Tag: Virtualisation

Telco Cloud Deployment Tracker: Open RAN deep dive

Telco Cloud: Open RAN is a work in progress

This report accompanies the latest release and quarterly update of STL Partners ‘Telco Cloud Deployment Tracker’ database. This contains data on deployments of VNFs (Virtual Network Functions), CNFs (cloud-native network functions) and SDN (Software Defined Networking) in the networks of the leading telcos worldwide. In this update we have added some additional categories to the database to reflect the different types of virtualised / open RAN:

  1. Open RAN / O-RAN: Fully open, disaggregated, virtualised / cloud-native, with CU / DU split
  2. vRAN: Virtualised CU/DU, with open interfaces but implemented as an integrated, single-vendor platform
  3. Cloud RAN: Single-vendor, virtualised / centralised BU, or CU only, with proprietary / closed interfaces

Cloud RAN is the most limited form of virtualised RAN: It is based on porting part or all of the functionality of the legacy, appliance-based BU into a Virtual Machine. vRAN and open RAN are much more significant, in both technology and business-model terms, breaking open all parts of the RAN to more competition and opportunities for innovation.

Accordingly, the report presents data on only open RAN and vRAN deployments however a granular analysis of each category of RAN deployment can be carried out using the Telco Cloud Tracker tool.

Access our online Telco Cloud Deployment Tracker tool here

Download the additional file for the full dataset of Telco Cloud deployments

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Open RAN and vRAN deployments, 2018 – 2022

Open-RAN-Deployments-Apr-2021-STL-Partners

Source: STL Partners

Open RAN and vRAN

Both Open RAN and vRAN are virtualised (with the exception of NTT DoCoMo as outlined in the report), but ‘open RAN’ implies full disaggregation of the different parts of the RAN (hardware, software and radio), and open interfaces between them. By contrast, vRAN incorporates the open interfaces but is generally deployed as a pre-integrated, single-vendor solution: hardware, software and radio supplied by the same vendor.

To date, there have been significantly more open RAN than vRAN deployments. But vRAN is emerging as a potentially competitive alternative to pure open RAN: offering the same operational benefits and – in theory – multi-vendor openness, but without the overhead of integrating components from multiple vendors, and a ‘single neck to choke’ if things go wrong. Deployments in 2020 were mostly small-scale and / or 4G, including trials which continued to carry live traffic after the trial period came to an end.

The stark contrast between 2021 and 2022 reflects a slight hiatus in commercial deployments as work intensified around integration and operational models, trials, performance optimisation, and cost economics. However, major deployments are expected in 2022, including greenfield networks 1&1 Drillisch (Germany) and DISH (US), Verizon, Vodafone UK, and MTN (Africa and ME).

Scope and content of the Tracker

The data in the latest update of our interactive tool and database covers the period up to March 2022, although reference is made in the report to events and deployments after that date. The data is drawn predominantly from public-domain information contained in news releases from operators and vendors, along with reputable industry media.

We apply the term ‘deployment’ to refer to the total set of VNFs, CNFs or SDN technology, and their associated management software and infrastructure, deployed at an operator – or at one or more of an operator’s opcos or natcos – in order to achieve a defined objective or support particular services (in the spreadsheet, we designate these as the ‘primary purpose’ of the deployment). For example, this could be:

  • to deploy a 5G standalone core
  • to launch a software-defined WAN (SD-WAN) service
  • or to construct a ‘telco cloud’ or NFV infrastructure (NFVi): a cloud infrastructure platform on which virtualised network services can be introduced and operated.

The Tracker is provided as an interactive tool containing line-by-line analysis of over 900 individual deployments of VNFs, CNFs or SDN technology, which can be used to drill down by:

  • Region where deployed
  • Operator
  • Technology vendor
  • Primary purpose
  • Type of telco cloud function deployed
  • …and more filters

Telco Cloud Trial Deployment Tracker

Take a look at the trial of our interactive tool with live, commercial deployments of VNFs, CNFs and SDN technologies worldwide

Previous telco cloud tracker releases

Each new release of the tracker is global, but is accompanied by an analytical report which focusses on trends in given regions from time to time:

 

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VNFs on public cloud: Opportunity, not threat

VNF deployments on the hyperscale cloud are just beginning

Numerous collaboration agreements between hyperscalers and leading telcos, but few live VNF deployments to date

The past three years have seen many major telcos concluding collaboration agreements with the leading hyperscalers. These have involved one or more of five business models for the telco-hyperscaler relationship that we discussed in a previous report, and which are illustrated below:

Five business models for telco-hyperscaler partnerships

Source: STL Partners

In this report, we focus more narrowly on the deployment, delivery and operation by and to telcos of virtualised and cloud-native network functions (VNFs / CNFs) over the hyperscale public cloud. To date, there have been few instances of telcos delivering live, commercial services on the public network via VNFs hosted on the public cloud. STL Partners’ Telco Cloud Deployment Tracker contains eight examples of this, as illustrated below:

Major telcos deploying VNFs in the public cloud

Source: STL Partners

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Telcos are looking to generate returns from their telco cloud investments and maintain control over their ‘core business’

The telcos in the above table are all of comparable stature and ambition to the likes of AT&T and DISH in the realm of telco cloud but have a diametrically opposite stance when it comes to VNF deployment on public cloud. They have decided against large-scale public cloud deployments for a variety of reasons, including:

  • They have invested a considerable amount of money, time and human resources on their private clouddeployments, and they want and need to utilise the asset and generate the RoI.
  • Related to this, they have generated a large amount of intellectual property (IP) as a result of their DIY cloud– and VNF-development work. Clearly, they wish to realise the business benefits they sought to achieve through these efforts, such as cost and resource efficiencies, automation gains, enhanced flexibility and agility, and opportunities for both connectivityand edge compute service innovation. Apart from the opportunity cost of not realising these gains, it is demoralising for some CTO departments to contemplate surrendering the fruit of this effort in favour of a hyperscaler’s comparable cloud infrastructure, orchestration and management tools.
  • In addition, telcos have an opportunity to monetise that IP by marketing it to other telcos. The Rakuten Communications Platform (RCP) marketed by Rakuten Symphony is an example of this: effectively, a telco providing a telco cloud platform on an NFaaS basis to third-party operators or enterprises – in competition to similar offerings that might be developed by hyperscalers. Accordingly, RCP will be hosted over private cloud facilities, not public cloud. But in theory, there is no reason why RCP could not in future be delivered over public cloud. In this case, Rakuten would be acting like any other vendor adapting its solutions to the hyperscale cloud.
  • In theory also, telcos could also offer their private telcoclouds as a platform, or wholesale or on-demand service, for third parties to source and run their own network functions (i.e. these would be hosted on the wholesale provider’s facilities, in contrast to the RCP, which is hosted on the client telco’s facilities). This would be a logical fit for telcos such as BT or Deutsche Telekom, which still operate as their respective countries’ communications backbone provider and primary wholesale provider

BT and Deutsche Telekom have also been among the telcos that have been most visibly hostile to the idea of running NFs powering their own public, mass-market services on the public and hyperscale cloud. And for most operators, this is the main concern making them cautious about deploying VNFs on the public cloud, let alone sourcing them from the cloud on an NFaaS basis: that this would be making the ‘core’ telco business and asset – the network – dependent on the technology roadmaps, operational competence and business priorities of the hyperscalers.

