- Selling NFV as a tool for helping operators grow their revenues – vs. save on OpEx and CapEx – is something vendors have struggled with.
- Monetizing NFV, however, needs to be seen as a core part of the technology’s value proposition, by vendors and operators, alike.
Last week, in the aftermath of Mobile World Congress, we had a customer reach out to ask about memorable demos and announcements focused on customer experience, monetization and network functions virtualization (NFV). It wasn’t immediately clear if the question was about multiple, distinct topics or about virtualization in the service of customer experience and new revenues. While awaiting a clarification, however, a friendly debate around the relationship between virtualization and monetization developed between our Service Provider Infrastructure analysts. I’m not sure that we all ended up on the same page, but I think it’s fair to say some conclusions and points of agreement were reached.
- Uncommon Message. Linkages between NFV and new revenue generation aren’t traditionally part of the larger NFV message from vendors or operators. Sure, operators have held out “new services” as something they see as an NFV goal. And some vendor have provided concrete examples. Cisco, doing its part, made this connection last year in hailing enhancements to its ESP platform. We were torn on whether or not Cisco had the OSS/BSS assets to execute (see Cisco Helps SPs Reach the SMB with NFV: Can It Orchestrate the Virtualized Managed Service Business Case?) but ultimately saw it as a message that was worth talking up (see Cisco’s Latest ESP Evolution = Sixth Sense for NFV Monetization Mandate). Even then, however, we noted that linking NFV to new service revenues was just something that vendors hadn’t yet done well.
- Important Message. If NFV can help carriers save money or support service scale, does it really need a monetization angle? Yes. It might seem flippant to note, “you can’t save your way to growth” but it definitely applies here; the potential for savings may kick NFV discussions into gear, but keeping the carrier C-suite engaged will require a revenue generation component. Taking the discussion beyond savings is all the more important when you look back at how mainstream thinking around NFV-related savings has evolved. At first, it was all about the use of COTS equipment. Then, it was about operations. More recently, we’ve heard operators and vendors suggest NFV may not be fundamentally cheaper from a network perspective, but may be cheaper in terms of service scale. The story will, doubtless, continue to evolve. As it does, having a monetization angle to fall back on will be key to helping NFV remain relevant.
- Today’s Services vs. Tomorrow’s Services. So, where will new NFV-enabled services come from? Visionaries might suggest that NFV will open up completely new service opportunities and network functions – services we’ve yet to even imagine. Pragmatic people might suggest that the real opportunity is more likely to lie in allowing familiar services to be rolled out in new ways. Realists, like myself, are likely to see both of these as true. In the near-term, NFV monetization opportunities will naturally focus on the services that operators already know, but delivered in new ways; think the targeting of the SMB market or the delivery of caching and analytics at the network edge. Longer-term, if NFV allows carriers to roll out new network functions more rapidly, then it should support the introduction (and creation) of new functions and businesses. Perhaps more importantly, where virtualization supports billing and charging infrastructure evolutions, we should end up with the tools to monetize today’s and tomorrow’s services alike. Well, that’s the hope.