Reluctance to deploy VNFs on the cloud reflects a persistent, legacy concept of the telco

VNFs on public cloud: Opportunity, not threat

There have been very few significant deployments of VNFs on the public cloud, even by leading telco advocates of virtualisation and cloud-native. STL Partners recently outlined extent to which telco network functions (VNFs and CNFs) are being deployed on public cloud, and particularly that of the leading hyperscalers. See AWS, Azure and Google.

STL Partners believes the continued separation of the network and IT domains in the thinking and practice of leading telcos (i.e. telco NFs kept separate from public cloud) reflects the persistence of a legacy concept of the telco, and an unwillingness to embrace the full logic and benefits of the cloud. In particular, the very notion of a ‘private telco cloud’ seems anachronistic: it harks back to when the network did truly represent a distinct technology domain, i.e. when it was based on dedicated, function-specific equipment. In the wake of virtualisation, and now in the era of cloud-native, the network itself (at least, the intelligent systems that run it) has become pure software and computing. And this is software, moreover, that is deliberately designed to be portable across multiple, hybrid cloud environments.

By resolutely holding on to ‘ownership’ of their telco cloud and CNFs, telcos are in effect trying to artificially perpetuate a separation of the network from the cloud that is no longer valid, as the network has become cloud. This does not, however, mean that there are not other valid competitive, regulatory or indeed security reasons why it might be desirable to maintain some degree of separation between the telco and hyperscale cloud.

Indeed, behind the concern that the ‘core’ connectivity business of telcos could be swallowed up by hyperscalers – if telcos became dependent on them to run their networks – lies perhaps a more grave concern: that telcos would then lose the logical network as a control point allowing them to dictate the terms on which hyperscalers gained access to their physical infrastructure as part of new edge compute use cases.

The nightmare scenario would then be: hyperscalers dominating both the cloud and the network – the edge compute, the application software (via partners) and the delivery mechanism (via the network) – with telcos being relegated merely to construction, operation and maintenance of physical infrastructure at the behest of the hyperscalers, and their application and connectivity partners. Almost literally just subcontractors digging holes in the ground, and wiring up cables, antennas and access points.

Over the past two to three years, many leading telcos have concluded co-operation agreements with the three largest hyperscalers that grant them access to the 5G edge to offer it as just such an edge compute platform to their application partners: Network-as-a-Cloud Platform (NaaCP).

Telco and hyperscaler co-operation agreements 2019 – January 2022

Source: STL Partners

NaaCP will drive more VNF deployments on public cloud, and opportunities for telcos as outlined in STL’s Partners report VNFs on public cloud: Opportunity, not threat.

Why the telco industry is revisiting convergence​

Why the telco industry is revisiting convergence

Convergence in networks has been pursued for many years to varying degrees but operators have often pursued divergence to support the speed and need for innovation at the expense of convergence. We explore what has changed and why the balance of forces has now shifted in favour of convergence.

Cloud native and disaggregation have shifted the balance of forces towards convergence

Communications service providers (CSPs) have consistently explored and sporadically pursued convergence over many years but they have always had to navigate the balancing act between the forces of convergence and divergence. Convergence has been part of the pursuit of simplification while divergence was seen as a means of innovation, given the need for speed and challenges with specificity in the traditional appliance-based world. This often meant that it was easier and quicker to deploy isolated islands to quickly address customer opportunities at the expense of any convergence efforts.

However, the advent of cloud native operating practices and increasing disaggregation means that CSPs no longer have to compromise between convergence and the need to support innovation, and move towards having a common network that serves diverse needs. By enabling operators to decouple and recombing various building blocks, disaggregation can separate and reduce any interdependencies while highlighting potential commonalities and areas that make convergence more viable.

Source: STL Partners

The renewed pursuit of convergence is driven by both internal and external drivers

Through our research with CSPs globally, we identified four main drivers for why CSPs have renewed their interest and pursuit of convergence:

Convergence

Source: STL Partners

1. Reducing total cost of ownership (TCO) through simplification and consolidation

  • Reducing duplication in capital deployment, better resource utilisation, economies of scale
  • Easier to assure and manage, common infrastructure and management toolset
  • Seamless foundation for other solutions on the network

2. Enabling greater control, resilience and automation

  • Ability to navigate greater network intricacy: Enabling mass scale visibility, greater automation and E2E control of the network for easier operations
  • Creating the basis for infrastructure-agnostic service design (e.g. access agnostic) for third parties

3. Creating a sustainable platform for massive data growth

  • Maximising use of infrastructure to support volume expansion and high performance demands
  • Extract greater synergies from access fibre to reduce own environmental footprint as part of greater emphasis on sustainability (see more in our report here)

4. Supporting greater innovation and ecosystem development

  • Creating the basis to deliver customer-specific services (e.g. via network slicing) with ability to define, manage, deliver and route app-specific services end-to-end
  • Exposing network programmability and capabilities to customers and partners to support requirements

…but convergence is multi-faceted and the pursuit is not without its challenges

Convergence should not be seen as just a technology decision but a fundamental strategic one. The demands on the network and from customers of all shapes and sizes are only going to increase. CSPs are also under pressure from new types of ‘co-opetition’ (e.g. the hyperscalers, greenfield operators, other digital players) to respond much faster to market and customer demands. Therefore, they need to be able to handle these demands and accelerate the beat rate of innovation in a way that provides greater operational simplicity, cost effectiveness and agility. Or be at risk of their market share and value eroding as a result.

The drivers for convergence as a broader concept are clear. However, through our research, we found different definitions of what exactly the term convergence means to CSPs. Furthermore, CSPs are also taking different approaches in pursuing convergence. In our report, we explore the following key questions:

  • What are the different dimensions of convergence? How are these related to one another and how do these (in different combinations) enable CSPs to address the four key drivers?
  • What strategies and approaches are different types of operators pursuing and why?
  • What are the key challenges and/or barriers that operators are facing?
  • Given the challenges and inherent complexity, how can they overcome them?

Our findings are based on an interview programme with telecoms operators globally. For more information and to access the full report, please use the link here.

Author: Yesmean Luk is a Principal Consultant at STL Partners, specialising in all things Telco Cloud

Telco Cloud insights pack

This 24-page document will provide you with a summary of our insights from our virtualisation research and consulting work:

  • Overview of Telco Cloud deployments worldwide
  • Benefits of telco cloud: state of the industry
  • Deployment approaches: implications and challenges
  • How STL Partners can support you

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Network slicing: Where are we today and how far is there to go?

Network slicing: Where are we today and how far is there to go?

Network slicing is an exciting prospect for both telcos and enterprises, but the technology is still a long way away from large scale adoption. This article explores some examples of early tests and deployments, as well as considerations for telcos looking to monetise network slicing in the future.

The promise of network slicing

Network slicing promises to unlock some of the key benefits of 5G network architecture. By creating multiple, dedicated, end-to-end networks on the same infrastructure, network slicing promises operators the ability to provide flexible and secure networking services to their enterprise customers. For the telecoms industry, network slicing offers a chance to deliver tailored services to different enterprise customers in a dynamic way. Enterprises can benefit from services customised to their specific needs and even to specific use case requirements.

Yet despite the hype around this technology, and the opportunity for both telcos and enterprises, widespread rollout is still somewhat nascent given its dependence on the deployment of 5G standalone. This article explores some of the existing tests and deployments that have taken place to date, as well as the ways in which telcos can look to monetise network slicing as the technology matures.

Where are we today?

To reach the vision of dynamic network slicing, it relies on the fully virtualised infrastructure of 5G whereby network functions do not run on dedicated physical appliances, and instead run as software in data centres. Each network slice can run as a complete network with its own capabilities and characteristics, adapted to use case or customer-specific requirements. For example, one slice might be used to support applications that require ultra-low latency. Another might support IoT use cases, for example a factory with hundreds of IoT devices. Essentially, enterprise customers can be allocated to slices depending on the use cases they are looking to support. Furthermore, the inherent flexibility of this architecture allows new network slices to be created, operated and retired as needs change. This allows operators to cater to enterprises as their requirements evolve.

Given the dependency of network slicing on the rollout of 5G standalone, live deployments of this technology are understandable still in their early stages. Only a small number of operators have so far deployed 5G standalone core with early movers such as DNA in Finland, China Telecom and T-Mobile USA. But the majority of operators are yet to deploy a standalone core and are planning to do so in the next two years. For example, Telia, SK Telecom, Rogers, and Verizon are all aiming to deploy in 2022 and 2023. Until the technology to enable network slicing is more readily available, examples of live deployments will remain limited. We have outlined some early trials, as well as the first deployment of network slicing below.

Early end-to-end network slicing trials

Orange, Nokia and Schneider Electric

In June 2021, Orange and Nokia deployed a 4G/5G private network with network slicing functionality at Schneider Electric’s factory in Le Vaudreuil, France. Nokia’s slicing solution can be used with existing LTE and 5G (standalone and non-standalone) devices. In what Nokia and Orange claim as an industry first, it enables full slice connectivity through domain controller software in the RAN, core and transport layers. This functionality supports high levels of security, quality of service and scalability that are essential in supporting the Industry 4.0 use cases that Schneider Electric will be testing.

Ericsson, Deutsche Telekom and Samsung

Ericsson, Deutsche Telekom and Samsung collaborated earlier this year to deliver the world’s first 5G end-to-end network slicing trial. The trial demonstrated the benefits of end-to-end networking slicing for cloud virtual reality game streaming using Ericsson’s commercial grade 5G standalone core infrastructure. This includes the RAN, 5G cloud core, slide orchestration and ordering automation. The trial was undertaken at Deutsche Telekom’s lab in Bonn for a VR streaming game use case, using two independent network slices; one with the default mobile broadband slice and an optimised slice for cloud VR gaming. The optimised slice delivers higher throughput and lower latency and demonstrated an enhanced experience on the gaming slice despite network congestion.