Table of contents

  • Executive Summary
  • Introduction: VNF deployments on the hyperscale cloud are just beginning
    • Numerous collaboration agreements between hyperscalers and leading telcos, but few live VNF deployments to date
    • DISH and AT&T: AWS vs Azure; vendor-supported vs DIY; NaaCP vs net compute
  • Other DIY or vendor-supported best-of-breed players are not hosting VNFs on public cloud
    • Telcos are looking to generate returns from their telco cloud investments and maintain control over their ‘core business’
    • The reluctance to deploy VNFs on the cloud reflects a persistent, legacy concept of the telco
  • But NaaCP will drive more VNF deployments on public cloud, and opportunities for telcos
    • Multiple models for NaaCP present prospects for greater integration of cloud-native networks and public cloud
  • Conclusion: Convergence of network and cloud is inevitable – but not telcos’ defeat
  • Appendix

Related Research

 

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Telco Cloud Deployment Tracker: 5G standalone and RAN

Telco cloud 2.0, fuelled by 5G standalone and RAN, is on the starting grid

This report accompanies the latest release and update of STL Partners ‘Telco Cloud Deployment Tracker’ database. This contains data on deployments of VNFs (Virtual Network Functions), CNFs (cloud-native network functions) and SDN (Software Defined Networking) in the networks of the leading telcos worldwide. It builds on an extensive body of analysis by STL Partners over the past nine years on NFV and SDN strategies, technology and market developments.

Access our Telco Cloud Tracker here

Download the additional file for the full dataset of Telco Cloud deployments

Scope and content of the Tracker

The data in the latest update of our interactive tool and database covers the period up to September 2021, although reference is made in the report to events and deployments after that date. The data is drawn predominantly from public-domain information contained in news releases from operators and vendors, along with reputable industry media.

We apply the term ‘deployment’ to refer to the total set of VNFs, CNFs or SDN technology, and their associated management software and infrastructure, deployed at an operator – or at one or more of an operator’s opcos or natcos – in order to achieve a defined objective or support particular services (in the spreadsheet, we designate these as the ‘primary purpose’ of the deployment). For example, this could be:

  • to deploy a 5G standalone core
  • to launch a software-defined WAN (SD-WAN) service
  • or to construct a ‘telco cloud’ or NFV infrastructure (NFVi): a cloud infrastructure platform on which virtualised network services can be introduced and operated.

The Tracker is provided as an interactive tool containing line-by-line analysis of over 900 individual deployments of VNFs, CNFs or SDN technology, which can be used to drill down by:

  • Region where deployed
  • Operator
  • Technology vendor
  • Primary purpose
  • Category of NFV/SDN technology deployed
  • …and more filters

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5G standalone (SA) will hit an inflection point in 2022

5G standalone (SA) core is beginning to take off, with 19 deployments so far expected to be completed in 2022. The eventual total will be higher still, as will that of NSA core, as NSA 5G networks continue to be launched. As non-standalone (NSA) cores are replaced by SA, this will result in another massive wave of core deployments – probably from 2023/4 onwards.

Standalone 5G vs non-standalone 5G core deployments

STL-5G-standalone-core-cloud-tracker-2021

Source: STL Partners

 

Previous telco cloud tracker releases

Each new release of the tracker is global, but is accompanied by an analytical report which focusses on trends in given regions from time to time:

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Why and how to go telco cloud native: AT&T, DISH and Rakuten

The telco business is being disaggregated

Telcos are facing a situation in which the elements that have traditionally made up and produced their core business are being ‘disaggregated’: broken up into their component parts and recombined in different ways, while some of the elements of the telco business are increasingly being provided by players from other industry verticals.

By the same token, telcos face the pressure – and the opportunity – to combine connectivity with other capabilities as part of new vertical-specific offerings.

Telco disaggregation primarily affects three interrelated aspects of the telco business:

  1. Technology:
    • ‘Vertical’ disaggregation: separating out of network functions previously delivered by dedicated, physical equipment into software running on commodity computing hardware (NFV, virtualisation)
    • ‘Horizontal’ disaggregation: breaking up of network functions themselves into their component parts – at both the software and hardware levels; and re-engineering, recombining and redistributing of those component parts (geographically and architecturally) to meet the needs of new use cases. In respect of software, this typically involves cloud-native network functions (CNFs) and containerisation
    • Open RAN is an example of both types of disaggregation: vertical disaggregation through separation of baseband processing software and hardware; and horizontal disaggregation by breaking out the baseband function into centralised and distributed units (CU and DU), along with a separate, programmable controller (RAN Intelligent Controller, or RIC), where all of these can in theory be provided by different vendors, and interface with radios that can also be provided by third-party vendors.
  2. Organisational structure and operating model: Breaking up of organisational hierarchies, departmental siloes, and waterfall development processes focused on the core connectivity business. As telcos face the need to develop new vertical- and client-specific services and use cases beyond the increasingly commoditised, low-margin connectivity business, these structures are being – or need to be – replaced by more multi-disciplinary teams taking end-to-end responsibility for product development and operations (e.g. DevOps), go-to-market, profitability, and technology.

Transformation from the vertical telco to the disaggregated telco

3. Value chain and business model: Breaking up of the traditional model whereby telcos owned – or at least had end-to-end operational oversight over – . This is not to deny that telcos have always relied on third party-owned or outsourced infrastructure and services, such as wholesale networks, interconnect services or vendor outsourcing. However, these discrete elements have always been welded into an end-to-end, network-based services offering under the auspices of the telco’s BSS and OSS. These ensured that the telco took overall responsibility for end-to-end service design, delivery, assurance and billing.

    • The theory behind this traditional model is that all the customer’s connectivity needs should be met by leveraging the end-to-end telco network / service offering. In practice, the end-to-end characteristics have not always been fully controlled or owned by the service provider.
    • In the new, further disaggregated value chain, different parts of the now more software-, IT- and cloud-based technology stack are increasingly provided by other types of player, including from other industry verticals. Telcos must compete to play within these new markets, and have no automatic right to deliver even just the connectivity elements.

All of these aspects of disaggregation can be seen as manifestations of a fundamental shift where telecoms is evolving from a utility communications and connectivity business to a component of distributed computing. The core business of telecoms is becoming the processing and delivery of distributed computing workloads, and the enablement of ubiquitous computing.

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Telco disaggregation is a by-product of computerisation

Telco industry disaggregation is part of a broader evolution in the domains of technology, business, the economy, and society. This evolution comprises ‘computerisation’. Computing analyses and breaks up material processes and systems into a set of logical and functional sub-components, enabling processes and products to be re-engineered, optimised, recombined in different ways, managed, and executed more efficiently and automatically.

In essence, ‘telco disaggregation’ is a term that describes a moment in time at which telecoms technology, organisations, value chains and processes are being broken up into their component parts and re-engineered, under the impact of computerisation and its synonyms: digitisation, softwarisation, virtualisation and cloud.

This is part of a new wave of societal computerisation / digitisation, which at STL Partners we call the Coordination Age. At a high level, this can be described as ‘cross-domain computerisation’: separating out processes, services and functions from multiple areas of technology, the economy and society – and optimising, recombining and automating them (i.e. coordinating them), so that they can better deliver on social, economic and environmental needs and goals. In other words, this enables scarce resources to be used more efficiently and sustainably in pursuit of individual and social needs.

NFV has computerised the network; telco cloud native subordinates it to computing

In respect of the telecoms industry in particular, one could argue that the first wave of virtualisation (NFV and SDN), which unfolded during the 2010s, represented the computerisation and digitisation of telecoms networking. The focus of this was internal to the telecoms industry in the first instance, rather than connected to other social and technology domains and goals. It was about taking legacy, physical networking processes and functions, and redesigning and reimplementing them in software.

Then, the second wave of virtualisation (cloud-native – which is happening now) is what enables telecoms networking to play a part in the second wave of societal computerisation more broadly (the Coordination Age). This is because the different layers and elements of telecoms networks (services, network functions and infrastructure) are redefined, instantiated in software, broken up into their component parts, redistributed (logically and physically), and reassembled as a function of an increasing variety of cross-domain and cross-vertical use cases that are enabled and delivered, ultimately, by computerisation. Telecoms is disaggregated by, subordinated to, and defined and controlled by computing.

