Redesigning the operator business model: The challenges of NFV

Telecoms.com periodically invites expert third-party contributors to submit analysis on a key topic affecting the telco industry. In this article Ravi Chittimoori, Senior Product Manager and lead on network virtualisation at Tektronix Communications, looks at the opportunities and challenges created by the dawn of the NFV era.

As predicted, this year’s Mobile World Congress was a hotbed of NFV activity, with all manner of exhibitors, vendors, and mobile service providers gearing up for the impending new era of mobile networking. At the show, Telefonica demoed a fully virtualised live network in collaboration with Alcatel Lucent and HP, while Amdocs and Juniper Networks partnered up to showcase virtualised software functions in an enterprise environment.

Countless other companies also contributed to the buzz, demonstrating their support for the inevitable industry-wide shift towards NFV. But while the move to a virtualised networking environment is universally recognised as a necessity, if for no other reason than the better handle the influx of connected devices and wearables now flooding the market, little consideration has been given to how operators will handle this change or the potential pitfalls they will face in doing so.

The hidden potential of NFV

Although it’s widely accepted that NFV represents the evolution of network design and holds the key to improving service delivery, it must also be recognised that the transition from hardware-based to software-defined networks represents a double-edged sword for operators. On the one hand, it’ll give operators a platform to redesign themselves, moving away from being engineering-led, network focused organisations towards data-centric businesses. But on the other, in doing so, it will lead to a fundamental change in the way networks are controlled, which will necessitate a completely different approach to network and employee management.

Network engineers and support teams that have worked with physical infrastructure for decades will need to redesign their existing processes. It’s inevitable that there will be a period of adjustment for an operator’s workforce, which may need additional jobs to be generated as new skills are required. With this in mind, although NFV has long been hailed as an OPEX-saving move in the long run, operators will need to factor in the cost of additional support to cover teething problems, plus staff training to ensure the workforce also makes the transition from a physical to virtualised environment.

Managing the complexities of a virtualised environment

A more pressing concern for operators, however, is how they will assure network performance within a virtualised environment. Adopting effective test and measurement tools has always been important when handling a legacy network, and the same considerations will still be present after moving to NFV. While virtualisation will help operators reduce their dependence on network equipment providers that have dictated the pace of network development for so long, it will not remove the complexity of monitoring the network environment overall.

In fact, network virtualisation will increase complexity in this regard, because network functions will now be held within software modules running on commercial-off-the-shelf infrastructure rather than physical hardware. As NFV becomes more widespread, operators will increasingly find themselves in system integrator roles as the virtualised networks they’re using will be based upon a patchwork of different hardware elements and systems.

Monitoring and optimising performance in this kind of environment, particularly in the face of ever-increasing data traffic demands, will be even more challenging than with physical legacy hardware. Operators not only need a horizontal view of all network activity (from the EPC to the IMS) but also a vertical view, covering the full network stack. Therefore, to avoid the risk of service disruptions, increased churn rates and damaged reputations when moving to software-based network architecture, it’s essential that operators have access to a powerful set of tools that are capable of giving a real-time end-to-end view of subscriber activity across the network.

Ultimately, in a virtualised environment the needs of the operator are the same; they still rely on the ability to quickly diagnose and troubleshoot problems in order to ensure the highest possible level of customer experience. But with a range of different software elements now in play, it’s more important than ever.

The implications of NFV

Despite the challenges, NFV does represent a significant opportunity for operators to generate new revenue streams, which is essential at a time when operators are under pressure from disruptive OTT players like WhatsApp and Skype. By introducing tools that provide a real-time view of the entire network environment, spanning legacy and virtualised hardware, operators will have access to a broad range of meaningful network data and subscriber information that will let them truly fulfil the role of an integrated communications service provider.

Once operators have visibility of this data, they will also be able to share it with other internal stakeholders. Each separate business unit will be in a position to access data from across the network that’s pertinent to their individual department, empowering them to make more informed decisions on both a commercial and operational level. The limit to the business use cases created by this are practically endless, and the only restriction will be an operator’s willingness to deploy the right test and measurement tools and processes to effectively collate and assess this data, then create a virtualised ecosystem that makes it easier to offer this information to end-user enterprises.

A new age of mobile networking

2015 is the optimum time for NFV to take the centre stage. There’s no disputing that OTT players are driving down ARPU and are having a significant impact on the operator’s bottom line. While the average subscriber’s data usage is showing no signs of slowing down, their reliance on traditional carrier-provided services, such as voice and text messages, continues to decrease. This will continue unless operators adapt to the changing telecoms environment and seek to establish new revenue streams and reduce costs through network virtualisation. Operators need to push through the challenges NFV presents to unlock the hidden benefits.

Operators have a lot to consider before switching to NFV, but even though it presents a number of challenges they cannot afford to ignore the need for network virtualisation. And as this year’s Mobile World Congress made clear, the next 12 months will see many progressive operators moving from merely planning and testing virtualised networks to implementing them on a large scale.

Ravi Chittimoori is currently Senior Product Manager and lead on network virtualisation 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.