Zeetta Networks and National Composites Centre (NCC)

In partnership with the NCC, a manufacturing research group, Zeetta Networks plans to deploy a sliceable private 5G network. The network will run on hardware and software provided by US-based RAN equipment provider, Airspan. This includes the provision of radios, distributed and centralised baseband units. Druid, a private networks integrator, will provide the local core which enables the slicing functionality. Taking the concept of slicing one step further, Zeetta has coined the term ‘network splicing’ which it is developing to enable automated, on-demand slicing from different networks to enhance flexibility and leverage optimal capacity and performance across these networks.

In the NCC deployment, three separate slices are combined: one from NCC’s own private network deployed at its HQ, another from private network deployed at a different location, and another from the public transport network. “For the first time in the world, an industrial 5G network can not only be customized and divided into multiple logical networks, but each of those virtual networks can be extended across a transport network to reach another virtual network in a completely different administrative domain,” said Zeetta Networks founder and CEO Vassilis Seferidis. “This would allow, for example, a critical asset to be tracked continuously in real time and with the same quality-of-service as it is transported from the point of production, to being received at the destination location.”

The question of monetisation

It is clear that network slicing is still in its early stages and operators are a long way from delivering on the promises of this technology at scale. But while the network technology matures, operators should also consider the commercial aspects and associated requirements on their IT systems (e.g. OSS and BSS) to enable operators to manage, orchestrate and monetise network slicing. Given slicing is designed to provide more tailored solutions to different types of customers, partners and use cases, operators’ IT systems must also be able to support various business models and service types, including more on demand services, charging for different outcomes (e.g. per slice of network capacity, instead of per byte), different payment or commercial models etc.

Additionally, operators should also look to review their go-to-market strategy. Network slices may be sold directly to enterprise, or to third parties on a wholesale basis. In the latter scenario, operators should ensure they still have access to value-added services in order to secure access to ongoing revenue opportunities.

Furthermore, operators can look to enhance their BSS to cater to enterprise customers in a flexible way to successfully capture new value streams. This could include:

  • Bespoke support for enterprise customers in designing and implementing their tailored made solutions
  • Improve omni-channel experiences and expand digital channel support in response to increased customer demand and complex billing enquiries
  • Dedicated teams to support B2B2X partnership models
  • Providing comprehensive technical and operational support
  • The use of automation and orchestration to manage diverse product catalogues including lifecycle and partner management

Ultimately, network slicing is an exciting prospect for operators and enterprise alike. Enabled by the rollout of 5G standalone, this technology can give rise to new use cases and enhanced revenue opportunities for telcos that are able to reimagine their commercial and BSS capabilities.

Author: Grace Donnelly is a Senior Consultant at STL Partners, specialising in Telco Cloud

Telco Cloud insights pack

This 24-page document will provide you with a summary of our insights from our virtualisation research and consulting work:

  • Overview of Telco Cloud deployments worldwide
  • Benefits of telco cloud: state of the industry
  • Deployment approaches: implications and challenges
  • How STL Partners can support you

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Mapping the telco’s cloud native approach

cloud native

Based on operator interviews and market understanding, STL Partners mapped telco approaches to cloud native across two dimensions with the aim of drawing insights and wider recommendations for all telco leaders considering their stance on cloud native.

Dimension 1 (the horizontal axis) reflects differences in telcos’ operating model visions, ambitions and capabilities. Dimension 2 (the vertical axis) is a measure of the operators’ market outlook expressed as the perceived level of pressure on their current business model.

Operators’ change ambition (dimension 1) can vary from “cautious evolution” to “ambitious transformation”:

  • Some operators are more cautious about their own capabilities and accordingly, their expectations on how they would deploy cloud native network code. They see themselves as operating others’ technology delivered to them in a turnkey fashion. This is more akin to how legacy networks have been deployed and managed. By limiting or deferring change and adopting a best-of-suite approach, they hope to evolve to cloud native operations over time. These tend to be smaller operators with significant legacy operations. These operators’ customer-facing teams have little visibility of or see little relevance for their customers in cloud native networking.
  • Other operators, with more ambitious transformation objectives, anticipate that they take a stronger, hands-on, more accountable approach in combining and operating others’ technology, potentially from multiple suppliers. This is more akin to how cloud native applications are managed in enterprise IT domains. At their heart, these operators see themselves as software-based technology firms. Although these tend to be larger operators or operator groups, we also found some smaller operators with a strong automation focus that fall into this group. Customer-facing teams also understand what cloud native networking means in practice and what it enables for customers.

Telco perceptions of current business model pressure (dimension 2) ranges from “current model remains viable” to “current model is unviable”:

  • Some operators recognise that they are experiencing considerable immediate pressures on their existing telco models. Consumer revenues are in decline, due to intensifying competition from other operators, including current challengers and new entrants. Strong local tech competitors (including the hyperscalers) also constrain the opportunities for operators to grow their ‘share of wallet’ from enterprises. This being all the harder with largely undifferentiated applications and solutions. This pressure on revenues is coupled with a new wave of (5G) investment and a substantial ongoing cost base. The leadership knows that things must change and fast.
  • Other operators perceive that they face less pressure on their existing telco model. It may be that consumer demand and connectivity revenues are still growing for them and competition may have been less intense (e.g. a duopoly). These operators believe that they are in a strong position to expand their service offerings to enterprises without having to be particularly innovative; in many cases they have trusted brands and are seen as local tech leaders by enterprises and consumers. Regulatory and/or geographic market characteristics may provide barriers to entry. Although there are undoubtably operators who enjoy a favourable market environment, this is a shrinking group. Furthermore, perceptions can be misleading. They may be in for a shock.

STL Partners report Cloud native: Just another technology generation? contains recommendations for the leadership of telcos in each of the resultant four broad groups.

See our other in-depth research on Telco Cloud:

Cloud native: Just another technology generation?

Cloud native networking: Telecoms’ latest adventure

As a term, cloud native has currency in telecoms networking. 5G has contributed to the recent industry-wide interest in adopting cloud native applications for networks. This is because the 5G standalone core networks (5G SA) that operators are now planning (and some have started deploying) are intended to run as software that is specified and architected following cloud native principles.

Within telecoms, thinking about cloud native tends to centre on the next phase of moving network functions into a software environment, building on lessons learned with NFV/SDN. Viewed from this perspective, cloud native is the next step in the telecoms industry technology evolution: from analogue to digital circuit-switched to digital IP to virtualised to cloud native.

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Telcos’ business model is reaching end-of-life

The rise of mobile telephony and fixed and mobile broadband means that telecoms operators have enjoyed 20 years of strong growth in all major markets. That growth has stalled. It happened in Japan and South Korea as early as 2005, in Europe from 2012 or so and, market by market, others have followed. STL Partners forecasts that, apart from Africa, all regions will see a compound annual growth rate (CAGR) below 3% for both fixed and mobile services for the next three years. Ignoring pandemic ‘blips’, we forecast a CAGR of less than 1% per annum globally. This amounts to a decline in real terms.

The telecoms industry is reaching the end of its last growth cycle

The telecoms industry’s response to this slowdown has been to continue to invest capital in better networks – fibre, 4G, 5G – to secure more customers by offering more for less. Unfortunately, as competitors also upgrade their networks, connectivity has become commoditised as value has shifted to the network-independent services that run over them.

In other words, the advantage that telcos had when only telecoms services could run on telecoms networks has gone: the defensive moat from owning fibre or spectrum has been breached. Future value comes from service innovation not from capital expenditure. The chart below sums the problem up: seven internet players generate around 65% of the revenue generated by 165 operators globally, but have a c. 50% bigger combined market capitalisation. This is because the capital markets believe that revenue and profit growth will accrue to these service innovators rather than telecoms operators.

Tech companies are more highly valued than telcos

Understand, then emulate the operating model

Operators have been aspiring to learn from technology firms so they can transform their operations and services. But changes have been slow, and it is difficult to point to many ‘poster child’ operators that successfully made a move beyond pure telecommunications. Partly this is due to a mismatch between corporate announcements and their investment policies. Too often we hear CEOs express a desire to change their organisations and that they intend to offer a host of exciting new services, only to see that aspiration not borne out when they allocate resources. Where other tech companies make substantial investments in R&D and product development, operators continue to invest miniscule amounts in service innovation (especially in comparison to what is poured into the network itself).

Telco vs tech-co investment models

STL Partners believes that many of the network-related activities that will enable operators to reduce capital expenditure, such as cloud-native networking, will also enable them to automate and integrate processes and systems so they are more flexible and agile at introducing new services. So, an agile software-oriented infrastructure will enable changes in business processes such as product development and product management, partnering, and customer care – if management prioritises investment and drives change in these areas. Cloud native business practices and software were developed by technology companies (and then widely adopted by enterprise IT functions) as a means to deliver greater innovation at scale whilst reducing the level of capital relative to revenue.

Our belief is that financial and operational developments need to happen in unison and operators need to move quickly and with urgency to a new operating model supported by cloud native practices and technology, or face sharp declines in ROI.

Table of Contents

  • Executive Summary
  • Table of Figures
  • Preface
  • Cloud native networking: Telecoms’ latest adventure
  • Telcos’ business model is reaching end-of-life
    • Understand, then emulate the operating model
    • The coordination age – a new role for telcos
    • 5G: Just another G?
    • Cloud native: Just another technology generation?
  • Different perspectives: Internal ability, timing …and what it means to be a network operator
    • Organisational readiness, skills and culture
    • Target operating model and ecosystem
    • Assembly versus Engineering
    • Wider perceptions across the business functions
    • Operator segment 1: Risk of complacency
    • Operator segment 2: Align for action
    • Operator segment 3: Urgent re-evaluation
    • Operator segment 4: Stay focused and on track
  • Appendix 1
    • Interviewee overview
  • Appendix 2
    • Defining Cloud Native
    • There is consensus on the meaning of cloud native software and applicability to networks
    • Agreement on the benefits: automation at scale for reliability and faster time to market
    • …and changing supplier relationships

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Operator strategies to cloud native networking

Operator strategies to cloud native networking

This blog post is a short-form version of an in-depth report investigating the different operator strategies to cloud native networking which can be found here. This report was written after a series of interviews with senior telco leadership.

