NFV/SDN Reality Check: Where Are We?

“It’s nice to see the telecom industry move at less than a snail’s pace…” said Peter Jarich, vice president at analyst firm Current Analysis, to Dan Meyer during the latest NFV/SDN Reality Check video show. Dan, who is editor-in-chief of RCR Wireless News, interviewed Peter about the status of NFV and SDN development and deployments as well as the challenges facing operators. Here’s a summary of some of the most compelling things Peter had to say (edited for readability). The interview starts at the 4:13 mark if you want to watch the whole thing.

On who is leading the pack:

Peter: On the one hand there are a handful of lead operators that are generating a lot of attention and do want to move fairly quickly: AT&T, Telefonica, DT, Vodafone. We see what’s going on with SKT, with Docomo. There are a lot of operators who you see time and time again at trade shows because they are moving the market forward. Yet even the horizon of those guys is fairly exaggerated.

And then beyond them there is that whole second tier and third tier of operators that either don’t have fully figured out what the value proposition is, what the ROI is, figured out how it fits with network or (and\or) don’t have the skill set to figure out how to implement this stuff. I mean, again you hear AT&T doing a really good job talking about retraining its personnel and the amount of time and effort that takes on their part. Beyond them you can guess how difficult that type of retraining is for some of the smaller companies.

It comes down to the ROI issue, it comes down to how this makes sense. If you’ve got a specific project or an operator with a specific use case, then you can see some of the other guys move in. PCCW has some good stories talking about what they’re doing. You look at what’s going on with CenturyLink, you see some great stuff from them. So there are some non-tier 1 operators who are doing some interesting things out there. Again, just really comes down to someone who has the use case, has an argument for it, knows what they’re going to do with it, and then actually moves it forward.

The evolving perception of SDN/NFV’s benefits:

Peter: A couple years ago when we did a survey of operators asking what’s important, it was all about capex savings…Then it was opex savings. Last year it was “it’s not about saving money it’s about making money.” You can see the progression in the organization. It started with the financial guys then they got higher to the C suite who said “no we need to make money with this, we’re not going to save our way to growth.”

And this year it seems like it’s been much more about performance, about management, service assurance. Now it’s back down to the folks who are actually going to be implementing this and go “okay tell me how this thing will operate, tell me how the performance will compare to what I’m looking at.”

Which you know we wouldn’t be at this place if the vendors couldn’t answer those questions, we also wouldn’t be there if the service providers weren’t thinking on that level. So the reality is to get to commercialization you’ve got to have all those components.

On the cultural changes required:

Peter: I mean I’ve had conversations with people who come from the IT side of the market and tell me telecom needs to get over the five 9s, that’s old school. Telling them that to their face may not be the best way to solve that. Some of the telcos are just misunderstanding or have a preconception of, is it five 9s service assurance or is it five 9s equipment? Does the equipment have to be operating at a five 9s reliability or is it the service, because that’s the whole idea of having redundancy and failover and multiple cheap servers that can get you the service assurance that you’re looking for, whether or not any one server is operating at that level.

On the new changes to networks beyond NFV and SDN such as 5G:

Peter: A couple years ago when we were talking about NFV and SDN you know we were sort of depicting SDN and NFV as the new TDM to IP transition, just a new way which networks are going to be built, a new way of thinking about how networks are operated. But the realization is that transition is still ongoing. It’s a 15 to 20-year plus transition, and we need to think about SDN and NFV in the same way, and so yeah it’s just a lot of learning as it’s going to take a while.

SDN and NFV in theory should be building a solid foundation for what’s going on in 5G. For vendors in particular it gives them something to sell while they’re waiting for 5G to actually come around.

How will we move SDN and NFV further along? (Or, what’s the real value of analyst white papers?)

Peter: So I think a lot of what we spent the last year on was a lot of discussion of how do we move operators from these proof-of-concept activities over to commercial deployments? And we’re definitely making progress there. You know one of the challenges is going to be continuing down that road so we can leverage actual commercial deployments to prove out with the ROI is. You’re seeing in the market some operators questioning “what’s my return on an NFV deployment?” “Someone prove to me how am I going to make money or save money from SDN?”

Now, we all love white papers in the analyst community. But you know there’s only so many times you can read a white paper from some analyst firm that says “here’s the revenue model for launching these things, and I’m sure my assumptions are 100 percent correct and not at all aimed at what the people paying me to write this paper have to say.”

But you know what the point of those papers is, to say “hey Mr. Operator you will earn a good return on your investment in buying some SDN and NFV here.” Now that we’re moving from that proof of concept to the deployment stage, we need to be able to see here’s what’s actually taking place in the real world. I think that’s gonna be the challenge; it’s going to be leveraging those deployments, which are going to be early, to actually show some results, which can lead the rest of the market to go okay, I can do this, I can benefit from it, here’s how it works. Because actions always speak louder than words, and I think we’re at a place where that could happen, but it’s naturally not going to be easy.