Telco NFV & SDN Deployment Strategies: Six Emerging Segments

STL Partners explores in detail how thirteen leading operators are addressing NFV and SDN. By exploring each management team’s vision for the technology and the current implementation activities, we have been able to identify six segments – from dynamic ‘NFV Business Model Transformation Pioneers’ to more prosaic ‘Utilitarian Adopters’. The report also outlines three major ‘best-practice’ recommendations for other players.

Introduction

STL Partners’ previous NFV and SDN research

This report continues the analysis of three previous reports in exploring the NFV (Network Functions Virtualization) and SDN (Software Defined Networking) journeys of several major telcos worldwide, and adds insights from subsequent research and industry discussions.

The first two reports that STL Partners produced contained detailed discussion of the operators that have publicly engaged most comprehensively with NFV: Telefónica and AT&T.

Telefónica embarked on an ambitious virtualization program, dubbed ‘UNICA’, toward the start of 2014; but its progress during 2014 and 2015 was impeded by internal divisions, lack of leadership from top management, and disagreement over the fundamental technology roadmap. As a result, Telefónica has failed to put any VNFs (Virtualized Network Functions) into production; although it continues to be a major contributor to industry efforts to develop open NFV standards.

By contrast, AT&T’s virtualization program, the User-Defined Network Cloud (UDNC) – launched at the same time as Telefónica’s, in February 2014 – has already contributed to a substantial volume of live NFV deployments, including on-demand networking products for enterprise customers and virtual EPC (Enhanced Packet Core) supporting mobile data and connected car services. AT&T’s activities have been driven from board level, with a very focused vision of the overall transformation that is being attempted – organizational as much as technological – and the strategic objectives that underlie it: those of achieving the agility, scalability and cost efficiency required to compete with web-scale players in both enterprise and consumer markets.

The third report in the series – ‘7 NFV Hurdles: How DTAG, NTT, Verizon, Vodafone, Swisscom and Comcast have tackled them’  – extended the analysis to the SDN and NFV deployment efforts of several other major operators. The report arrived at a provisional model for the stages of the SDN / NFV transformation process, outlined in Figure 1 below.

Figure 1: The SDN-NFV Transformation Process

The transformation process outlined in the chart suggests that elaborating the overall SDN architecture should ideally precede the NFV process: logically if not always chronologically. This is because it is essential to have a vision of the ‘final’ destination, even if – or especially as – operators are navigating their way through a shifting myriad of technology choices, internal change programs, engagements with vendor and open-source ecosystems, priorities and opportunities for virtualization, legacy system migration models, and processes for service and business remodeling.

The focus of this report

This report re-examines some of the analysis undertaken on the players above, along with some additional players, to derive a more fine-grained understanding of the virtualization journeys of different types of telco.

We examine these journeys in relation to five dimensions and the analysis focuses on the choices operators have made in these areas, and how things have turned out so far. This, in turn, allows us to pinpoint six telco segments for SDN and NFV deployment.

There is no ‘one size fits all’ approach to SDN and NFV. However, because the operators we examine have a similar rationale for engaging in SDN- and NFV-led transformation and display sufficient commonality in their approach to deployment, STL Partners has been able to make three core best-practice implementation recommendations.

 

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