Register for our ‘Operator strategies to cloud native networking’ webinar with Oracle on Wed, 24 Feb here

Defining Cloud Native

Cloud native applications have associated architectures, technologies and practices originating from Big Tech and widely adopted by enterprise IT to run infrastructure-agnostic applications. The Cloud Native Computing Foundation (as good as any authority) defines Cloud Native as follows:

“Cloud native technologies empower organizations to build and run scalable applications in modern, dynamic environments such as public, private, and hybrid clouds. Containers, service meshes, microservices, immutable infrastructure, and declarative APIs exemplify this approach.

These techniques enable loosely coupled systems that are resilient, manageable, and observable. Combined with robust automation, they allow engineers to make high-impact changes frequently and predictably with minimal toil.”

The Coordination Age

The current telecoms operating model is not sustainable. Commoditisation of core connectivity services means that revenues are stagnating while traffic volumes (and costs) continue to grow. Operators must adapt to achieve greater innovation through automation, at scale: in particular, they need to provide new, differentiated network services that work hand-in-glove with telcos’ own and others’ applications that meet the demands of customers and needs of society. We call this the Coordination Age. The operators that succeed, will do so with an operating model supported by technology intended to deliver innovation at scale: fast, low cost, reliable, highly automated. In two words, cloud native.

Figure 1: Telcos’ route to growth is through innovation at scale

cloud native networking

Source: STL Partners

Different operator strategies

Most operators share common definitions of cloud native and agree that it is both relevant and inevitable for telecoms networks. However, they have different perspectives on how cloud native code will be applied tot heir networks.

Some operators are more cautious.They are concerned about their ability to deploy cloud native network code given existing workforce and skillsets. They see themselves primarily as operators of others’ technology, which they implement as a guaranteed package -much how legacy networks have traditionally been deployed and managed. They are not ready to take on additional engineering accountability implicit in cloud native practices. (e.g. CI/CD pipeline management)and requiring a more detailed understanding of their networks’ underlying components’ internal workings.Furthermore, some of these operators do not see an immediate need to pursue dramatic transformation as they do not perceive that their business model is failing.

Other operators are more ambitious. They see themselves as needing to combine and operate technology from multiple different suppliers, more akin to how cloud native applications are managed in IT domains. They expect to combine and adapt different suppliers’ network components and to have a sufficient understanding of those components’ internal workings to do so.They believe that this better places them to take advantages of the promised benefits of cloud native networking: flexibility, scalability, automation, and the elusive combination of reliability and fast time to market of new services and rapid evolution of existing services. They thus hope to build and sustain competitive advantage over other operators and application providers.

With the aim of drawing insights and wider recommendations for all operators, we mapped operators into four broad groups across two dimensions.

Figure 2: Telco cloud native operator matrix

cloud native networking

Source: STL Partners

Telco leadership recommendations by segment

We address our recommendations to these four quadrants.

Quadrant 1: Cautious evolution, current model seen as viable – Risk of complacency

  • Cloud native strategy: plan for the change to come: the eventual adoption of cloud native practices, processes, organisation, and skills. Understand the risks of deferring this, identify and monitor market trigger points, set internal development thresholds, prepare responses.
  • Skills, organisation, and culture: Build capabilities for a more software-first organisation. Re-organise operations to reflect a well-defined future mode of operation. Create opportunities and incentives for teams to build confidence in running cloud native applications. Cultivate a learning culture where failing fast is shared openly.
  • Partnerships: Choose partners with deep IT and cloud experience who can further accelerate your operators’ own learnings. Select ecosystem partners that are committed to the realisation of an open, cloud native and standards-based approach with a deep understanding of service reliability and security. Operators should seek ecosystem partners that have demonstrated a success track in cloud technologies.

Quadrant 2: Ambitious transformation, current model seen as viable – Align for action

  • Cloud native strategy: understand where you want to build your own IP and focus on this. When allocating budgets make sure you understand the circumstances under which cloud native should be chosen over alternatives. Manage stakeholder expectations. Prioritise and focus.
  • Skills, organisation, and culture: when you pursue a transformation strategy, commit properly. Reorganise, re-skill, recruit, and reward. Create opportunities and incentives for teams to build confidence in running cloud native applications.
  • Partnerships: Mitigate risks and challenges of moving to cloud native by choosing ecosystem partners that can bring discipline, structure, operational blueprints, and guidance. These partners should be experienced in implementing cloud native and standards approach.

Quadrant 3: Cautious evolution, current model seen as unviable – Urgent re-evaluation

  • Cloud native strategy: Do not defer decisions. Act decisively and with clarity, one way or the other and avoid drifting down a business-as-usual trajectory out of inertia. Manage stakeholder expectations.
  • Skills, organisation, and culture: bring clarity of purpose and make sure that this is translated in a meaningful way to employees and other stakeholders. Define the future mode of operation in detail. Offer a clear route for employees to learn new skills and adopt new practices.
  • Partnerships: select partners that can inspire confidence and drive change. Those that can demonstrate having ‘lived’ through the cloud’s evolution from a definition of basic characteristics to something that is now an entire landscape of technology with an accompanying operational philosophy. Above all pick ecosystem partners that have demonstrated a success track in cloud technologies.

Quadrant 4: Ambitious transformation, current model seen as unviable – Stay focused on track

  • Cloud native strategy: Maintain momentum by identifying and communicating early success stories across all stakeholders: customers, investors, employees, and partners. Do not pursue cloud native networking as an end in itself. Ensure that the networking transformation is closely coupled with new service and ecosystem development. Stay rigid on de-coupled architecture. Don’t compromise
  • Skills, organisation, and culture: Ensure clarity of purpose on the overall vision is shared by all. Start with customers and partners, follow with culture, skills, organisation and operating model. Technology adoption will follow. If you have not done so already, consider creating a strong C-level product role to bridge technology and customers.
  • Partnerships: Select ecosystem partners that are committed to the realisation of an open, cloud native and standards approach with a demonstrated success track in cloud technologies. Avoid CNF partners that seek to impose specific hardware, containerisation, Linux release or orchestration.

Author: Matt Bamforth is a consultant at STL Partners, specialising in edge computing, telco cloud and 5G.

Register for our ‘Operator strategies to cloud native networking’ webinar with Oracle on Wed, 24 Feb here

Telco Cloud insights pack

This 24-page document will provide you with a summary of our insights from our virtualisation research and consulting work:

  • Overview of Telco Cloud deployments worldwide
  • Benefits of telco cloud: state of the industry
  • Deployment approaches: implications and challenges
  • How STL Partners can support you

Just click on the button below to request your free pack.

 

Read more about Telco Cloud, Cloud Native, NFV & SDN

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Read more

Top ten tenets of Telco Cloud

Top ten tenets of Telco Cloud

Below, we outline our top 10 tenets in Telco Cloud, sharing our high-level view of where we see the telecoms industry moving and what we believe the future will be.

1. Networking is special, but not that special 

Telco cloud is not just about telecoms networks and IT and the move to cloud native technologies, it is also about changing the fundamental operating model: about processes, policies, skills, organisational structure, partnership models and culture that enable operators to innovate much faster and pursue agile product and service development.  

2. The future is chopped: you need smaller building blocks with rigid architecture 

The world is continually being chopped into smaller building blocks (from monolithic to microservices-based), which is a fundamental aspect of digitisation. Enforce a super-rigid domain architecture with these building blocks (e.g. BSS, Network, Edge, IoT etc.to empower domains to adapt and evolve much faster. 

3. Decouple, decouple, decouple 

To reinforce this rigid architecture, decouple infrastructure from software, decouple IT (BSS) from networking and customer applications, and decouple (the teams’) accountability from control and define clear boundaries.

4. OTT is doomed, long live NEA (network enabled application)  

OTT will die (as a term): Networking will increasingly be consumed through applications. Networks will become programable, accessible and “instructable therefore applications will no longer be “over the top”, but increasingly integrated to and enabled by network APIs.

5. Customer and partner models are changing

More of your network services will be consumed through (real) ecosystems, where the value lies in enabling your own and others’ applications. But to do so, it is not about self-care portals. Provide access to network resources through APIs and developer toolsets, as programmers are becoming customers and customers are becoming programmers themselves.

6. Continuous improvement of existing services will be the new normal 

Customers (and solution partners) expect to benefit from improvements and new capabilities, without having to ‘order’ upgrades or contract new product.

7. The distinction between OpEx and CapEx should not matter  

Financial reporting considerations should not undermine (the right) resource decisions. Procure capabilities as XaaS to enable you to reallocate resources more quickly and fail faster.

8. Everyone must be coding-conversant

Employees in all functions must be conversant and comfortable with coding and agile development concepts…not just IT.

9. Know the code you use, especially others’ code you use 

Understand your own plumbing (IT, Networking, IoT) and take greater ownership of it so that you can add value and create differentiation by bringing together different partner components to your/their customer solutions.

10. Programmable by design is preferable but automating existing may be the best next step

Automating existing human processes and interfaces is a ‘sticky plaster’ interim measure and not a destination for Telco Cloud. It’s still pretty good.

STL Partners is committed to working with executives who share a vision for the industry that involves greater agility and innovation, a bigger role for the network and operators, and believe that implementing Telco Cloud is a key foundation of success. We will be sharing more detailed thoughts on the above and where we see the industry moving very soon, so stay tuned!