In summary, we can say that telecoms networks and operations are going through disaggregation now because this forms part of a broader societal transformation in which physical processes, functions and systems are being brought under the control of computing / IT, in pursuit of broader human, societal, economic and environmental goals.

In practice, this also means that telcos are facing increasing competition from many new types of actor, such as:

  • Computing, IT and cloud players
  • More specialist and agile networking providers
  • And vertical-market actors – delivering connectivity in support of vertical-specific, Coordination Age use cases.

 

Table of contents

  • Executive Summary
    • Three critical success factors for Coordination Age telcos
    • What capabilities will remain distinctively ‘telco’?
    • Our take on three pioneering cloud-native telcos
  • Introduction
    • The telco business is being disaggregated
    • Telco disaggregation is a by-product of computerisation
  • The disaggregated telco landscape: Where’s the value for telcos?
    • Is there anything left that is distinctively ‘telco’?
    • The ‘core’ telecoms business has evolved from delivering ubiquitous communications to enabling ubiquitous computing
    • Six telco-specific roles for telecoms remain in play
  • Radical telco disaggregation in action: AT&T, DISH and Rakuten
    • Servco, netco or infraco – or a patchwork of all three?
    • AT&T Network Cloud sell-off: Desperation or strategic acuity?
    • DISH Networks: Building the hyperscale network
    • Rakuten Mobile: Ecommerce platform turned cloud-native telco, turned telco cloud platform provider
  • Conclusion

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O-RAN: What is it worth?

Introducing STL Partners’ O-RAN Market Forecast

This capex forecast is STL Partners’ first attempt at estimating the value of the O-RAN market.

  • This is STL Partners’ first O-RAN market value forecast
  • It is based on analysis of telco RAN capex and projected investment pathways for O-RAN
  • The assumptions are informed by public announcements, private discussions and the opinions of our Telco Cloud team
  • We look forward to developing it further based on client feedback

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What is O-RAN?

We define O-RAN as virtualised, disaggregated, open-interface architectures.

  • Our O-RAN capex forecasts cover virtualised, disaggregated, open-interface architectures in the Radio Access Network
  • They do not include vRAN or O-RAN compliant but single vendor deployments

O-RAN definition open RAN

O-RAN will account for 76% of active RAN capex by 2030

As mobile operators upgrade their 4G networks and invest in new 5G infrastructure, they can continue purchasing single vendor legacy RAN equipment or opt for multi-vendor open-standard O-RAN solutions.

Each telco will determine its O-RAN roadmap based on its specific circumstances (footprint, network evolution, rural coverage, regulatory pressure, etc)1. For the purpose of this top-level O-RAN capex forecast, STL has defined four broad pathways for transitioning from legacy RAN/vRAN to O-RAN and categorised each of the top 40 mobile operators in one of the pathways, based on their announced or suspected O-RAN strategy.

Through telcos’ projected mobile capex and the pathway categorisation, we estimate that by 2026 annual sales of O-RAN active network elements (including equipment and software) will reach USD12 billion, or 21% of all active RAN capex (excluding passive infrastructure). By 2030, these will reach USD43 billion and 76%, respectively.

Total annual O-RAN capex spend

Table of content

  • Executive summary
    • O-RAN forecast 2020-2030
    • Brownfield vs greenfield
    • Four migration pathways
  • Modelling assumptions
  • Migration pathways
    • Committed O-RAN-philes
    • NEP-otists
    • Leap-froggers
    • Industrial O-RAN
  • Next steps

 

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2020 in review and focus on North America: How should telcos do cloud?

Tenth update of the Telco Cloud Tracker

This report accompanies the tenth release of STL Partners’ ‘Telco Cloud Tracker’ database. This contains data on deployments of NFV (Network Functions Virtualisation), SDN (Software Defined Networking) and cloud-native network functions (CNFs) in the networks of the leading telcos worldwide. This analytical report focuses on trends in North America, set in global context.

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Scope and content of the Tracker

The data in the tenth update covers the period up to the end of January 2021, although reference is made in the report to events and deployments after that date. The data is drawn predominantly from public-domain information contained in news releases from operators and vendors, along with reputable industry media. However, it also includes a smaller set of deployment data disclosed to us confidentially by operators and vendors. This information is added to the aggregate data sections of the ‘Tracker’ spreadsheet, which do not refer to the specific solutions supplied or the operators where they were deployed.

We apply the term ‘deployment’ to refer to the total set of virtual network functions (VNFs), CNFs or SDN technology, and their associated management software and infrastructure, deployed at an operator – or at one or more of an operator’s opcos or natcos – in order to achieve a defined objective or support particular services (in the spreadsheet, we designate these as the ‘primary purpose’ of the deployment). For example, this could be:

  • to implement a virtualised mobile core
  • to launch a software-defined WAN (SD-WAN) service
  • or to construct a ‘telco cloud’ or NFV infrastructure (NFVi): a cloud infrastructure platform on which virtualised network services can be introduced and operated.

Accordingly, some of the deployments contained in the database comprise multiple elements, which are listed separately, including details about the category of NFV / SDN / CNF, and vendor and product name where known.

In addition to these mainly public-domain deployments, there are many non-publicised deployments that are inevitably omitted from the ‘Tracker’. However, the ever-growing ‘Tracker’ database now constitutes a considerable body of research that in our view offers a reliable snapshot of the overall market and the main trends in the evolution of telco cloud. In addition, as the ‘Tracker’ contains details only of deployments in live, commercial telco networks (either completed or in progress), this provides a useful corrective to the hype of some vendors’ pronouncements about agreements with operators, which often relate only to collaboration arrangements and preliminary trials, rather than commercial roll-outs.

The one exception to this rule of including only deployments that are implemented to support commercial services is a limited set of data on some of the current live network trials of open and / or virtual RAN (vRAN). The reason for making this exception is the very high level of interest currently in open RAN.

In terms of the telcos included, we limit the database mainly to Tier-One international and national telecoms operators, along with national fixed and mobile operators in smaller markets. For subsequent updates, we may expand the range and types of service providers included, because telco cloud is opening up opportunities for new players to provide cloud- and CNF-based connectivity and related services that are competing strongly with classic telco services.

SD-WAN in focus

In this update of the Tracker we have included a deep dive on SD-WAN, which was one of the main early drivers of SDN/NFV deployments, particularly among North American operators. It is worth exploring in more detail because, as it evolves into an increasingly cloud-centric and cloud-native service, it is emerging as another battleground between operators, hyperscalers and vendors.

5G is driving deployments – but will it drive business model change?

This is the first update to the ‘Telco Cloud Tracker’ in 2021, which provides an opportunity to review 2020 and discuss the key trends in 2021.

Despite the global pandemic, the pace of virtualised network function (VNF) deployments has continued at a strong level.

Total deployments by region, 2016 to 2021

Our projection is that the final number of deployments in 2020 will be at around the same level as 2019 (182 in total). Many live deployments are confirmed some time after the event, swelling the totals for previous years. Accordingly, some of the deployments currently recorded as ‘in progress’ will be added to the tally for 2020.

5G core dominates the scene but is done largely via single-vendor, ‘vertical’ NFV

The main driver of deployments in 2020 was 5G network launches around the world, particularly in the second half of the year. This meant that many Non-standalone (NSA) 5G cores – the platform supporting almost all live 5G networks – also went live, as is illustrated below:

 Deployments by leading network function, 2016 to 2021

We recorded 76 completed deployments of NSA cores in 2020, up from 56 in 2019. A further ten deployments were either completed or pending in the first quarter of 2021.

