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How NFV Is Changing The Landscape Of Telecommunications
Companies Brave Enough To Make The Change Reap The Rewards
Not since the introduction of IP (Internet Protocol) has the The Landscape of Telecommunications (TLC) industry seen so many radical changes at the same time. The most relevant market dynamics for a carrier today include NFV, “cloudification” of TLC services and OTTs. These dynamics are leading to a progressive blend between the classical world of telecommunications and the modern IT world.
- The advent of the Network Function Virtualization (NFV) promises to transform complex and expensive dedicated machines into simple, agile, effective network systems.
- The “cloudification” of TLC services, which is moving data and functions from the inside of corporate IT systems to the outside, allows enterprises to take advantage of the resources made available by service providers (SP), with operational and economic benefits for the enterprise itself.
- The advent of “Over The Top” (OTT) which, according to the definition, are Service Providers (SP) that leverage the extensive connectivity resources provided by the carriers to offer integrated services. The most popular today are Google and Amazon, which exploit the enormous storage capacity that support from their core business to provide server and storage services and then cloud businesses to third parties. The most obvious and direct consequence of all this for the carriers is that while the OTT receive the benefits in form of profits, carriers remain with the infrastructural complexity to manage and with the substantial costs associated with it.
For the sake of this article, let’s focus on NFV. We’ll examine:
- How NFV transformation is not clear, and in fact there is no one size fits all
- A huge opportunity for consultants and system integrators who can select or design a future-proof transformation methodology.
- A threat for the telcos who are confronted with, amongst many others, a major operational, organizational and financial challenge.
- A new variable, learning, which is the (partial) adoption of the open source approach.
Network Function Visualization (NFV) Transforms Business Today
NFV, as a term, was first coined more than three years ago and in that short time, has become a reality that is not going anywhere anytime soon. Indeed, after the first testing phases and proofs of concept, carriers have established that transforming a classic network function (such as Home Location Register – HLR) in a virtual operation is technically feasible and there are already dozens of companies of all sizes that are able to do so. In fact, it is now widely agreed upon that virtual and physical will live together for the foreseeable future. It is clear that NFV is acting as a catalyst to bring the telecom and IT world together.
So, why is NFV not taking off as many expected?
The reason lies in a number of challenges associated to the virtualization for the telecom world.
Challenges For The Carriers
Regardless of the underlying infrastructure to support their services, the greatest challenge for carriers remains the inability to provide their enterprise customers with integrated communications services, not only connectivity, in a way that is both fast and flexible. Even today, the product management phase of a communications service easily extends for 6-9 months.
History has proven that anytime there a new service is introduced, a comprehensive set of systems and management capabilities were dedicated to it. This reesulted in a proliferation of systems that hardly communicate with each other, presenting a fractured view of the service. As a consequence, significant manual and procedural interventions are required, making the service management costly and inefficient. Adding to the confusion is the complexity of operation and organization related to the potential transformation dictated by the advent of NFV.
It is clear that if the OTT are able to do service provisioning in a matter of hours, carriers have a serious problem.
However, carriers’ intimate knowledge of the customer’s historical data and the physical connectivity that could ensure the carrier to learn about their customers’ behavior, gives them a competitive advantage which, however, has yet to be adequately exploited.
3 Core Functions Of NFV Implementation
Thus, while NFV is already a production reality with several carriers around the world, both as a generic virtualization platform or implementation of a specific network function (both core or edge), there are at least three core functions that are tremendously affected by the NFV implementation and are still to be properly addressed in the NFV context.
Someone once likened NFV transformation to someone who wants to replace an engine on a plane while it is flying. This analogy gives you a good idea of what it means for the VP Operations of a carrier to switch from the actual situation to a hybrid scenario where legacy and virtual coexist efficiently. It is therefore apparent why Operations essentially push back the idea of virtualization of network functions. If you asked a VP Operations in a large carrier, she would list the following as her most hated words:
Virtualisation – “Who moved my BRAS (Broadband Remote Access Server)? Where is the HLR?”
Devops – “It is either Dev or Ops. Doing both in a telco environment is extremely dangerous. Why? Because introducing even the smallest change in a telecom network environment might introduce a serious instability with unpredictable domino effects (think, the Butterfly Effect). This is why carriers require long trials before introducing innovation in their network environment. And they have depoy complex fall back procedures in case something goes wrong on at 3 a.m. on a Saturday morning.”