Telco Cloud insights pack

This 24-page document will provide you with a summary of our insights from our virtualisation research and consulting work:

  • Overview of Telco Cloud deployments worldwide
  • Benefits of telco cloud: state of the industry
  • Deployment approaches: implications and challenges
  • How STL Partners can support you

Just click on the button below to request your free pack.

 

Read more about Telco Cloud, Cloud Native, NFV & SDN

Research

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

The number of deployments of NFV and SDN continues to grow – but while some markets are moving on to the next phase, others are just getting going.

Read more

Research

Open RAN: What should telcos do?

Alongside the roll-out of 5G cores and radios, the Radio Access Network (RAN) is evolving to a more open, virtualised and distributed architecture. What are the opportunities and risks for telcos?

Register now

Research

Telco Cloud: Why it hasn’t delivered, and what must change for 5G

Telco cloud made big promises for the transformation of telecoms. It is a fundamental enabler for 5G and the exciting opportunities ahead. Why hasn’t it delivered yet – and what needs to change?

Read more

Operator strategies in cloud-native networking

Operator strategies in cloud-native networking

As operators around the world begin to plan their deployment of 5G SA and Open RAN, the focus on adopting a ‘cloud native’ approach to networking has come to the fore. Operators agree that cloud native is inevitable for networking but how differently do they see this working in practice?

In this webinar, we will share STL’s latest research findings on the different operator strategies in approaching cloud native networking. While some operators see cloud native technology and practices as essential parts of a wider change in their operating model, there are other operators more cautiously looking to accommodate cloud native networking within existing operating and partnership models. Can both be right?

Presenters

Philip Laidler, Partner – STL Partners
Matt Bamforth, Consultant – STL Partners
Todd Spraggins, Strategy Director, Communications Global Business Unit – Oracle
Darwin Janz, Senior Planner, Technology Strategy – SaskTel
Shakil Ahmed, Global Lead, Telenor Hybrid Cloud Platform – Telenor

Key topics discussed in the webinar:

  • The key benefits of a cloud native approach to networking
  • Where different operators are heading
  • Potential risks and mitigation

See our other forthcoming webinars or catch up on any you’ve missed

The second cloud-native wave of NFV is being driven by 5G

The second cloud-native wave of NFV is being driven by 5G

Telco cloud deployments are still growing globally

The increasing investments that are being made by operators into 5G, justified based on new use cases which assume extreme sophistication and flexibility in the network, make a better telco cloud an urgent priority. Telco cloud has not yet delivered on its big promise of openness, flexibility, visibility, control, performance at scale, and offering a platform for agile service innovation.

After a slight drop in the total number of deployments in 2019, 2020 is set to be a year of modest growth for telco cloud deployments. We recorded 63 completed deployments from January to July 2020, as well as another 72 pending deployments which we expect to be completed by the end of this year. Finally, we are expecting an additional 45 deployments by December 2020 (it should be noted that this is a conservative estimate, given COVID-19), taking the number of deployments in 2020 to around 180 in total.

NSA 5G core deployments driving growth in 2020

The main driver of growth in the first seven months of 2020 has been deployments of non-standalone (NSA) 5G cores, used to support either completed or upcoming 5G network launches. These deployments have been consistent across all regions, bar Latin America, with the strongest growth seen in Asia-Pacific and North America.

By contrast, the volume of new implementations of SD-WAN and virtualised Evolved Packed Core (vEPC) has declined relative to earlier years, with the EPC (the 4G core) now being superseded by deployments of the NSA 5G core. Looking to Europe specifically, if the trends for the first seven months of 2020 continue throughout the rest of the year, NSA 5G cores will be the leading category of VNF deployed in Europe overall (and across all years). This shows that NFV – or more broadly, virtualisation or telco cloud – is far from running out of steam.

Instead, we see telco cloud as entering a potentially bigger, second phase, based on cloud-native technology and serving as an integral enabler of 5G networks and services. Even so, the NSA 5G core is set to be superseded by the more integrally cloud-native standalone 5G core, which is essential to realising the potential for telco 5G networks to support the plethora of long-anticipated, new use cases across different industry sectors and social needs.

Deployments in Europe will probably fail to reach 2019 levels

Our tracker has recorded 43 deployments – completed and pending – in the first seven months of 2020, compared to a total of 69 in the full year of 2019. Based on our analysis, if we extrapolate the number of deployments in the year to date, this brings us to an estimated total of 57 deployments for 2020 as a whole.

One reason as to why Europe will probably fail to maintain its record of year-on-year growth is that Europe went through its initial surge of 5G network launches in 2019, whereas other regions are now experiencing that in 2020 in contrast. We see the same thing when we look at SD-WAN deployments in Europe, where many telcos have completed their SD-WAN service launches which results in the pace of new deployments receding. Both SD-WAN and NSA 5G core make up the two leading VNFs deployed in Europe from 2014 to July 2020.

Smaller telcos are increasingly entering the scene in Europe

Although the European scene is still dominated by the larger players (i.e. the likes of Vodafone, Telefonica, Deutsche Telekom etc.), we have seen indications that more and more smaller operators are now carrying out virtualisation programmes.

By the end of 2018, we saw a total of 29 telco operators who had deployed VNFs, SDN / SD-WAN or cloud-native functions (CNFs) in Europe. However, by July 2020, this number has gone up to a total of 43 telcos across Europe. This could be driven by the need to keep up with larger domestic competitors in areas such as non-standalone 5G core, virtualisation of the EPC and SD-WAN.

Tipping point for open RAN?

An equally important, cloud-native, virtualised building block for the delivery of such use cases, and for mass-scale/low-latency 5G – open RAN – is making steady strides, particularly via the initiatives of Europe-based telcos. While open RAN is far from being a ‘done deal’, there are plenty of indicators from the activities of Europe-based operators that we may be at a tipping point where open RAN starts to be deployed at scale.

STL Partners will continue to track the progress of cloud-native networks and cloud-centric telco business models, both in the Telco Cloud Tracker and in more focused reports in our Telco Cloud stream. We will be discussing the state of the SD-WAN market in more detail in the next release of our tracker, with our analysis focusing on North America.

Author: Giulia Bollen Gandolfo is a Consultant at STL Partners, specialising in telco cloud, BSS platforms and how e-Commerce channels can impact telco bottom lines.

Telco Cloud insights pack

This 24-page document will provide you with a summary of our insights from our virtualisation research and consulting work:

  • Overview of Telco Cloud deployments worldwide
  • Benefits of telco cloud: state of the industry
  • Deployment approaches: implications and challenges
  • How STL Partners can support you

Just click on the button below to request your free pack.

 

Read more about Telco Cloud, Cloud Native, NFV & SDN

Research

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

The number of deployments of NFV and SDN continues to grow – but while some markets are moving on to the next phase, others are just getting going.

Read more

Research

Open RAN: What should telcos do?

Alongside the roll-out of 5G cores and radios, the Radio Access Network (RAN) is evolving to a more open, virtualised and distributed architecture. What are the opportunities and risks for telcos?

Register now

Research

Telco Cloud: Why it hasn’t delivered, and what must change for 5G

Telco cloud made big promises for the transformation of telecoms. It is a fundamental enabler for 5G and the exciting opportunities ahead. Why hasn’t it delivered yet – and what needs to change?

Read more

Cloud native telecoms: Are CNFs the future?

Cloud Native Telecoms: Are CNFs the future?

Cloud native telecoms: Are CNFs the future?

I’ve written before about the difficulty of extracting reality from tech marketing spin. My job is to turn hype technologies (5G, NFV, edge clouds…) into business opportunities. A big part of that is looking at what vendors are saying about their products and trying to figure out how much is possible now, as opposed to some theoretical point in the future.

Under the spotlight at the moment: the claim that “cloud native” is the future of networking technology. Let’s unpick this.

First, we must define “cloud native”.

At its most specific, the term is shorthand for cloud native computing, a software development approach. As the CNCF puts it: “technologies to empower organisations to build and run scalable applications in modern, dynamic environments such as public, private, and hybrid clouds”.

In practice, this means using very flexible software technologies to build loosely coupled systems that are very easy to observe, manage and change.

If you want to get super-geeky about it, there are specific technical methodologies (Twelve-Factor App), and a host of technologies (containers, microservices, serverless functions, immutable infrastructure). But the key thing to understand is cloud native applications are software that was designed from the ground up to run in the cloud.

The problem is that we’re talking about networking, and networking is always a special case.

Carrier-grade networks were never designed from the ground up to run in the cloud. Far from it. Networks are dominated by very powerful but inflexible dedicated equipment – hefty application-specific hardware such as switches and gateways.

Network function virtualisation (NFV) was meant to be a way around that, but it isn’t, largely because it involves simulating the dedicated hardware on a generic computer. It works – and is a great way to move towards software models quickly. But it’s not easy to scale and has no chance of performing as well as a dedicated appliance.

So, the vendor community has begun to push the cloud-native network function (CNF). This means networking apps designed from the ground up as software apps. They’ll run without many of the overheads associated with virtualisation, and therefore be faster, more efficient, more scalable, etc etc etc….

Our data shows that cloud native is not all hype. Cloud native networking deployments are now starting to happen – 5G cores by China Mobile and DNA in Finland; Rakuten’s not-quite-fully-cloud-native 4G network – and more are in the works.

But claiming cloud native to be “the future” is problematic.

First, phase one NFV isn’t going anywhere – it will remain important for at least another few years. Many markets are only now beginning the initial deployment of virtualised 4G core networks (vEPC) and over the next five years we expect a wave of open RAN and vRAN deployments.

Graph showing NFV deployments by year, 2011-2020Q1. Growing in all regions, each year.

But more importantly, everything that the industry is promising for cloud-native has been promised before. NFV was also meant to be fast, efficient and scalable. Inevitably, in a few years’ time there will be a next step which is even faster, more efficient, and more scalable. IT is easy to conclude that cloud native is simply another phase in the telco cloud journey.

