Communications service providers (CSPs) are changing who they are as brands, how they run as businesses and how meaningful their services are for the companies and consumers they serve. Technology trends like network functions virtualization (NFV) and software-defined networking (SDN) have the potential to underpin these massive changes.
When completely transformed, the businesses we once called phone companies will be digital service providers (DSPs), capable of providing networking capabilities and new digital services on-demand, at scale, and in the cloud.
The key phrase is “completely transformed.” The story we, as an industry, keep telling CSPs is that they can use emerging technologies to become more flexible and agile, capable of launching new services quickly and finding new sources of revenue. But what are those new services and when will we see them? How do we move forward and not lose sight of that overall story?
The communications industry can do a better job of helping CSPs recognize the value in adopting NFV and SDN. Embracing network virtualization pragmatically will help that cause.
Operators today manage every service and piece of equipment in their networks—until they are inside the home. There, chaos reigns with a plethora of devices, operating systems, data requirements and network capabilities. With so many connected devices, homes are becoming smarter but networking in the home is becoming more complex.
Outside the home, cable, telecom and satellite companies are merging to capture as many customers as possible. Similarly, consumer brands and Internet companies are targeting those same customers with Web-connected entertainment and smart devices, using home broadband connections as the starting point for their services.
As more companies reach for their customers, service providers are working to improve the overall experience of consumers and, where possible, reduce the likelihood that they'll leave.
Virtualized customer premises equipment (CPE) could address many of the above-mentioned challenges that operators are facing, while giving them a platform to bring new services to market faster in order to compete more effectively in delivering on the promise of the connected home.
The typical home broadband CPE provides physical connectivity, a modem, Wi-Fi and Layer 2/Layer 3 switching and simultaneously runs a variety of other applications such as routing, NAT, DHCP, firewall and other security software, parental control solutions and quality of service (QoS) management. However, the problems that these purpose-built devices create for service providers are well-documented:
A virtualized CPE (vCPE) allows CSPs to do what they do now—provide connectivity and a basic set of network services to residential consumers—at significantly lower costs, with the added bonus of enabling the transition into becoming a digital service provider:
There is a compelling story in the potential of NFV and SDN to transform the industry, change companies for the better and create a new breed of agile, digital service providers. As our vCPE example shows, we don’t have to sell a vision of some far-off digital future; we can earn the trust of our customers today by demonstrating the high-value ways to enjoy virtualization’s benefits now.
With more devices connected in the home and greater competition, service providers must support residential customers by implementing different economic models that reduce the total cost of ownership of each customer and improve overall customer experience. This is, indeed, some of the promise of becoming a digital service provider that can be unlocked right now through a single use case.
The NFV and SDN opportunity is not just about changing the way things are done; it’s about changing the industry and redefining what it means to be a service provider. Because that future requires a fundamental change in network architecture and business models, however, it won’t happen overnight. But when it does, and it will, in order for us to get there from here, we have to move forward.
[Editor’s note: This column also appears in the January/February 2016 issue of Global Telecoms Business magazine (www.globaltelecomsbusiness.com).]
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