As it is for the technological portion of the NFV transformation, there is not a single path that suits every carrier. Each service provider is therefore required to design its own long term objective, operational architecture, taking into account their strategic and operational needs, and then apply methodologies that are truly proven to drive the transformation towards the objective.
There will be common elements but the most relevant to focus on are:
- OSS efficiency.
- Leverage customer intimacy to gather related data to drive operational efficiency.
- Leverage “as a Services” capabilities (the modern wording for outsourcing) whenever repetitive processes are required.
- Embrace devops, or at least begin to understand how development could marry operations without giving away the 6×9 reliability target of the entire infrastructure system (as opposed to the reliability of its components), again looking at methodologies that would facilitate this process in a telco environment.
The advent of virtualization, cloudification and the pressure exerted by the OTT is imposing a cultural shift to the telecom service providers. Indeed, the classic dominance of the CTO over the CIO is gradually being challenged as carriers are required, more and more, to look at their infrastructure and related management from both the CTO and CIO perspective. In fact, it is those who are capable to merge the classical knowledge of the TLC world with those in the IT world that will be coming out of the pack as winners.
Already several carriers around the world have embraced this transformation, some even creating the position of “Chief Digital Officer – CDO.” This role takes into account the need for “digitization,” which is the buzzword of the moment, and is designed to combine IT and TLC knowledge in one place. Even here, there is no one size fits all approach, but each carrier should make the necessary organizational adjustments that fit with their strategic intent and actual situation.
Another hot issue associated to the transformation NFV is linked to monetization. It’s still difficult to measure how the NFV transformation will impact the carrier’s business success. Before taking on such a significant change and not losing sight of financial goals, carriers need to identify the business criteria (and related leading indicator and KPIs) that will transform the NFV transformation in a success.
A potential approach for carriers to leverage virtualization as a means to generate new revenues and profitability streams is to deploy a platform that is capable of supporting the introduction and provisioning of new services. If such a platform is consumed “as a Service” (PaaS), all of a sudden, carriers will find themselves in a position to to catch up with, and in fact surpass, the OTT.
The advantages of this approach:
- Start-up costs are minimal, especially if the open source approach is preferred, meaning the platform is delivered on the basis of no license costs.
- Maximum flexibility in scaling up and down, according to the real needs of the market.
- If a solid certification system is set up around the PaaS, carriers are in a position to introduce applications and services much quicker than today, solving one of the biggest problems they face with the advent of OTT, dramatically shortening time to market.
Once properly calibrated and structured, the PaaS might support the carrier to gradually migrate existing business and network applications, unifying the delivery platform for such services with both organizational and operational benefits.
Opportunities For The Ecosystem
Although it is evident that NFV and the other market dynamics bring apparently insurmountable challenges, these are also times of great opportunities for the entire telecom ecosystem. If carriers want to regain their fair share of the market and profitability lost in favor of the OTT, the most important macro opportunities presented to telco are:
- Take the NFV approach, starting the transformation from a single network function and then gradually expanding from there.
- Integrate operational and business aspects of the NFV with the technology transformation.
- Understand how to monetize NFV, by leveraging the Internet of Things and other technologies and services related to the media.
- Focus on learning how to effectively gather and analyze customer data to gain insight, and be ready to tailor communication offerings to their customers, both enterprises and consumers.
- Leverage open source in at least two directions:
- Deploy OpenStack (and other related components) effectively, involving operations upfront in the architectural design and implementation.
- Use a PaaS based on open source by leveraging the portfolio of human and business resources that come from open communities to build Business Intelligence applications faster and and at a lower cost to be used on PaaS.
- Take the discontinuity forced by the market dynamics to revisit the entire OSS/BSS systems and migrate them under a single management platform.
In conclusion, no matter how the NFV is turned around, it is a necessary step that carriers have to take and gradually deploy on a full scale. However, NFV also brings unprecedented challenges both for the carriers and the entire ecosystem.
In this complex scenario, the upper hand is with those who:
- Can leverage proven transformational methodology, possibly borrowed from other industries, and deploy a solid risk management plan.
- Can bravely embrace the open source approach to build infrastructure, service management and business application platforms.
Telecom service providers have to look beyond their comfort ecosystem and embrace a wider set of potential partners to ensure a successful transformation, which will underline their very own survivability.
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