Perhaps a more important question is – will cloud native deliver everything telcos need?

My hypothesis: only if it happens alongside the long overdue opening-up of vendor and partner ecosystems. Cloud native will only truly deliver what the telecoms industry needs if it is “open”, in the loosest sense of the word.

Achieving an open networking ecosystem means a lot must change: more standardisation and automation, deployment templates, frameworks, and so on. Those same challenges held back NFV. The newer tools that are emerging should make this second wave more effective, but it’s too early to say for sure.

Meanwhile, as network functions become pure software, we face a much bigger issue: the convergence of cloud computing and telecoms. No longer will networking be a distinct discipline – and therefore the telecoms industry has the challenge of carving out a new role for itself… More on that in a future post!

Author: Matt Pooley, Telco Cloud Practice Lead

Telco Cloud insights pack

This 24-page document will provide you with a summary of our insights from our virtualisation research and consulting work:

  • Overview of Telco Cloud deployments worldwide
  • Benefits of telco cloud: state of the industry
  • Deployment approaches: implications and challenges
  • How STL Partners can support you

Just click on the button below to request your free pack.

 

Read more about Telco Cloud, Cloud Native, NFV & SDN

Research

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

The number of deployments of NFV and SDN continues to grow – but while some markets are moving on to the next phase, others are just getting going.

Read more

Research

Open RAN: What should telcos do?

Alongside the roll-out of 5G cores and radios, the Radio Access Network (RAN) is evolving to a more open, virtualised and distributed architecture. What are the opportunities and risks for telcos?

Register now

Research

Telco Cloud: Why it hasn’t delivered, and what must change for 5G

Telco cloud made big promises for the transformation of telecoms. It is a fundamental enabler for 5G and the exciting opportunities ahead. Why hasn’t it delivered yet – and what needs to change?

Read more

15 NFV Solution providers to watch

15 NFV Solution providers to watch

Here at STL Partners, we have been following developments and deployments in the Telco Cloud space for several years. Below, we highlight fifteen different companies that offer NFV solutions, broken down into three buckets:

  • Traditional Network Equipment Providers (NEPs)
  • Other NFV giants
  • Start-ups you may not have heard of

Traditional NEPs

Ericsson

HQ: Stockholm, Sweden
Website: https://www.ericsson.com
Date founded: 1876
Number of employees (2019): 99,417
Revenue (2019): SEK 227.2bn

Offering:

Ericsson’s NFV offerings address the whole stack, including NFV MANO, core VNF’s (such as vEPC), as well as a complete NFVi solution. Their offerings seek to provide customers with several different deployment options, whether it be a full decoupling of NFV solutions or full stack solution deployment. They emphasise that their objective is to bring new levels of performance, flexibility and optimisation.

Ericsson is collaborating with others in the space. Their collaboration with VMware, for example, aims to simplify network virtualisation for CSPs, accelerating time to market for new services and enabling customers to fully embrace the opportunities of services like VoLTE and 4G/5G.

 

Huawei

HQ: Shenzhen, Guandong
Website: https://www.huawei.com/uk/
Date founded: 1987
Number of employees (2019): 194,000
Revenue (2019): 121.72 billion USD

Offering:

Huawei provides a full NFV solution, based on open cooperation with NFV Open Lab, as well as integration of individual NFV components and existing network integration in multi-vendor scenarios. They provide carrier-class high availability services, and claim a faster TTM relative to competitors and an open ecosystem.

The products and solutions developed by Huawei’s cloud core network team are interoperable with and authorised by the major cloud OS vendors, such as RedHat, Ubuntu and Windriver. This means operators can select the portfolio of VNF software, cloud OS and COTS hardware that suits them best, reducing concern over compatibility risk during integration and deployment.

Juniper Networks

HQ: Sunnyvale, California
Website: juniper.net
Date founded: 1996
Number of employees (2019): 9,400+
Revenue (2019): 4.4 billion USD

Offering:

Juniper offers a carrier-grade NFV solution that combines a dynamic cloud orchestration system with a supporting reference architecture based on virtualisation and programmability. They have a production-ready suite of NFV capabilities that orchestrates and automates the provisioning and operation of network functions, both virtualised and physical.

They are committed to an open-platform approach, helping firms stay flexible and minimize risks by avoiding vendor lock-in. These elements enable a platform to rapidly deliver new services to market. The NFV solution further has a built-in automation capability powered by machine learning to optimise the distributed cloud infrastructure and VNFs, to help guarantee SLA delivery.

Cisco

HQ: San Jose, California
Website: www.cisco.com
Date founded: 1984
Number of employees (2019): 75,900
Revenue (2019): 51.9bn

Offering:

“Cisco Evolved Services Platform provides a comprehensive multivendor NFV solution that is based upon open standards and APIs. It is extensible by offering comprehensive modular capabilities that span the entire network operator architecture: cloud, video, mobile and fixed. It is elastic; it seamlessly and dynamically scales services and resources whenever and wherever they are needed. Cisco’s NFV portfolio has the most extensive set of virtual network functions available on the market”

Cisco’s NFV Infrastructure solution provides the compute, storage, networking infrastructure and management and assurance to run NFV services. It is a fully integrated, carrier-grade and robust solution, that delivers “high performance, availability, security and scalability”

Cisco’s open-ecosystem approach to network function virtualisation allows thier partners, which include Fortinet, f5 and Palo Alto, to submit their VNFs for certification, as well as Cisco offering VNFs that are developed in-house

Nokia

HQ: Espoo, Finland
Website: https://www.nokia.com
Date founded: 1865
Number of employees (2018): 103, 083
Revenue (2018): 22.56bn Euro

Offering:

Nokia offer a “comprehensive portfolio” of NFV-ready products, solutions and services, boasting “hundreds” of commercial SDN & NFV deployments. Their “horizontal operations” delivery model enables the delivery of managed cloud services for virtualised network products from Nokia (including vIMS, vCPE, vEPC and OSS applications), as well as managing network virtualisation transformation for customers.

As with the above players, Nokia are also partnering with other players, particularly around easing the deployment of VNFs. Partners here include VMware, to certify Nokia’s VNFs on VMware’s vCloud NFV platform, to help speed up the onboarding of VNFs by service providers, as well as f5, “to enable service providers to deploy a wide range of VNFs, coupled with complete MANO”.

Nokia acquired Nuage Networks in 2015 (founded 2013, https://www.nuagenetworks.net/, based in the San Francisco Bay Area), who seek to “empower [their] customers to finally deliver on the true promise of the cloud”, and to work towards a “world where innovation isn’t hampered by infrastructure … where network resources are as effortless consumable as compute and storage”. To this end, they deliver scalable and programmable SDN solutions within and across the DC and out to the SD-WAN, with the security and availability required by business-critical environments.

Other NFV giants

Red Hat

  • HQ: Raleigh, North Carolina
  • Website: https://www.redhat.com/en
  • Date founded: 1993
  • Number of employees (2019): 13,400
  • Revenue (fiscal year 2018): 3.4 billion USD

Offering:

Red Hat’s NFV solution delivers the entire core software stack for NFV, as well as integrating key technologies from open source communities, including OpenStack and Linux, into its enterprise-grade projects. Red Hat is “the only open technology vendor that delivers the entire core software stack needed for NFV”, ensuring “better interoperability, stability, and security” across the NFV environment. Furthermore, Red Hat Consulting delivers design and installation services, mentoring, as well as training and certification services for OpenStack.

Red Hat works closely with an extensive system of partners, which helps them “offer flexible and complete solutions” that work best for the needs of the customer. Their partners include Affirmed, Amdocs, Atos and Cisco.

 

Amdocs

  • HQ: Chesterfield, Missouri (corporate), Saint Peter Port, Guernsey (registered office)
  • Website: https://www.amdocs.com/
  • Date founded: 1982
  • Number of employees: 25,000
  • Revenues (2019): 4.1 billion USD

Offering:

As “the industry’s first software and services portfolio to leverage ONAP (Open Network Automation Platform)”, Amdocs NFV enables service providers to accelerate adoption and monetisation of NFV and SDN.

Amdocs help service providers with the whole process, starting with strategy and planning, as well as implementation (helping service providers deploy the platform and integrate it into their (hybrid) networks, and with operations (the services to help ongoing operation, assurance and optimisation of the platform).

Amdocs has a wide ranging NFV partner ecosystem, including 160+ VNFs from leading industry vendors, including Affirmed, Mavenir and Juniper and Palo Alto. In collaboration with these partners, Amdocs is able to their NFV portfolio to enable “fast, low-cost design, fulfilment and monetisation of hybrid network services”

 

Netcracker Technology

  • HQ: Waltham, Massachusetts
  • Website: https://www.netcracker.com/
  • Date founded: 1993
  • Number of employees (Owler):7000
  • Revenues (Owler): 1.8 billion USD

Offering:

The Netcracker SDN/NFV portfolio comprises “several market-ready solutions built on a common platform powered by Agile Virtualisation Platform and Practice” (AVP), and the portfolio “helps service providers seamlessly transition to cloud networks and services”. Their solution is designed to combat the “key challenges of commercialisation, multivendor services and optimal efficiency”, and enables service providers to start with any virtualised service and incrementally add new services”, thus providing greater efficiency and agility.

They have a “robust” partner ecosystem and a digital marketplace of commercially ready services, as well as consulting and professional services, and they have worked with Swisscom, Deutsche Telekom, Etisalat and Vodafone.

Netcracker have received multiple awards, including the 2019 MEF award for Orchestration, Service Automation and Technology Leadership, as well as the 2019 TM Forum Excellence Award for operational transformation and agility.