Table of content

  • Executive Summary
    • 5G core drives deployments
    • SD-WAN: Telco value moves from the WAN to the edge
    • The industry is facing an existential question: How should telcos do cloud?
    • Conclusion from North America analysis: Can a brownfield MNO be more cloud-native than a greenfield one?
  • Introduction
    • Tenth update of the Telco Cloud Tracker
    • Scope and content of the Tracker
    • SD-WAN in focus
  • 5G is driving deployments – but will it drive business model change?
    • 5G core dominates the scene but is done largely via single-vendor, ‘vertical’ NFV
    • The industry faces an existential question: how should telcos do cloud?
    • Focus on North America: four divergent answers to the existential question
  • SD-WAN: While WAN moves to the cloud, new software-defined value migrates to the edge
    • SD-WAN was one of the success stories of the first phase of SDN / NFV
    • SD-WAN has been largely made in America
    • Changes accelerated by Covid favour SD-WAN vendors over telcos – but telcos retain strengths in key areas
    • Main opportunities currently for telcos in SD-WAN, and challenge from vendors
    • ‘SD’ moves towards the edge, while ‘WAN’ moves to the cloud
  • Conclusion: Can a brownfield MNO be more cloud-native than a greenfield one?

 

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Microsoft, Affirmed and Metaswitch: What does it mean for telecoms?

What is Microsoft doing, and should telcos be worried?

Over the past two years, Microsoft and its cloud business unit Azure have intensified and deepened their involvement in the telecoms vertical. In 2020, this included the acquisition of two leading independent vendors of cloud-native network software, Affirmed Networks and Metaswitch. This move surprised many industry observers, as it represented an intensification of Microsoft’s involvement in telco networking.

In addition, in September 2020, Microsoft announced its ‘Azure for Operators’ strategy. This packages up all the elements of Microsoft’s and Azure’s infrastructure and service offerings for the telecoms industry – including those provided by Affirmed and Metaswitch – into a more comprehensive, end-to-end portfolio organised around Microsoft’s concept of a ‘carrier-grade cloud’: a cloud that is truly capable of supporting and delivering the distinct performance and reliability that telcos require from their network functions, as opposed to the mainstream cloud devoted to enterprise IT.

In this report, our discussion of Microsoft’s strategy and partnership offer to telcos is our own interpretation based on our research, including conversations with executives from Microsoft, Affirmed Networks and Metaswitch.

We examine Microsoft’s activities in the telecoms vertical in the light of three central questions:

  • What is Microsoft doing in telecoms, and what are its intentions?
  • How should telcos respond to Microsoft’s moves and those of comparable hyperscale cloud providers? Should they consume the hyperscalers’ telco cloud products, compete against the hyperscalers, or collaborate with them?
  • And what would count as success for telcos in relationship to Microsoft and the other hyperscalers? Are there any lessons to be learned from what is happening already?

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Microsoft’s telecom timeline

The last couple of years has seen Microsoft and Azure increasing their involvement in telecoms infrastructure and software while building partnerships with telcos around the world. This march into telecoms stepped up a level with Microsoft’s acquisition in 2020 of two independent virtual network function (VNF) vendors with a strong presence in the mobile core, among other things: Affirmed Networks and Metaswitch. Microsoft was not previously known for its strength in telco network software, and particularly the mobile domain – prompting the question: what exactly was it doing in telecoms?

The graphic below illustrates some of the key milestones in Microsoft’s steady march into telecoms.

Microsoft’s move on telecoms

Microsoft’s five partnership and service models

Microsoft Azure’s key initiatives over the past two years have been to expand its involvement in telecoms, culminating in Microsoft’s acquisition of Affirmed and Metaswitch, and the launch of the Azure for Operators portfolio.

As a result of these initiatives, we believe there are five models of partnership and service delivery that Microsoft is now proposing to operators, addressing the opportunities arising from a convergence of network, cloud and compute. Altogether, these five models are:

Five business models for partnerships

  • A classic telco-vendorrelationship (e.g. with Affirmed or Metaswitch) – helping telcos to evolve their own cloud-native network functions (CNFs), and cloud infrastructure and operations
  • The delivery and management of VNFs and CNFs as a cloud service, or ‘Network Functions-as-a-Service’ (NFaaS)
  • Enabling operators to pursue a hybrid-cloud operating model supporting the delivery of their own vertical-specific and enterprise applications and services, or Platform-as-a-Service (PaaS)
  • Rolling out Azure edge-cloud data centres into telco and enterprise edge locations to serve as a cloud delivery platform for third-party application developers providing low latency-dependent and high-bandwidth services, or ‘Network-as-a-Cloud Platform’ (NaaCP)
  • Using such Azure edge clouds – in enterprise and neutral facilities alongside telco edge locations – as the platform for full-fledged ‘net compute’ services, whether these are developed collaboratively with operators or not.

Table of Contents

  • Executive Summary
    • Microsoft wants to be a win-win partner
    • What should telcos and others do?
    • Next steps
  • Introduction
    • What is Microsoft doing, and should telcos be worried?
  • What has Microsoft done?
    • Microsoft’s telecom timeline
  • What is Microsoft’s strategy?
    • Microsoft’s five partnership and service models
    • The ‘Azure for Operators’ portfolio completes the set
    • 5G, cloud-native and net compute: Microsoft places itself at the heart of telco industry transformation
    • Cellular connectivity – particularly 5G – is pivotal
  • Telco-hyperscaler business models: What should telcos do?
    • Different hyperscalers have different telco strategies: comparison between Azure, AWS and Google Cloud
    • What should telcos do? Compete, consume or collaborate?
  • Microsoft’s ecosystem partnership model: What counts as success for telcos?
    • More important to grow the ecosystem than share of the value chain
    • Real-world examples: AT&T versus Verizon
  • Conclusion: Telcos should stay in the net compute game – and Microsoft wants be a partner
  • Appendix 1: Analysis of milestones of Microsoft’s journey into telecoms
  • Appendix 2: Opportunities and risks of different types of telco-hyperscaler partnership
  • Index

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AI is starting to pay: Time to scale adoption

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AI adoption yields positive results

Over the last five years, telcos have made measurable progress in AI adoption and it is starting to pay off.  When compared to all industries, telcos have become adept at handling large data sets and implementing automation. Over the last several years the telecoms industry has gone from not knowing where or how to implement AI, to having developed and implemented hundreds of AI and automation applications for network operations, fraud prevention, customer channel management, and sales and marketing. We have discussed these use cases and operator strategies and opportunities in detail in previous reports.

For the more advanced telcos, the challenge is no longer setting up data management platforms and systems and identifying promising use cases for AI and automation, but overcoming the organisational and cultural barriers to becoming truly data-centric in mindset, processes and operations. A significant part of this challenge includes disseminating AI adoption and expertise of these technologies and associated skills to the wider organisation, beyond a centralised AI team.The benchmark for success here is not other telcos, or companies in other industries with large legacy and physical assets, but digital- and cloud-native companies that have been established with a data-centric mindset and practices from the start. This includes global technology companies like Microsoft, Google and Amazon, who increasingly see telecoms operators as customers, or perhaps even competitors one day, as well as greenfield players such as Rakuten, Jio and DISH, which as well as more modern networks have fewer ingrained legacy processes and cultural practices to overcome.

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Telecoms has a high AI adoption rate compared with other industries

AI pays off

Source: McKinsey

In this report, we assess several telcos’ approach to AI and the results they have achieved so far, and draw some lessons on what kind of strategy and ambition leads to better results. In the second section of the report, we explore in more detail the concrete steps telcos can take to help accelerate and scale the use of AI and automation across the organisation, in the hopes of becoming more data-driven businesses.

While not all telcos have an ambition to drive new revenue growth through development of their own IP in AI, to form the basis of new enterprise or consumer services, all operators will need AI to permeate their internal processes to compete effectively in the long term. Therefore, whatever the level ambition, disseminating fundamental AI and data skills across the organisation is crucial to long term success. STL Partners believes that the sooner telcos can master these skills, the higher their chances of successfully applying them to drive innovation both in core connectivity and new services higher up the value chain.

