Will NEPs Block NFV Like Carriers Tried to Block OTTs?

David Snow

David Snow

Summary Bullets:

  • NFV poses a threat to established NEPs which is analogous to carriers’ OTT challenge.
  • While the NFV debate currently rages around performance, it is easing NFV management issues that will make vendors ‘carrier-friendly.’

The thirteen operators which fired the starting pistol for the networks functions virtualization (NFV) initiative in October 2012 can certainly be credited with starting a revolution.  Just over one year into this race, every network equipment provider (NEP) has been compelled to have an official ‘NFV story.’  In truth, NFV is not really a new concept and has been in use in IT and telecom service layer products over many years.  However, what is new is the way in which ‘commercial off-the-shelf’ (COTS) hardware is increasingly able to support processing workloads at the network layer, previously the sole domain of specialized telecom hardware.  This it is what fuels the more ‘revolutionary’ dimension of NFV among both operators and vendors. 

Today’s NEPs face the prospect of losing their grip on network hardware to the extent that it will also host software from rival vendors and so enable them to enter the infrastructure market without any hardware.  In fact, this is analogous to the situation that operators themselves have faced over the last few years from over-the-top (OTT) players consuming their hardware (and bandwidth) resources.  Interestingly, the operators’ OTT threat probably benefitted NEPs by providing more equipment sales, but the question now is: how are today’s well-established NEPs reacting now that the ball is on the other foot?  Fortunately, most vendors are not reacting to NFV as some operators first did to OTTs, by blocking their rivals or basically saying, “Hey! You! Get off of my cloud.”  Current Analysis has heard many responses from NEPs to this new scenario and the larger ones are saying things like this (in order):

  1. “Well, you know we’re a software company too; software accounts for 75-80% of our revenue, so we’re not fazed by this anyway.”
  2. “Sure – we’re totally open to third parties, we’re working to open standards and, by the way, they can all come and join the ecosystem we’ve just set up.”
  3. “You know, this NFV thing is going to take a very long time, and when we talk to our customers, they are still worried about getting telecom-grade performance; they’ll still want us to supply complete nodes.”

So, they’re not blocking, or are they?  Yes and no. Yes, they are blocking, because like all network transitions, NFV has to work and there are still plenty of problems to solve, not least performance, a subject of heated debate particularly around the media plane; just listen to the ongoing case of Oracle Acme Packet vs. Metaswitch in the session border control market.  But also no, vendors are not blocking, because they see the writing on the wall; NFV is going to happen because operators need it to for their economic survival, even if it’s an uncomfortable network transition to face, and suppliers need to share the pain.  Vendors recognize this reality and have always been good at solving interworking and performance issues; they’ll solve this one too.  The real challenge of NFV though, is more to do with what you allow to run on your network and then how you orchestrate and manage it, which sounds just like the ‘OTT challenge’ all over again – something operators, not vendors, do.  And to do it well, operators are definitely going to need ‘a little help from their friends’ – and the NEPs need to be those ‘friends’ who make the difference.

About David Snow
As Principal Analyst for Service Provider Infrastructure, David is responsible for tracking the evolution and key developments within the IP Services Infrastructure market. His coverage areas include Hosted Multimedia Application Servers, IP Multimedia Subsystems (IMS), Mobile Softswitching, Policy Control, Service Delivery Platforms (SDPs), Session Border Controls (SBCs) and Softswitches.

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