 

VMware

  • HQ: Palo Alto, California
  • Website: vmware.com
  • Date founded: 1998
  • Number of employees (2019): 24,200
  • Revenue (fiscal year 2019): 9 billion USD

Offering:

VMware’s vCloud NFV is an ETSI-compliant NFV platform for Communications Service Providers, providing a “fully integrated, modular, multi-tenant” NFV platform offering “compute, storage, networking, management and operations capabilities”

Their cloud combines a “carrier grade NFV infrastructure” with VMware vCloud Director for Service Providers acting as the Virtualised Infrastructure manager (VIM).

VMware have also developed the VMware Ready for NFV certification program, bringing together “the largest ecosystem of VNF vendors, orchestration providers and system integrators”. Named partners include Affirmed Networks, Cisco, Fortinet and F5.

 

Ciena

  • HQ: Hanover, Maryland
  • Website: ciena.com
  • Date founded: 1992
  • Number of employees (2018): 6,013
  • Revenue (2018): 3.1 billion USD

Offering:

Ciena have developed a distributed-NFVI software, a “complete, modular solution specifically optimised” for the distributed NFV environment. The software is built to address deployment issues related to distributed-NFV use cases, allowing for rapid implementation of advances and providing flexibility in deployment.

Their software is capable of being deployed on any physical server, including an x86-based commercial-off-the-shelf server, and each component is licensed to operate individually or as a complete stack, thus eliminating vendor lock-in

BluePlanet, a division of Ciena (founded 2006, blueplanet.com, headquartered in San Francisco Bay Area) provides intelligent and automated NFV orchestration capabilities for instantiating, managing and chaining VNFs. It conforms to the ETSI MANO guidelines, and they further leverage APIs and other technologies to simplify integration with different OSS, SDN, and VIM platforms.

Their open, vendor-agnostic strategy enables customers to use the VNFs and cloud infrastructure of their choice to “simplify the operationalisation of new NFV-based services and scale them according to customer demand”

 

Start-ups you may not have heard of

Nefeli networks

  • HQ: Berkeley, California
  • Website: nefeli.io
  • Date founded: 2016
  • Number of employees (Crunchbase): 11-50
  • Revenue (Crunchbase): unknown, Nefeli Networks have gained 9.2 million USD in venture funding

Offering:

Nefeli Networks develops orchestration and infrastructure solutions for network application. They have developed a platform that is able to virtualise “entire classes of network appliances into composable building blocks to create rich, scalable, and easy-to-manage network services”. The aim is to “creat[e] the next generation of software for managing and operating large scale networks”. 

The founders, CTO Sylvia Ratnasamy, an associate professor of computer science at the University of California, Berkeley, and Chairman Scott Shenker (co-founder and initial CEO of Nicira before its acquisition by VMware), also co-founded LeanNFV.org, the entity behind the Lean NFV open architecture, about which you can read more here.

 

Zeetta

  • HQ: Bristol, UK
  • Website: https://zeetta.com/
  • Date founded: 2015
  • Number of employees: 25 (full-time)
  • Revenue (Crunchbase): unknown, raised 4.1 million USD in venture funding

Offering:

Zeetta Networks is a “network automation company that delivers digital transformation with intelligence and automation”. “They offer Open Networking solutions for heterogenous networks based on SDN and Network Virtualisation technologies”, which they sell through their commercial proposition: NetOS®, a network control and management platform for enterprises and managed service providers.

NetOS was deployed in the UK’s first public trial of an urban 5G deployment, at the 5G Layered Reality event in Bristol in March 2018. The demonstration showed several use cases, “including Smart City Safety and real-time HD VR/AR applications, supported over the same physical infrastructure with dedicated network slices”. NetOS was used to provision and operate these network slices on-demand, each with their individual latency and bandwidth requirements.

The work of Zeetta Networks has been recognised by multiple industry bodies, including GSMA’s Global Mobile Awards, TMF’s Excellence Awards and the 5G World Awards, as well as being recognised as a “Gartner Cool Vendor” for Communications Service Provider Network Operations in 2019.

 

netElastic systems

  • HQ: Santa Clara, California
  • Website: https://netelastic.com/
  • Date founded: 2016
  • Number of employees (Crunchbase): 11-50
  • Revenue (zoominfo): 6 million USD

Offering:

netElastic state that their vision is to help providers succeed with their network transformation goals. Since they were founded in 2016, they have worked with 40% of the top carriers in the world, as well as many smaller carriers to understand their infrastructure challenges.

They are a “leading innovator of NFV software for carriers with a suite of products leveraging low-cost hardware” (SDX central). Their solutions are purpose-build to meet the needs of carriers, and include “market-leading scalability and performance, massive multi-tenancy, core network integration, and always-on high availability clusters”. By providing carrier-class performance and significant cost benefits, netElastic is helping to change the economics of networking.

netElastic have been nominated for numerous industry innovation awards, including Light Reading’s Leading Lights Award for Most Innovative NFV Product Strategy and Network Virtualisation Europe’s Most Innovative NFV Solution Award. In 2019, they further achieved Winner’s Circle Status, the highest recognition level as the Intel® Network Builders Winner’s Circle Program.

 

InManta

  • HQ: Leuven, Belgium
  • Website: https://inmanta.com/
  • Date founded: 2016
  • Number of employees (Linkedin): 11-50
  • Revenue: unknown

Offering

Inmanta have developed an “innovative, integrated” approach for management and orchestration (MANO), which provides capabilities for end-to-end delivery of telecommunication services, and aligns with key industry standards including TOSCA and ETSI NFV.

Their solution manages and automates the full service lifecycle and is built on an open framework that easily integrates with VNFs, OSS/BSS, SDN, physical and virtual devices, datacentre resources and cloud platforms.

Inmanta won the international Call for Innovation on SDN/NFV 2.0, organised by Swisscom, Telia and Proximus

 

NFWare

  • HQ: San Francisco Bay Area, California
  • Website: https://nfware.com/
  • Date founded: 2015
  • Number of employees (Crunchbase): 11-50
  • Revenue (Crunchbase): 2.5 million USD (venture funding)

Offering

NFWare have developed “virtually the world’s fastest networking software”, offering a virtualised IP routing solution for Service Providers, Operators and Data Centres. NFWare have developed a virtual carrier grade NAT as well as a virtual load balancer, “the industry’s fastest software load balancer for high-loaded deployments”, both of which are able to run on standard x86 servers.

Described as “A Leading VNF product” by SDxCentral, a Telco Cloud Hot Tech Innovator by ABI Research report, as well as reaching the Top-50 prominent industry vendors, according to Technavio and was awarded Solution Partner Status by Intel Winners’ Circle Program.

Partners and customers of NFWare include intel, Telefonica, Nokia and Lenovo

Insights on Virtualisation, NFV & SDN pack

This 24-page document will provide you with a summary of our insights from our virtualisation research and consulting work:

  • Overview of NFV/SDN deployments worldwide
  • Benefits of telco cloud: state of the industry
  • Deployment approaches: implications and challenges
  • How STL Partners can support you

Just click on the button below to request your free pack.

 

Read more about Virtualisation, SD-WAN & NFV

Research

NFV Deployment Tracker: North America update

The latest update to our NFV deployment tracker that monitors all commercial deployments globally. New deployments in N America are increasingly driven by 5G, with a striking role for open source and telco self-builds.

Published: June 2019

Read more

Webinar

Virtualisation: Reaching tipping point

A webinar on NFV and SDN. What operators are deploying, what this means, and how 5G is likely to accelerate progress. Based on our unique data on NFV deployments

Live event: May 2019

Register now

Webinar

Edge business models and how to execute them

A joint webinar with MobiledgeX and STL Partners exploring edge cloud business models and the value proposition for application developers in augmented reality

Read more

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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Latest NFV news & announcements

Latest NFV News & Announcements

Here at STL we have been following the developments of Telco Cloud for the past decade. Below is a selection of what we consider to be some of the most exciting recent developments in NFV & SDN, all of which have real potential to transform the current landscape.

Lean NFV

Unveiled at ONS 2019 in San Jose, Lean NFV’s mission is to drastically simplify the complexity of implementing NFV. The movement argues that NFV has struggled to lift off because of the difficulty to deploy, which stems from several aspects of the current methodology, including the tight coupling between solutions and the management of the rest of the infrastructure, as well as the time-consuming process of on-boarding VNFs, as developers are not yet given clear and practical guidelines to ensure compatibility. Lean NFV was designed with these issues in mind, and aims to reduce complexity, ease deployment, encourage interoperability and spur innovation

Lean NFV proposes an open architecture that only specifies the minimal requirements for interoperability. This centres around the standardisation of three key integration points of the NFV architecture: NFV managers, the computational infrastructure (both bare metal or virtualised, and the connectivity between them, whether as a physical or virtual fabric) and VNFs. The model further requires an additional fourth element – a key-value (KV) store – that serves as a universal point of integration to improve coordination efforts of NFV solutions (specifically, management components and VNFs). By adopting these two measures, the community should be able to create a new NFV ecosystem that enables both easy deployment and rapid innovation.

Lean NFV thus proposes minimal requirements for all NFV deployments and developers to work towards. The resulting architecture is expected to be future-proof, given its suitability to cloud-native designs and the proposed 5G service-based architecture, both of which envision disaggregated VNFs and highly modular management. Components of the resulting ecosystem are likely to come from both commercial vendors and open-source efforts, and can be mixed and matched as desired. To initiate this process, Lean NFV is developing open-source VNF so that interested parties can see operational examples of this new approach.

Microsoft’s Acquisition of Affirmed Networks

Microsoft’s recent acquisition of Affirmed Networks, announced in March 2020, is set to provide Microsoft with an entry-point into the telecom industry, enabling Microsoft to become a provider of solutions for mobile operators. Affirmed Networks, who specialise in fully virtualised, cloud-native network solutions, develop tools that enable SDN capabilities, which are crucial for 5G infrastructure. This aligns Microsoft with developments that are set to revolutionise the telecoms industry, such as the transition to 5G (MarketsandMarkets estimate that the 5G infrastructure market will be worth $47.8bn by 2027) and network function virtualisation.

