carriers are looking to sign those very subscribers up to their new branded services.

It is also important to consider how a virtualised environment will integrate with the existing legacy network given plans for network operators to launch virtualised networks as “contained domains” working in concert with the existing legacy network. If 2014 was considered a test bed for network virtualisation activity, then 2015 will be the year operators ramp up their deployments and move from planning to implementation.

Ultimately, NFV is an enabling technology. It is not a silver bullet to help carriers eliminate OTT competition once and for all but it is an essential cog in a much larger machine working to revolutionise mobile networking, giving operators the ability to roll out their own branded services and applications quickly and efficiently.

ETSI’s goal of increasing NFV interoperability between vendors is set to become a reality, network virtualisation will soon become one of the most active components for ensuring commercial success. In essence, NFV is the key to unlocking a mobile network’s hidden potential.

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About the author

Ravi Chittimoori is currently Senior Product Manager and lead on network virtualisation and NFV at Tektronix Communications. Ravi has an MBA from the University of Texas and a background in computer science and engineering. Prior to joining Tektronix Communications, Ravi was a software design engineer for Inet Technologies.

Tektronix Communications has evolved out of its heritage in telecoms assurance and monitoring, into the world’s first full service, end-to-end Telecoms Intelligence Provider. As a Telecoms Intelligence Provider, the company offers a complete 4 dimensional view of networks, with solutions designed to give deep insight into Subscribers, the Services and applications they consume, the Technologies they use and Network environments in which they exist.

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