Contents

  • Executive Summary
  • Introduction
  • Developing an AI strategy: What is it for?
    • Telefónica: From AURA and LUCA to Telefónica Tech
    • Vodafone: An efficiency focused strategy
    • Elisa: A vertical application approach
    • Takeaways: Comparing three approaches
  • AI maturity progression
    • Adopt big data analytics: The basic building blocks
    • Creating a centralised AI unit
    • Creating a new business unit
    • Disseminating AI across the organisation
  • Using partnerships to accelerate and scale AI
    • O2 and Cardinality
    • AT&T Acumos
  • Conclusion and recommendations
  • Index

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Telco Cloud Europe update: Open RAN approaching tipping point

Telco Cloud deployments on track for growth again in 2020

Ninth update of the ‘Telco Cloud Tracker’: from ‘NFV’ to ‘telco cloud’

This report accompanies the ninth release of STL Partners’ ‘Telco Cloud Tracker’ database. This contains data on deployments of NFV (Network Functions Virtualisation), SDN (Software Defined Networking) and cloud-native network functions (CNFs) in the networks of the leading telcos worldwide. This analytical report focuses on trends in Europe, set in global context.

For this update and hereafter, we have changed the name of the database from ‘NFV Deployment Tracker’ to ‘Telco Cloud Tracker’. The name change reflects STL Partners’ new focus on ‘Telco Cloud’ as both a research stream and consultancy practice. But the change also corresponds to the fact that the telecoms industry has now embarked on the second phase of its journey towards more integrally software-based networks – the first phase of which went under the banner of ‘NFV’. This journey is not just about a migration towards ‘software in general’, but cloud-native software: based on design principles developed by the cloud industry, which have the potential to bring cloud-scale economics, programmability and automation to connectivity and connectivity-dependent services.

The Tracker database is provided as an interactive Excel tool containing line-by-line analysis of more than 760 individual deployments of NFV, SDN and CNFs, which can be used to drill down on trends by company and region.

We will produce further research and reports on different aspects of cloud-native software and its impact over the coming months.

Growth in 5G core offset by declines in other areas

Telco cloud deployments so far

After a slight drop in the overall number of deployments in 2019, 2020 is set to be a year of modest growth, as is illustrated by the figure below:

Total number of deployments worldwide, 2014 to July 2020

Source: STL Partners

The data for 2020 is split up into completed, ‘pending’ and estimated additional deployments. We have recorded 63 completed deployments between January and July 2020. Pending deployments (totalling 72) are those previously announced that we are expecting to be completed during 2020 but which – to our knowledge – had not yet gone live in the commercial network by the end of July. The estimated additional deployments are derived from extrapolating to the full year 2020 from the total of completed implementations in the first seven months. This results in around 45 further deployments. On this basis, the total for the year as a whole would reach around 180 deployments: just above the previous record year of 2018 (178).

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Table of Contents

  • Executive Summary
  • Introduction: Telco cloud deployments on track for growth again in 2020
    • Ninth update of the ‘Telco Cloud Tracker’: from ‘NFV’ to ‘telco cloud’
    • Scope and content of the Tracker
  • 5G core drives new growth in 2020
    • Deployments are on the rise again
    • Growth has been consistent across almost all regions
    • Europe also on track to maintain its record of year-on-year growth
    • Deployments in Europe are still dominated by the major players, but smaller telcos are catching up
    • Vendors: Ericsson in close second place behind Cisco owing to strong presence in mobile core
  • Open RAN at a TIPping point in Europe
    • European telcos are playing a leading role in open RAN
  • Conclusion: Growth being driven by 5G – with open RAN waiting in the wings
    • Worldwide surge in NSA 5G core deployments
    • NSA 5GC is now nearly the leading VNF overall in Europe
    • … with cloud-native, SA 5GC coming down the pipeline
    • … and waiting in the wings: open RAN
    • These overlapping waves of innovation will make telco cloud mainstream

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NFV goes mainstream: How cloud-native is contributing to growth

This report accompanies the latest update of the NFV Deployment Tracker (June 2020).  It provides an analysis of global tracker findings and covers deployments from 2011 until March 2020.

About the NFV Deployment Tracker

The NFV Deployment Tracker is a regularly-updated database of commercial deployments of Network Functions Virtualisation (NFV) and Software-Defined Networking (SDN) technologies by leading telcos worldwide. It builds on an extensive body of analysis by STL Partners over the past five years on NFV and SDN strategies, technology and market developments.

The Tracker is provided as an interactive Excel tool containing line-by-line analysis of nearly 700 individual deployments of NFV and SDN, which can be used to drill down on trends by company and region.

The NFV Deployment Tracker

Overview of STL Partners NFV Deployment Tracker

Source: STL Partners

Previous reports have focussed on trends in specific regions, in addition to global findings. These include:

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NFV/SDN continues to grow at different speeds in different regions

NFV deployments continue to grow…

In total, our database now contains information on 689 NFV and SDN deployments comprising 1,401 individual functional elements, i.e. an average of just over two components per deployment. As has been the case since we began collecting data, the number of deployments (as defined by STL Partners) continues to grow year on year; although the trend as illustrated below requires some explanation:

Deployment growth continues – despite an apparent slowdown

Source: STL Partners

Pending deployments are those regarding which there is uncertainty surrounding completion.  STL Partners expects some of these will be allocated to 2019 as it discovers that they were completed in that year. 2019 could yet emerge as a growth year, and if not, 2020 looks set to exceed the totals for 2018 and 2019.

…but the rate and drivers of growth vary by region

If we make a more meaningful comparison – between 2019 and the first three months of 2020 (including pending deployments), on the one hand, and 2018, on the other – we see that the number of deployments has continued to grow in each region, apart from North America, where the market is maturing and the pace of new deployment has subsided.

Regional deployment growth, with the exception of North America

Source: STL Partners

Overall, the Asia-Pacific region has accounted for the largest number of deployments across all years: 232 (33.7%) of the total – just ahead of Europe on 226 (32.8%). North America has generated 135 deployments (19.6%), followed by the Middle East with 57, Latin America on 30, and Africa with 15.

Table of contents

  • Executive Summary
  • About the NFV Deployment Tracker
    • Scope
    • Definitions
  • Introduction: NFV/SDN continues to grow – but at different speeds in different regions
    • NFV deployments continue to grow…
    • …but the rate and drivers of growth vary by region
  • In detail: understanding the growth
    • 5G ushers in Phase 2 NFV in developed markets…
    • …while Phase 1 core virtualisation spreads to other markets
    • SD-WAN also goes global
    • SDN was a critical component in longhaul network upgrades
    • vRAN and open RAN enter the stage
    • A second wave of telco cloud deployments is also underway
    • NFV MANO deployments were geared to supporting multi-vendor VNFs over telco clouds
  • In detail: deployments by operator
    • Vodafone, & Telefónica: telco cloud builders innovate at the core and edge
    • China, Japan (& Finland): leading cloud-native deployment
    • AT&T & Verizon: virtualisation programmes near completion
  • In detail: deployments by vendor
    • Cisco & Nokia: generalists leading overall and in 2019/20 respectively, boosted by 5G cores
    • VMware: thriving on telco cloud and SD-WAN
    • Ericsson: leading on 5G cores
    • Huawei: real position is unclear
  • Conclusion: NFV’s first phase has delivered, but tougher challenges lie ahead
    • NFV has become a more and more integral part of telcos’ service portfolios and infrastructure
    • NFV has proven its worth in addressing the challenges of today…
    • … while cloud-native NFV is also getting underway, and may help address the challenges of tomorrow
    • Phase 2 NFV: innovating our way out of the crisis
    • What next?
  • Appendix: Glossary of terms

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NFV Deployment Tracker: Asia-Pacific points to the future of NFV

About the NFV Deployment Tracker

The NFV Deployment Tracker is a quarterly-updated database of commercial deployments of Network Functions Virtualisation (NFV) and Software-Defined Networking (SDN) technologies by leading telcos worldwide. It builds on an extensive body of analysis by STL Partners over the past four years on NFV and SDN strategies, technology and market developments.

