Omdia Viewpoint: CNF is key for telecom operators to realize the promise of 5G

Telecom operators are investing in operator software-defined networks (SDN) and network function virtualization (NFV) to reduce costs, improve network operations, and provide 5G services to enterprises, according to a new report from market research firm Omdia. These advantages are more important than ever as major cloud service providers take an increasing share of the 5G digital pie. Operators will continue to invest in cloud-native technologies to establish their position as digital service providers. Over the next three years, their top priority will be to migrate physical and virtualized network functions (VNFs) to operations and services running in a cloud-native environment.

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The migration to cloud-native network functions (CNFs) is underway

The report states that the total market value of global SDN and NFV investment is expected to increase from US$35 billion in 2020 to US$67 billion in 2025. Operator network software integration remains an integral part of operators' 5G strategy. Its main goal is to improve network automation and programmability for cloud-based service delivery. Omdia believes that SDN/NFV is the entry point for operators to enter telecom cloud operations.

Over the next three years, the top priority for operators is to migrate network functions from physical network functions (PNFs) and virtualized network functions (VNFs) to cloud-native functions running in containerized environments. The goal of containerization is to solve issues related to scaling, repair, and redundancy through better automation, and this migration is an important step in achieving cloud-native network operations.

Omdia is currently surveying operators around the world on their network software strategies. Preliminary data (n=54) shows respondents’ network function migration timelines for the next year. In the short term (12-24 months), operators expect a higher share of PNFs and VNFs combined in the mix of physical, virtualized, and cloud-native functions, accounting for approximately 77% of all network function types. However, over the next 2-3 years, respondents expect to increasingly move to virtualized and cloud-native functions. While still not a majority, expectations for cloud-native functions running in operator environments have risen from 23% in the short term to 30% in the medium term.

It is worth noting that the percentage of PNFs is decreasing (from 45% of all network function types in the short term to 32% in the medium term). These data show that operators are moving in the right direction in terms of operator network software integration. Moreover, they are realistic in terms of the percentage of their network operations and services that are cloud native.

Stephanie Gibbons, principal analyst for carrier network software at Omdia, noted that CNFs are a key part of delivering on the promise of 5G, however, they do require more testing and fine-tuning, and operators must be able to automate them to be successful. CNFs will continue to be in the proof-of-concept and trial phases next year, but operators will continue to invest in SDN/NFV to ensure that the necessary cloud-native architecture is ready to support CNFs.