While traditionally telecom operators would build their own data centres filled with proprietary hardware, thanks to today’s virtualisation technologies, the large cloud platform providers are now able to offer the same capabilities and reliability at a much lower cost (although it must be noted that this transition may take a while, particularly due to perception issues around using a public cloud). Azure could thus serve as a core platform for 5G infrastructure, providing a link to bring cloud computing resources running on Azure into closer connection with the network infrastructure. This could speed up and ease the process of running cloud-based edge computing applications on 5G networks.

BT launches new Cisco-based Managed SD-WAN; expands BT’s portfolio of Cisco-based SDN and NFV solution sin the UK

Last March, BT announced the launch of a new managed software defined wide area network (SD-WAN) service for UK business customers. This managed service offers a fully converged software defined solution that combines BT’s capabilities into a single customer solution, bringing together offerings including fixed line connectivity, mobile data, dedicated security expertise as well as managed services with a single point of contact. According to BT, this offering is set to enable secure, high-bandwidth connections across multiple sites using fixed and mobile networks.

BT’s managed SD-WAN is set to simplify network infrastructure, replacing the complexity of traditional networks with one smart, secure network. This will provide customers with more information to enable them to make the best possible decisions and boost efficiencies, to optimise traffic around their requirements, while balancing performance and agility, thus resulting in better business performance.

As part of the launch, BT is offering two different managed SD-WAN options, including Cisco SD-Wan powered by Viptela, and Cisco SD-WAN powered by Meraki. This launch builds on the announcements made with Cisco in 2018, and further expands BT’s portfolio of Cisco-based SDN and NFV solutions in the UK.

“Our customers are looking for the next generation of intelligent connectivity, but they often don’t have the resources to implement this on their own. Our fully managed service capability with an SD-WAN solution removes these barriers and brings secure connectivity and control across all customer devices and applications, so they can react faster and work smarter.” says Steve Best, MD, Customer Solutions, BT.

VMware and Deutsche Telekom develop vRAN solution

VMware and Deutsche Telekom announced in February 2020 that they are collaborating on a virtual Radio Access Network (vRAN) platform, which has been developed based on O-RAN standards, an offering which is set to deliver agility to RANs for existing LTE and future 5G solutions. The solution is currently undergoing testing and validation at Deutsche Telekom’s headquarters, located in Bonn, Germany. “In a 5G world, the RAN needs to become software-defined in order to meet the needs of CSPs, and what we’re proposing with this open and intelligent vRAN platform will do exactly that” (Skehar Ayyar, executive VP and general manager of telco and edge cloud at VMware)

In line with the move to virtualisation, which is seeing an increasing number of service providers moving to virtualise all parts of their network, an open vRAN is an essential component to deliver applications and services over a 5G network. As explained by Alex Jinsung Choi (SVP Strategy & Technology Innovation at Deutsche Telecom), the work with VMware and Intel aims to address scalability for the vRAN layer deployment. The Open RAN solution architecture uses standards-based Intel processors and FlexRAN to run vRAN workloads on top of VMware’s telco cloud platform, optimised for real-time and low latency workloads.

Deutsche Telekom are further collaborating with Cohere Technologies and Mavenir, to develop a VMware-developed pre-standard, near-real-time RAN Intelligent Control. This will enable real-time radio resource management capabilities to be delivered as applications on top of the platform.

“Virtualizing the RAN is an important step in the 5G future that will enable innovative services at the edge. Through this collaboration we aim to demonstrate how standards-based hardware and software can accelerate new types of network deployments,” explained Cristina Rodriguez, vice president and general manager of Intel’s Wireless Access Network Division.

NEC and Rakuten’s 5G radio units and open RAN

Rakuten Mobile, Inc. and NEC corporation recently announced (March 2020) that the production of their 5G radio unit (RU), jointly developed by the two companies, has started at NEC Platform’s Fukushima plant, and that the first unit has been shipped.

The 5G RU is set to play a key role in Rakuten Mobile’s fully virtualised cloud native mobile network, according to Tareq Amin, Rakuten’s Representative Director, Executive Vice President and CTO. With its launch, Rakuten Mobile is poised to start construction of their 5G base stations, starting in the Tokyo area with the ultimate objective of providing subscribers with a cost efficient, highly secure, high quality 5G service. They expect to launch their 5G commercial services in June 2020.

Rakuten Mobile aims to utilise the technology to enable new business opportunities to “solve social issues and contribute to regional development”. NEC, with its focus on providing “Solutions for Society”, is set to leverage its background in network construction to support operators globally in developing their 5G networks and contributing to the creation of new mobile services around the world.

The 5G RU produced at NEC’s Fukushima plant conforms with open architecture standards, and comes in a compact form factor with low power consumption (Atsuo Kawamura, EVP & President of the Network Services Business Unit at NEC).

This move marks a step closer for Rakuten Mobile on their journey to building the first ever End-to-end fully virtualised cloud native network. NEC and Rakuten are further collaborating on the development of BSS and OSS solutions for Rakuten Mobile’s 4G network operations.

Insights on Virtualisation, NFV & SDN pack

This 24-page document will provide you with a summary of our insights from our virtualisation research and consulting work:

  • Overview of NFV/SDN deployments worldwide
  • Benefits of telco cloud: state of the industry
  • Deployment approaches: implications and challenges
  • How STL Partners can support you

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5G Telco Clouds webinar

5G Telco Clouds webinar

5G Telco Clouds: Where we are and where we are headed

First broadcast: 8 April 2020

Operators have struggled with telco cloud to date. NFV deployments have suffered from a lack of truly ‘cloud-native’ components and approaches, and the industry continues to grapple with the complexities of transformation and building skillsets. Meanwhile, there is a growing urgency to safeguard investments in 5G new radio, which have been justified based on new use-cases which assume extreme sophistication in the network.

In this webinar, we argued that 5G will only pay if telcos find a way to make telco clouds work.

We shared learnings from first-hand work with operators and vendors about successful (and less successful) routes to cloud deployment, and suggest that shifting industry dynamics – new partnerships, ecosystems and integrations – mean that now is the time to make it happen.

You’ll need to submit your name and email to access the recording

See our other forthcoming webinars or catch up on any you’ve missed

Our presenters

 

Matt Pooley, Telco Cloud Practice Lead & Senior Consultant, STL Partners

Matt leads STL Partners’ bespoke work with leading operators and tech companies across the globe on defining the telco cloud opportunity, strategies and routes to deployment. On the side, he is a regular speaker at industry events, and has authored research on topics as broad as innovation, network experience and SD-WAN deployment models. Current focus includes cloud native, network automation, and partnership strategy.

Philip Goddard, Business Development Director, Juniper Networks

As part of the Contrail Business Unit, Philip he leverages his experience across a broader set of opportunities and technologies. He has successfully executed a mix of direct sales and marketing roles within the telecommunication industry in both Europe and North America over a lengthy career.

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Related Webinar – 5G Telco Clouds: Where we are and where we are headed

This research report will be expanded upon on our upcoming webinar 5G Telco Clouds: Where we are and where we are headed. In this webinar we will argue that 5G will only pay if telcos find a way to make telco clouds work. We will look to address the following key questions:

  • Why have telcos struggled to realise the telco cloud promise?
  • What do telcos need to do to unlock the key benefits?
  • Why is now the time for telcos to try again?

Join us on April 8th 16:00 – 17:00 GMT by using this registration link.

Telco cloud: big promises, undelivered

A network running in the cloud

Back in the early 2010s, the idea that a telecoms operator could run its network in the cloud was earth-shattering. Telecoms networks were complicated and highly-bespoke, and therefore expensive to build, and operate. What if we could find a way to run networks on common, shared resources – like the cloud computing companies do with IT applications? This would be beneficial in a whole host of ways, mostly related to flexibility and efficiency. The industry was sold.

In 2012, ETSI started the ball rolling when it unveiled the Network Functions Virtualisation (NFV) whitepaper, which borrowed the IT world’s concept of server-virtualisation and gave it a networking spin. Network functions would cease to be tied to dedicated pieces of equipment, and instead would run inside “virtual machines” (VMs) hosted on generic computing equipment. In essence, network functions would become software apps, known as virtual network functions (VNFs).

Because the software (the VNF) is not tied to hardware, operators would have much more flexibility over how their network is deployed. As long as we figure out a suitable way to control and configure the apps, we should be able to scale deployments up and down to meet requirements at a given time. And as long as we have enough high-volume servers, switches and storage devices connected together, it’s as simple as spinning up a new instance of the VNF – much simpler than before, when we needed to procure and deploy dedicated pieces of equipment with hefty price tags attached.

An additional benefit of moving to a software model is that operators have a far greater degree of control than before over where network functions physically reside. NFV infrastructure can directly replace old-school networking equipment in the operator’s central offices and points of presence, but the software can in theory run anywhere – in the operator’s private centralised data centre, in a datacentre managed by someone else, or even in a public hyperscale cloud. With a bit of re-engineering, it would be possible to distribute resources throughout a network, perhaps placing traffic-intensive user functions in a hub closer to the user, so that less traffic needs to go back and forth to the central control point. The key is that operators are free to choose, and shift workloads around, dependent on what they need to achieve.

The telco cloud promise

Somewhere along the way, we began talking about the telco cloud. This is a term that means many things to many people. At its most basic level, it refers specifically to the data centre resources supporting a carrier-grade telecoms network: hardware and software infrastructure, with NFV as the underlying technology. But over time, the term has started to also be associated with cloud business practices – that is to say, the innovation-focussed business model of successful cloud computing companies

Figure 2: Telco cloud defined: New technology and new ways of working

Telco cloud: Virtualised & programmable infrastructure together with cloud business practices

Source: STL Partners

In this model, telco infrastructure becomes a flexible technology platform which can be leveraged to enable new ways of working across an operator’s business. Operations become easier to automate. Product development and testing becomes more straightforward – and can happen more quickly than before. With less need for high capital spend on equipment, there is more potential for shorter, success-based funding cycles which promote innovation.