The Tracker is provided as an interactive Excel tool containing line-by-line analysis of nearly 600 individual deployments of NFV and SDN, which can be used to drill down on trends by company and region.

Figure 1: The NFV Deployment Tracker

Overview of STL Partners NFV Deployment Tracker

Source: STL Partners

Each new release of the Tracker is global, but is accompanied by an analytical report which focusses on trends in a given region. Previous analysis includes:

This report accompanies the seventh update of the NFV Deployment Tracker, providing an overview of global trends, and a deep-dive on what’s happening in the Asia-Pacific region.

Scope and definitions

The NFV Deployment Tracker covers verified, live deployments of NFV and SDN in commercial telco networks. We do not include proofs of concept, commercial trials or mere agreements to deploy, unless these eventually result in a full commercial deployment.

The data derives mainly from public-domain sources, such as press releases by operators and vendors, or reputable industry media. We also include undisclosed deployments that the operators concerned have informed us about on a confidential basis. These are subsumed within the aggregate data sets analysed in this report but are not itemised in the detailed information contained in the Excel spreadsheet.

We include only telecoms operators, and not other types of company that rely on communications infrastructure and services to deliver their own services (such as cloud providers, internet exchange and hub operators, vendors, systems integrators, etc.).

The telcos included are mainly Tier One providers: those that rely on their own national and international, end-to-end facilities to deliver B2C or B2B services. However, we also include information on incumbent or dominant operators for smaller countries – which are not big enough to be defined as Tier One – as well as particularly innovative deployments by smaller or start-up players in significant markets.

Data in this report covers deployments from 2011 until August 2019.

Global context: NFV is definitely not dead

Global NFV deployments still growing; Asia-Pacific in the lead

We have gathered data on 572 live, commercial deployments of NFV and SDN technology worldwide between January and August 2019. These deployments include 1,161 VNFs, software sub-components and infrastructure elements for which information is available. Overall, the volume of new deployments worldwide has increased every year since 2011.

Figure 2: NFV deployments are picking up speed

NFV deployments by region and year 2011-2019

Source: STL Partners NFV Deployment Tracker

The total of 132 deployments for 2019 in the above chart includes both completed and pending implementations (we define pending as ongoing deployments that have not yet been verified as completed, but which we expect to be concluded in 2019). In addition, the 2019 total shown here runs only up to the end of August 2019; so we are confident that the full-year total for 2019 will exceed the 147 deployments recorded in 2018.

In fact, the number of deployments in Europe and the Middle East in 2019 to date has already exceeded the total for each of these regions for 2018 as a whole. In Asia-Pacific, the volume for the first eight months of 2019 (38) is already around 80% of the 2018 total (49) – meaning that the region is likely to show growth overall by the end of 2019. It must be noted that, by contrast, deployments in North America have declined significantly.

When measured purely in terms of deployments, Europe led the world for the first time in the first eight months of this year. However, in the previous three years – and overall – the Asia-Pacific region has deployed more than any other. We have gathered data on 203 live, commercial deployments of NFV and SDN technology in the Asia-Pacific region between January 2012 and August 2019 – 35.5% of the global total. This means that Asia-Pacific is the largest market for NFV and SDN.

Figure 3: Asia-Pacific leads in total NFV deployments worldwide

Asia-Pacific leads in global NFV deploymentsSource: STL Partners

Table of contents

  • Executive summary
  • About the NFV Deployment Tracker
  • Scope and definitions
  • Global context
    • Global NFV deployments still growing; Asia-Pacific in the lead
    • Growth in 2019 driven by virtualised 5G mobile cores
    • Mobile core virtualisation is the dominant driver of NFV overall
    • SDN retains its dominant role in Asia-Pacific
    • Vendors of mobile network cores performing strongly
  • Asia-Pacific in focus: leading on innovatio
  • More Asia-Pacific operators are embracing NFV and SDN
  • Pushing the boundaries of mobile core architecture
  • Winning the race to operationalise the 5G standalone core
  • Innovating on SDN-based, on-demand networking services
  • Ambition to innovate for economic and social development
  • Conclusion: Asia-Pacific both leads on past deployments and points the way ahead
    • Asia-Pacific leads the NFV/SDN market in two main ways
    • The region also points the way ahead for the industry
  • Appendix: Glossary of terms

Predicting the future: Where next for SD-WAN?

Introduction

This document is the third in a mini-series of three reports which seek to explore SD-WAN technology from an enterprise perspective, covering the challenges that SD-WAN is designed to address, the differing types of SD-WAN product on the market today, and how we envisage SD-WAN-type services evolving in future.

The first two reports in the series are:

Future evolution of SD-WAN

Any decision made about SD-WAN aspects or management must be taken not just in context of enterprises’ current networking challenges, but also in context of how those challenges, as well as networking technology, are likely to evolve. This report assesses where we expect the industry to go next.

At STL Partners, we believe that SD-WAN under its current definition is not an end in itself. All indications are that enterprises are becoming increasingly cloud-centric, and we see no sign of this trend reversing. SD-WAN will no doubt be a key component of the multicloud ecosystem – but it will require an evolution beyond the confines of what is currently being packaged and sold.

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In short, existing SD-WAN services are just the first step on a longer journey towards integrated, software-driven WAN operations and networking on a broader scale. Enterprises and vendors planning SD-WAN rollout would do well to consider how that evolution could unfold.

As with any new technology, there are multiple pathways that this evolution could follow – none of which are yet well-understood. STL Partners has identified three emerging evolution pathways, which we explain in detail below. The options are:

  1. SD-WAN used as the first step towards SD-Branch: SD-WAN is deployed as a stepping stone technology towards more advanced, integrated management of enterprises’ LANs and branches alongside the WAN.
  2. SD-WAN sold “as a Service”: SD-WAN starts to be offered as a more fully cloud-based software service, free from vendor or hardware-based constraints.
  3. SD-WAN used as an enabling component of edge/IoT platforms: SD-WAN features and infrastructure are integrated with service providers’ edge computing and Internet of Things (IoT) platforms, with sales focus on enterprise automation and process optimisation, rather than the SD-WAN component itself.

These options are of course not mutually exclusive and are likely in practice to be adopted in some combination of the different elements. It is quite feasible, for example, that some service providers will start to “upsell” their existing SD-WAN customers onto a more integrated “SD-Branch” offering (#1) – and to sell a flavour of this same offering as a cloud-based software option (#2). Indeed, we have already seen this happening in the marketplace.

In addition, all three options share two things in common:

  • A move towards cloud-centricity: Their focus is on the LAN and branch, WAN (delivered in an even more flexible, cloud-native way), the edge (and edge computing and IoT), respectively.
  • Increasing use of AI technology: Artificial intelligence (AI) and machine learning (ML) are pouring into all areas of technology and network infrastructure is no exception. The dynamic nature of traffic patterns over SD-WAN make it a prime candidate for this kind of tech to enable, say, security threat detection or traffic routing optimisation. Whichever direction SD-WAN takes, it is sure to make use of AI/ML.

In this report, we detail each of the three options, with particular reference to how they might benefit both enterprise customers, and those who will provide such SD-WAN services.

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Flavours of SD-WAN: What’s on offer and which work?

Introduction

This is the second in a mini-series of three reports which seek to explore SD-WAN technology from an enterprise perspective, covering the challenges that SD-WAN is designed to address, the differing flavours of SD-WAN product on the market today, and how we envisage SD-WAN-type services evolving in future.

