Ovum Observation: SDN/NFV Significantly Reduces Time to Market for Services of Operators in Emerging Markets

Early morning news on January 11, for communications service providers (CSPs) in emerging markets, network function virtualization (NFV) is an opportunity to narrow the time-to-market gap with traditional services of operators in developed markets. The traditional network upgrade cycle - for example, the migration from 3G to 4G took about 10 years, and upgrading network service functions was slow and cumbersome. But through NFV, operators in emerging markets can shorten the time to market for services (such as LTE or VoLTE) to just 3-4 years compared to their counterparts in developed markets.

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Only some tier-1 operators have deployed SDN/NFV now, but emerging markets have already incorporated it into their new fixed network construction plans.

Some tier-1 telecom operators have launched SDN and commercial NFV services. For example, since the launch of AT&T's Network on Demand in 2015, more than 1,200 enterprises in multiple industries have signed up for this solution, which provides a large number of virtualized services (for example, virtualized access routers for enterprises). AT&T's goal is to have 75% of its network NFV-ready by 2020.

On the other hand, many other tier-1 telecom operators have not yet commercially deployed SDN/NFV, but Ovum expects that 2017 will be the year when more major operators will commercialize SDN/NFV services. So far, SDN/NFV upgrades have been led by operators in Western Europe, Japan, and the United States. As is typical in Asia, many other tier-1 telecom operators have chosen to wait and see the success of NFV before commercializing it.

Meanwhile, more emerging market operators in Asia are signing vendor contracts that involve restructuring their fixed and mobile networks into cloud-based infrastructures and preparing for 5G and IoT, including SDN/NFV upgrades. Globally, the first services to be virtualized include EPC and IMS. Some operators are virtualizing both at the same time, while others prioritize one, such as IMS, if their immediate strategic goal is commercial VoLTE services.

Nicole McCormick, broadband and multiplay practice director at Ovum, said that for emerging operators, NFV enables them to bring new services (VoLTE) to market faster than legacy network upgrade cycles would allow, and also brings them closer to their peers in developed markets in terms of reducing costs and making money from new business opportunities.