Much has been written about the vast potential of such a telco cloud, by analysts and marketers alike. Indeed, STL Partners has been partial to the same. For this reason, we will avoid a thorough investigation here. Instead, we will use a simplified framework which covers the four major buckets of value which telco cloud is supposed to help us unlock:

Figure 3: The telco cloud promise: Major buckets of value to be unlocked

Four buckets of value from telco cloud: Openness; Flexibility, visibility & control; Performance at scale; Agile service introduction

Source: STL Partners

These four buckets cover the most commonly-cited expectations of telcos moving to the cloud. Swallowed within them all, to some extent, is a fifth expectation: cost savings, which have been promised as a side-effect. These expectations have their origin in what the analyst and vendor community has promised – and so, in theory, they should be realistic and achievable.

The less-exciting reality

At STL Partners, we track the progress of telco cloud primarily through our NFV Deployment Tracker, a comprehensive database of live deployments of telco cloud technologies (NFV, SDN and beyond) in telecoms networks across the planet. The emphasis is on live rather than those running in testbeds or as proofs of concept, since we believe this is a fairer reflection of how mature the industry really is in this regard.

What we find is that, after a slow start, telcos have really taken to telco cloud since 2017, where we have seen a surge in deployments:

Figure 4: Total live deployments of telco cloud technology, 2015-2019
Includes NFVi, VNF, SDN deployments running in live production networks, globally

Telco cloud deployments have risen substantially over the past few years

Source: STL Partners NFV Deployment Tracker

All of the major operator groups around the world are now running telco clouds, as well as a significant long tail of smaller players. As we have explained previously, the primary driving force in that surge has been the move to virtualise mobile core networks in response to data traffic growth, and in preparation for roll-out of 5G networks. To date, most of it is based on NFV: taking existing physical core network functions (components of the Evolved Packet Core or the IP Multimedia Subsystem, in most cases) and running them in virtual machines. No operator has completely decommissioned legacy network infrastructure, but in many cases these deployments are already very ambitious, supporting 50% or more of a mobile operator’s total network traffic.

Yet, despite a surge in deployments, operators we work with are increasingly frustrated in the results. The technology works, but we are a long way from unlocking the value promised in Figure 2. Solutions to date are far from open and vendor-neutral. The ability to monitor, optimise and modify systems is far from ubiquitous. Performance is acceptable, but nothing to write home about, and not yet proven at mass scale. Examples of truly innovative services built on telco cloud platforms are few and far between.

We are continually asked: will telco cloud really deliver? And what needs to change for that to happen?

The problem: flawed approaches to deployment

Learning from those on the front line

The STL Partners hypothesis is that telco cloud, in and of itself, is not the problem. From a theoretical standpoint, there is no reason that virtualised and programmable network and IT infrastructure cannot be a platform for delivering the telco cloud promise. Instead, we believe that the reason it has not yet delivered is linked to how the technology has been deployed, both in terms of the technical architecture, and how the telco has organised itself to operate it.

To test this hypothesis, we conducted primary research with fifteen telecoms operators at different stages in their telco cloud journey. We asked them about their deployments to date, how they have been delivered, the challenges encountered, how successful they have been, and how they see things unfolding in the future.

Our sample includes individuals leading telco cloud deployment at a range of mobile, fixed and converged network operators of all shapes and sizes, and in all regions of the world. Titles vary widely, but include Chief Technology Officers, Heads of Technology Exploration and Chief Network Architects. Our criteria were that individuals needed to be knee-deep in their organisation’s NFV deployments, not just from a strategic standpoint, but also close to the operational complexities of making it happen.

What we found is that most telco cloud deployments to date fall into two categories, driven by the operator’s starting point in making the decision to proceed:

Figure 5: Two starting points for deploying telco cloud

Function-first "we need to virtualise XYZ" vs platform-first "we want to build a cloud platform"

Source: STL Partners

The operators we spoke to were split between these two camps. What we found is that the starting points greatly affect how the technology is deployed. In the coming pages, we will explain both in more detail.

Table of contents

  • Executive Summary
  • Telco cloud: big promises, undelivered
    • A network running in the cloud
    • The telco cloud promise
    • The less-exciting reality
  • The problem: flawed approaches to deployment
    • Learning from those on the front line
    • A function-first approach to telco cloud
    • A platform-first approach to telco cloud
  • The solution: change, collaboration and integration
    • Multi-vendor telco cloud is preferred
    • The internal transformation problem
    • The need to foster collaboration and integration
    • Standards versus blueprints
    • Insufficient management and orchestration solutions
    • Vendor partnerships and pre-integration
  • Conclusions: A better telco cloud is possible, and 5G makes it an urgent priority

Rakuten’s network: is it really cloud-native, multi-vendor and fully-virtualised?

Rakuten’s network: is it really cloud-native, multi-vendor and fully-virtualised?

Japanese new-entrant mobile operator Rakuten Mobile has made waves recently for its claims that it has built a cloud-native, multi-vendor 5G network. If true, the hype is justified. No other telecoms operator can boast a network of this kind (yet). This is a world first.

But how true are these claims? Exactly how cloud-native and fully-virtualised is Rakuten’s 5G network? Is it really operating in a truly open, multi-vendor environment? And why does this matter?

Building a mobile network from scratch

Rakuten is a unique player in telecoms, in that it does not define itself as a mobile operator. In 2014, the company began to offer consumer connectivity as a mobile virtual network operator (MVNO) on NTT Docomo’s 4G network. But this was primarily intended as a way to diversify and expand upon its existing business in e-commerce and web content.

This all changed in April 2018, when the company was awarded a licence to build and operate its own 5G network. The company was to become a fully-blown mobile network operator (MNO), with its own radio spectrum and network infrastructure. This would mean building a network from scratch.

In October 2018, outspoken CTO Tareq Amin outlined ambitious plans to build a brand-new  5G network, virtualised from end to end – from the core right through to the radio access network (RAN) – with all network functions broken up into micro-services running on common computing hardware. This would be the ‘world’s first cloud native platform’.

Rakuten Network

This in itself was ambitious, but not impossible. After all, having no existing network infrastructure meant that Rakuten could design without legacy constraints. But Amin promised more: the core network, able to operate in dual 4G/5G mode, would go live within 12 months. The only constraint was capital expenditure.

The truth? It’s complicated

In reality, timelines have slipped. The company has already pushed the core network go-live date back from October 2019 to Spring 2020. When it does go live, the company will offer connectivity services over the 4G network of competitor KDDI, with whom it has signed a roaming agreement. Only later will it will begin to operate over its own 5G radio network, where coverage is available.

But, assuming that it does go live, what about the claims that it is cloud-native, multi-vendor and fully-virtualised? It’s complicated. There are several aspects which are inconsistent.

Micro-services, but not cloud-native

Part of the problem is that Rakuten’s definition of ‘cloud-native’ differs from ours. STL Partners would expect a cloud-native 5G network to be based on a ‘micro-services architecture’, where the software which makes up the core network has been broken down into sub-components which can be swapped in and out without issue.

Rakuten’s core network is based on such a micro-services architecture. But, at least from the outside, the micro-services appear to be tied to specific vendors. Both Nokia and Cisco supply network function software – but each vendor’s functions depend on their own, proprietary management software. And because the whole lot has been designed to operate on Rakuten’s private telco cloud, it would be difficult to port it to other hardware environments. To us, that’s not quite cloud-native, impressive as it might be.

Multi-vendor, but not vendor-neutral

Rakuten’s new network is certainly multi-vendor. Elements are provided by Cisco, Nokia, and more. However, the way that the network has been deployed means that it is not entirely vendor-neutral. Cisco is providing some of the critical VNFs (in this case the vEPC for example) on a Cisco-dominated NFV MANO stack (incl. the VNFM, VIM and orchestration software). All of which are so tightly integrated together that it becomes, to some extent, irreplaceable.

This seems more of a classic ‘best-of-breed’ implementation than a fully open, multi-vendor situation and to some extent, replicates much of the vendor lock-in that the industry is trying to do away with.

Virtual network functions, but not fully virtualised

Rakuten’s platform depends on several hardware acceleration techniques that compromise the mutual independence of hardware and software. An example is the use of Single Root Input-Output Virtualisation (SR-IOV), a technique which transforms a common computing device into a device dedicated to a particular function.

Many other operators have employed SR-IOV, not least because it significantly increases performance. But it’s not NFV by its strictest definition.

Striking a balance

You might conclude from the above that some of Rakuten’s claims are misleading. But this might be missing the point.

There is no doubt that what Rakuten has done to deliver a viable, carrier-grade NFV-based network is impressive. This is the most advanced attempt to demonstrate the viability of the virtualised, cloud-native and multi-vendor characteristics of the 3GPP 5G standards.

At the end of the day, Rakuten is a business. It has to strike a balance between idealism and what is achievable within its ambitious timelines.

Whether or not the performance and resilience of the network is able to reach the required standard at this point in time is another story. We’ll wait and see!

For more information on our analysis of Rakuten in the wider industry context, see our recent report, the 5G Core and NFV: Different sides of the same coin

Author: Yesmean Luk

Yesmean is experienced in consulting assignments on NFV/SDN implementation and the Internet of Things. Before joining STL, she worked as a consultant at Deloitte and a business analyst at IBM. Yesmean holds a Global MSc in Management from the London School of Economics, specialising in strategy and international business, and a BSc (Hons) in Economics and Econometrics from the University of Kent.

Read more about Virtualisation, SD-WAN & NFV

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