15 July 2014

SDN-NFV: technology, business sustainability and regulation rules

When looking at future potential deployment scenarios of SDN and NFV, at least three dimensions should be taken into account: technology, business sustainability and regulation rules.

One way to consider the technology variable is the split degree in the (centralized vs distributed) execution of L2-L7 Virtual Network Functions (VNF). In fact, many (but not all) Network Elements (e.g., routers and switches) and Network Functions (e.g., middle-boxes) can be virtualized, i.e., replaced by software running on logical resources (e.g., Virtual Machines). This split will determine different alternatives, as long as the Operations of said VNFs and the services.

In general this could create a split of roles of current Networks and Services Providers (NSP) into “Software- Defined NSP” (SD-NSP) and Infrastructure Provider (IP). A SD-NSP is an Operator owning basically software networks and services platforms, i.e., platforms whose functions (ranging  from L2 to L7) are fully developed, executed and operated in software, in the Cloud and/or  in the Exchanges (centralized vs distributed). SD-NSPs are “borrowing” hardware resources (e.g. just antennas, L0-L1 transmission and processing power) from IPs. An SD-NSP looks like an OTT.

Regarding the business sustainability variable, it is estimated that SD-NSPs will see dramatic costs reductions (e.g. estimation of 40%-50% savings in energy), CAPEX reductions, improved efficiency in the overall Operations (e.g. 25%-35% OPEX savings just by automating processes), reduced time-to-market when deploying services (e.g., quite similar to OTTs today). SD-NSPs will be also potentially capable to “upload and execute” their “software networks and services platforms” anywhere there will be an IP willing to rent hardware and L0-L1 resources.  This is disruptive and it allows to enter new markets with limited investments, e.g., by using just OPEX, or playing as Global Players. Also new service ecosystems (today not sustainable) might be enabled.

Concerning the third variable, regulation rules, the story is even more complex: rules should encourage fair competition, improve the functioning of the market and guarantee basic user rights. In this sense, “mass digitalization and Softwarization” have the potential to create a situation where personal information is created, held and managed at a ‘global’ level, so proper legal frameworks should be put in place.

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