The first and third reports in the series are:

This report examines the role that different types of SD-WAN solutions can play in helping digital enterprises address their growing networking challenges.

SD-WAN as a solution to the networking challenges of digital enterprises

In the first report, we discussed some of these challenges. These revolve around the need to carry a growing range and volume of mission-critical, application-specific data flows – reliably and securely – across a hybrid multi-cloud, multi-domain and distributed WAN environment. This includes different types and sizes of enterprise sites, branches, campuses and remote workers served by diverse access networks on a 24/7 basis.

We highlighted seven main networking challenges that SD-WAN products and services are designed to address, as follows:

  1. Managing the costs of WAN links
  2. Improving control of hybrid WAN and multi-cloud environments
  3. Assuring service and prioritising business-critical traffic
  4. Introducing new sites and capabilities
  5. Preventing attacks and mitigating security risks
  6. Managing different network domains and services across the whole enterprise
  7. Future-proofing enterprises’ advancing requirements while reducing complexity.

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In the present report, we look at SD-WAN in the context of the different flavours currently available on the market, and explore how current offers differ across several aspects:

  • Use of Customer Premises Equipment (dedicated appliance, uCPE or cloud?)
  • Networks used to deliver SD-WAN (overlay, hybrid or dedicated?)
  • Network topologies employed (hub and spoke, partial or full mesh?)
  • Security functions integrated
  • Extension across multiple geographies and domains

Throughout the report, we differentiate between these aspects of SD-WAN and the management requirements and features associated with them.

We also identify some of the leading vendor and service provider products and services that correspond to each of the types we discuss. This is intended for illustration and guidance only and does not constitute a recommendation.

What are the aspects of different SD-WAN deployments?

As set out in the introduction, we are differentiating in this report between aspects of SD-WAN and the management requirements and features associated with each aspect and with SD-WAN as a whole. These are:

Aspects of different SD-WAN deployments

aspects of SD-WAN deployments: CPE, networks, topology, security and extensions across geographies and domains

Source: STL Partners

In the rest of this report we highlight which management elements we regard as more specific to each individual aspect.

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Enterprise networking challenges: How can SD-WAN help?

Introduction

This document is the first in a mini-series of three reports which seek to explore SD-WAN technology from an enterprise perspective, covering the challenges that SD-WAN is designed to address, the differing types of SD-WAN product on the market today, and how we envisage SD-WAN-type services evolving in future.

The next two reports in the series are:

What networking challenges are faced by today’s digital enterprises?

Enterprises throughout the world are rapidly digitising their operations. Increasingly, the digital strategies they are adopting include the transition of business tools, applications and processes to a ‘multicloud’ environment: involving a hybrid combination of applications and data hosted in one or more public clouds alongside the company’s own private data centres.

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Digital enterprises require secure access to their applications and data from any location, at any time, via any device and over any network. At the same time, they need to ensure that their end users – both employees and customers – have the same application quality of experience as they did when the tools, applications and processes were hosted in the company’s own private data centre.

Unfortunately, existing WAN architecture models often do not provide the scale, flexibility or agility required to support this transition. These legacy WAN architectures typically leverage a hub and spoke network topology, where the hub is in the corporate data centre and static, point-to-point circuits that often require manual provisioning for deployment, moves, adds and changes connect the hub site to the branch offices. As these organisations transition to multicloud, the corporate data centre, hub site, becomes a bottle neck. Additionally, their static, manually provisioned circuits can’t keep pace with the dynamic nature of multicloud traffic flows.

Consequently, these businesses need to look for a new, simplified and automated approach to managing and transforming their WAN. Additionally, as enterprises look to leverage broadband internet to simplify and manage the cost of the WAN, they need to maintain the same SLA levels, ensure application quality of experience (QoE), and to be mindful of the security implications and risks in doing so.

SD-WAN platforms and services represent a response to these networking challenges that is being adopted more and more by enterprises of all sizes – from SMBs through to the largest multi-nationals – across all regions worldwide.

In this report, we highlight the main networking challenges that SD-WAN is designed to address, and outline in brief some of the ways it does so.

In a subsequent report, we will discuss the main types of SD-WAN platforms and services available on the market today, along with the leading vendors and communications service providers that provide them. And in a third report, we discuss some of the ways in which we expect SD-WAN technology and services to develop over the next few years as it expands to encompass more and more aspects of enterprise information and communications technology, and to meet the needs of new applications and automated processes

Which networking challenges does SD-WAN address?

In this section, we discuss the main problems faced by network engineers and operations personnel managing the WAN, and evolving its architecture and functionality, in response to the rapidly changing, digital requirements of their enterprise. At the same time, network operations are under increasing pressure to reduce costs while maintaining, and indeed improving, quality of service and experience.

With these pressures in mind, we have identified seven key networking challenges faced by enterprises:

7 key enterprise networking challenges

7 enterprise networking challenges

Source: STL Partners

In the rest of this report, we explore each of these challenges in detail, and how SD-WAN helps to address them.

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Three new telco business models: Soft-net, Cloud-net, Compute-net

Introduction

This report outlines three new telecoms business models that builds on previous research where we have outlined our vision of an emerging third age of telecoms called the Coordination Age. This is based on a global need to improve the efficiency of resource utilisation is manifesting in industries and individuals as a desire to “make the world work better”. We discuss this concept in detail in the following reports:

We believe that three new business models for telcos are emerging as part of the Coordination Age.

  • The Soft-Net: the core business remains connectivity, but the softwarisation of the network through SDN / NFV enables the network to adapt and scale to support new, advanced connectivity services. This includes third-party digital and networked-compute services that depend on the physical network connectivity the Soft-Net provides.
  • The Cloud-Net: also connectivity-focused, but with the production, delivery and consumption of services increasingly effected via the cloud (i.e. cloud-native). SDN and virtualisation enable capacity and services to be spun up, managed and delivered on demand over any physical network and device.
  • The Compute-Net: the core business is to provide distributed, networked, compute- and software-based services, often for specific enterprise verticals. These depend on SDN and NFV to deliver the ultra-fast, low-latency compute, throughput and routing capabilities required.

The three new models represent distinct strategic options for telcos looking to either: optimise and evolve their existing connectivity business; create new value from cloud-based, ‘horizontal’ platforms; or expand into new vertical markets – or a combination of all three approaches. This is illustrated here:

Interdependence between the three future telco business models

Source: STL Partners

In other words:

  • The Soft-Net operates the physical and virtualised infrastructure that delivers flexible, advanced connectivity in support of Cloud-Net and Compute-Net services (as well as well as legacy communications and connectivity services, delivered in a more scalable and cost-effective way)
  • The Cloud-Net delivers flexible, on-demand connectivity over hybrid infrastructure (including that owned by multiple Soft-Nets) in support of the increasingly complex and variable networking requirements of globally distributed, digital enterprises
  • The Compute-Net delivers vertically focused, compute-enabled processes and outcomes across all areas of industry and society. In doing so, it relies on networking and cloud platform services supplied by the Soft-Net and Cloud-Net, which may or may not be vertically integrated as part of its own organisation.

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The three telecoms business models link to NFV / SDN strategies

One of the distinguishing features of these models is the different modes of telco engagement in NFV and SDN they are potentially driven by. In previous analyses, we have identified three pathways towards NFV and SDN deployment. This is how they link to the three business models:

Figure 1: The three future telco business models and corresponding NFV pathways

Source: STL Partners, NFV / SDN deployment pathways: Three telco futures

In the rest of this report, we define these telecoms business models in more detail and illustrate how they present a pragmatic framework for telcos to focus their technology investments and develop valuable new Coordination Age services.

