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SDN and NFV at a crossroads: vendors innovating and positioning for the future of CSPs’ network virtualisation

  • September 2013
  • -
  • Analysys Mason
  • -
  • 67 pages


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Communications service providers (CSPs are increasingly exploring software-controlled networking (SCN, and established vendors must innovate to stay relevant or risk becoming obsolete. This report specifically explores the vendor landscape in software-defined networking (SDN, network function virtualisation (NFV and cloud computing, with analysis of the business environment and a technology forecast for this rapidly changing technology space.

The boundaries between cloud computing, NFV and SDN will continue to blur as virtualisation overcomes traditional hardware barriers

Cloud computing and NFV are similar, but essentially distinct.
• Cloud computing is the virtualisation of commodity IT hardware and applications/software, which can run at least 99% availability level. It is acceptable for non-real-time telecoms software (OSS, BSS) on x86 servers, but is not yet proven for telecoms network functions.
• NFV is the virtualisation of telecoms-specific network functions into applications that will run at least 99.999% availability on suitable carrier-grade hardware and software.

Telecoms software systems that provide network functions can easily reside in a private cloud computing architecture.

The SDN roadmap needs to navigate and mature in the data centre before it can reach CSPs’ networks (CSP SDN). NFV and SDN overlap in the core/aggregation layer of CSPs’ network.

CSP SDN is still largely in R&D and remains an open opportunity for both telecoms and non-telecoms vendors.

Trials have so far clearly separated SDN/OpenFlow from CSP SDN – but this could change as R&D continues and SDN vendors provide solutions for both data centres and CSPs as part of their strategy.

CSPs have more-extensive network and business responsibilities than DCPs, and the distribution and access layers are the most costly

Significant differences in costs and responsibilities separate CSPs and DCPs. DCPs’ total costs are less than 10% of CSPs’ for delivering and operating services and supporting customers, because DCPs run ‘over the top’ of CSPs’ expansive transport and access networks to reach end users.

DCPs’ spend is concentrated on their core (data centre) networks, but this is mainly commodity IT and networking hardware and software. CSPs’ core networks use carrier- grade hardware and software, which is on average ten times the cost of commodity IT, to meet the demand of delivering their own services and DCPs’ services to end users.

Very few DCPs physically network their data centres and own the costs and operations. However, in most cases CSPs have their own transport networks between data centres.

CSPs own almost all of the access layer, although in a few cases DCPs fund Wi-Fi and fibre access (namely Google). CSPs worldwide spent about 77% of their capex (USD267 billion) in 2012 on network hardware, software, roll-out, professional services and associated network infrastructure.

CSPs spend more on user support via call centres, because of stronger regulation in telecoms. DCPs mainly spend on supporting enterprise customers, with minimal effort.

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