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Carriers Embrace NFV, SDN for Network Agility, Ammo to Address OTT Threat

By Paula Bernier September 26, 2014

Carriers are scrambling as they see over-the-top services such as Skype and WhatsApp eating into their revenues. Indeed, OTT players have captured 30 percent of voice traffic in seven years, and now service provider voice growth is around 3 percent per year.

In response, carriers have joined forces to develop standards that will allow their telecom equipment to run on off-the-shelf servers so they can more effectively compete with their app-based competitors. This initiative, known as network functions virtualization, or NFV, will help turn hardware-based telcos into software telcos – allowing them to be more flexible in rolling out new offerings while saving money in the process. Meanwhile, software-defined networking will help them more effectively manage their networks.

In the near term, much of the focus on NFV and SDN is about how to enable carrier cost savings by, for example, simplifying the network, and enabling network operators and their developers to use commercial-off-the-shelf hardware. But in the longer term, it’s about the transformation not only of carrier networks, but also of the basic mindset and business strategies at these carriers. And that involves moving from static networks to a new software-defined networking architecture that is dynamic, and will enable network operators to expedite the delivery of more tailored services.

Such services include a wide variety of offerings, including platform-as-a-service and software-as-a-service. Carriers like NTT and Telefonica, as just two examples, are also moving forward with network-as-a-service offerings. NTT Communications Group now offers its SDN-based Arcstar Universal One services in more than 190 countries. With these new NTT Communications services, CIOs and other IT types will be able to activate and deactivate services as needed, have access to those services within a few minutes of inputting the portal request, and pay for those services on a per-use basis rather than engaging with telcos on three- to five-year contract commitments. Meanwhile, Telefonica has been working with an array of leading telecom/datacom suppliers on NFV and SDN, and at Mobile World Congress partnered with Infinera to demonstrate SDN-based NaaS.

The move to NFV and SDN undoubtedly involves a major rethink in how networking is done. A major sign that this is both doable and desirable for network operators is the fact that it was the big telcos themselves – including AT&T, BT Group, Deutsche Telekom, Orange, Telecom Italia, Telefonica and Verizon – that drove the creation of the ETSI Network Functions Virtualization Industry Specification Group, which came together in November 2012 and has since seen many more companies join the charge.

AT&T followed that up about a year later when, in September of 2013, it launched what it calls the next generation of its Supplier Domain Program – Domain 2.0. Calling Domain 2.0 a transformative initiative, AT&T said it will trigger “a swift and broad move to a modern, cloud-based architecture that is expected to significantly reduce the time required to pivot to this target architecture while accelerating time-to-market with technologically advanced products and services.”

Leveraging NFV and SDN, AT&T explained, will enable it to simplify and scale its network by separating hardware and software functionality; separating network control plane and forwarding planes; and improving management of functionality in the software layer. 

Edited by Maurice Nagle

Executive Editor, TMC

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