Contents:

  • Executive Summary
  • Introduction
  • Three telco futures and Telco 2.0
  • Chapter 1: Three telecoms business models for the Coordination Age
  • Three new business models: but why ‘telco’?
  • Business model analysis: Telcos’ vs competitors’ strengths
  • Relationship between the Soft-Net, Cloud-Net and Compute-Net business models
  • Chapter 2: Roles of the Soft-Net, Cloud-Net and Compute-Net in a ‘driverless car-as-a-service’ ecosystem
  • A driverless car-as-a-service business involves coordination of data, processes and events across a broad supply chain
  • Soft-Nets provide the mainly wireless connectivity
  • Cloud-Nets provide the hybrid, on-demand wide-area networking
  • Compute-Nets design and coordinate the ecosystem
  • Conclusions
  • The Coordination Age: A new purpose for telecoms, and three models for realising it
  • Key takeaways for telcos

Figures:

  1. The three future telco business models and corresponding NFV pathways
  2. The Telco 2.0 infrastructure and service stack
  3. Interdependence between the three future telco business models
  4. Two examples of the three new business models
  5. The three new business models overview
  6. Telcos face some fierce competition as they move up the stack
  7. Telco expansion across the three business models
  8. Advantages and disadvantages of vertical integration
  9. Mapping the Soft-Net, Cloud-Net and Compute-Net roles in a driverless car environment
  10. Types of data and corresponding compute-based services in a driverless car-as-a-service ecosystem

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NFV Deployment Tracker: Global review and update

Welcome to The NFV Deployment Tracker!

This report is the fourth analytical report in the ‘NFV Deployment Tracker’ series and is intended as an accompaniment to the third update of the Tracker Excel spreadsheet (to the end of June 2018).

The update extends the coverage of the Tracker worldwide: adding a comprehensive set of data on live, commercial deployments of NFV and SDN in the African, Latin American and Middle East markets to the existing data set on Asia-Pacific, Europe and North America. In addition, the spreadsheet contains updated and expanded data on deployments in the latter regions.

The expansion of the Tracker’s coverage worldwide presents an opportunity to gain an overview of global SDN and NFV development and deployment trends, and to assess the prospects for the technologies, and the services based on them, going forward.

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Previous editions and other NFV / SDN research

Scope of information provided by the Tracker

The data in the NFV Deployment Tracker is sourced primarily from public-domain information such as telco and vendor press releases and reliable press reports regarding successfully completed deployments and the launch of live, commercial services based on virtualised network functions (VNFs) or SDN. We have also obtained some confidential information direct from operators, which we are unable to present in the detailed break-down of deployments by operator. However, this information has been added to an aggregated data set, which is also provided in the spreadsheet.

The data is therefore limited to verified deployments: production implementations of NFV and SDN powering live services, where we can be confident that the data on the VNFs and IT components involved is accurate and – as far as possible – up to date. We also include some information on deployments planned to be completed by the end of 2017 or by a date as yet unknown, where the information is in the public domain, and where the size and scope of the deployments merit their inclusion.

Contents:

  • Executive Summary
  • The volume and pace of SDN / NFV deployments continues to grow…
  • …but some fundamental challenges remain
  • The focus of deployments varies region by region
  • Operator trends
  • Vendor trends
  • Conclusion
  • Introduction
  • Welcome to the third update of the ‘NFV Deployment Tracker’
  • Scope, definitions and importance of the data
  • Analysis of the global data set
  • Constant growth – but SDN / NFV deployment is far from universal
  • Asia-Pacific ahead on number of deployments despite a slowdown in 2018
  • SD-WAN, SDN, core network functions and orchestration have driven the growth in 2018
  • Operator trends: Leading players rack up the deployments, leaving others lagging far behind
  • Vendor trends: a few major players dominate the scene – but telcos continue to look for alternatives
  • Conclusion 

Figures:

  • Figure 1: Growth in the number of SDN / NFV deployments per year, 2012 to June 2018
  • Figure 2: Breakdown of total deployments by region, 2012 to June 2018
  • Figure 3: Deployments by region, 2014 to 2018
  • Figure 4: Global deployments by higher-level category, 2014 to 2018
  • Figure 5: Deployments in Europe by leading category, 2014 to 2018
  • Figure 6: Asia-Pacific deployments by higher-level category, 2014 to 2018
  • Figure 7: Deployments in North America by leading categories, 2014 to 2018
  • Figure 8: Global deployments of leading VNFs and functional components, 2014 to 2018
  • Figure 9: Total deployments of leading VNFs and functional components, Middle East
  • Figure 10: Leading VNFs and functional components, Latin America
  • 1Figure 11: Leading operators by number of deployments, global
  • Figure 12:  Leading vendors by number of deployments, global
  • Figure 13: Leading vendors by deployment category 25

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NFV Deployment Tracker: Asia takes the lead

Introduction

Welcome to the second update of the ‘NFV Deployment Tracker’

This report is the third analytical report in the ‘NFV Deployment Tracker’ series and is intended as an accompaniment to the second update of the Tracker Excel spreadsheet (dated March 2018).

The update provides a comprehensive set of data on live, commercial deployments of NFV and SDN in the Asia-Pacific market. Under ‘Asia-Pacific’, we include all of the countries of Central, Southern and South-East Asia, along with Oceania. In addition to the new set of data for Asia-Pacific, the spreadsheet contains updated and revised data on deployments in the European and North American regions.

In June 2018, the data set and analysis will be extended to all other regions worldwide, with the aim of providing the industry’s most comprehensive, authoritative source of information on live deployments of NFV and SDN.

Scope, definitions and importance of the data

Detailed explanation of the scope of the information provided in the Tracker, definitions of terms (including how we define a live ‘deployment’ and definitions of frequently used NFV / SDN acronyms) and an account of why we think it is important to track the progress of NFV / SDN are provided in the first analytical report of the series – so we will not repeat them here.

Analysis of the Asia-Pacific data set

Overall data and trends: Asia-Pacific is the largest global market for NFV

We have gathered data on 102 live, commercial deployments of NFV and SDN in Asia-Pacific between 2012 and 2018. These were completed by 33 telcos, including all of the major operators in China, Japan, South Korea and Australia. Deployments have been more limited in India: seven in total, including two global implementations by Tata Communications. Altogether, the data includes information on 203 known Virtual Network Functions (VNFs), functional sub-components and supporting infrastructure elements that have formed part of these deployments.

This means that Asia-Pacific is the largest market for NFV and SDN, measured purely in terms of number of deployments. The Asia-Pacific totals outstrip the updated numbers for both Europe (89 deployments and 182 VNFs / functional components) and North America (62 deployments and 126 VNFs / functional components). The number of operators that have completed deployments is also higher than that in Europe or North America.

Contents:

  • Executive Summary
  • Asia-Pacific is the leading global SDN / NFV market
  • Introduction
  • Welcome to the second update of the ‘NFV Deployment Tracker’
  • Scope, definitions and importance of the data
  • Analysis of the Asia-Pacific data set
  • Overall data and trends: Asia-Pacific is the largest global market for NFV
  • SDN, SD-WAN and core network functions have driven the growth
  • Operator trends: Innovators lead the way, closely followed by the Chinese giants
  • Vendor trends: SD-WAN and vCPE vendors lead the way
  • Conclusion

Figures:

  • Figure 1: Total NFV and SDN deployments in Asia-Pacific, 2012 to 2018
  • Figure 2: Asia-Pacific deployments by higher-level category, 2014 to 2018
  • Figure 3: European deployments by higher-level category, 2014 to 2018
  • Figure 4: North American deployments by higher-level category, 2014 to 2018
  • Figure 5: Leading VNFs and functional components deployed in Asia-Pacific
  • Figure 6: Leading Asia-Pacific operators by number of NFV / SDN deployments
  • Figure 7: Leading vendors by number of deployments