NFV World Congress: NFV Monetization vs. Network Pragmatism (aka the AT&T Paradox)

Peter Jarich

Peter Jarich

Summary Bullets:

  • Over time, we’ve seen operator thinking around NFV as a tool for saving money (OpEx and CapEx) vs. making money (new revenue generation) shift towards the latter.
  • Most recently, operator and vendor messaging around NFV monetization was prominently on display at Layer 123’s NFV World Congress.
  • The “savings vs. monetization” dynamic, however, is not an either/or decision, potentially confounding vendor agendas to drive broader thinking around monetization and service orchestration.

Last week, we released our wrap-up of insights from Layer123’s NFV World Congress. You can take a look at that analysis here: Layer123 NFV World Congress: Trying Hard to Find a Monetization Story for NFV. Included in that analysis was a potential contradiction. On the one hand, the event highlighted operator and vendor thinking around the use of NFV to generate new revenues vs. saving money on network rollouts and operations. On the other hand, specific network functions are often rolled out by individual business units with their own narrow agendas, which may not always include new revenue generation. One vendor, in particularly, framed this in terms of orchestration and business processes. Operators approaching NFV from an orchestration and business enablement standpoint, the vendor argued, are in a much better position to leverage the technology for truly evolving their networks vs. maintaining their current operations with new gear. In many cases, they continued, it’s been an uphill battle to get this message understood by operators looking at NFV in tactical terms.

But, is it fair to expect any operator to have a single dominating view? Probably not.

A more realistic (and nuanced) view is that even the most progressive NFV proponents – those looking at it holistically – are also going to have specific network challenges they see NFV helping to solve. Here, AT&T’s activities around (and at) the show provide a great example.

Broad AT&T. From the launch of its Domain 2.0 program, AT&T made it clear that it saw SDN and NFV as strategic to its network AND business strategies going forward. Not surprisingly, it’s often seen as a pioneer in moving NFV forward. At the NFV World Congress opening day workshop focused on OPNFV, you saw this leadership position in display. While the mini-Summit featured only one speaker from AT&T (talking about “Service Enablers and Platforms”), there was no shortage of AT&T employees there – likely contributing to the standing room-only attendance.

Narrow AT&T. Last Tuesday (just a few days after the Congress closed), AT&T’s John Donovan called out the carrier’s progress with NFV in a blog post. One example he cited was virtual DNS infrastructure. Sure, DNS queries support service rollout and operations. However, it’s hard to see this as part of a broad, business-generating agenda. Instead, it’s just good network hygiene – moving to newer, more resilient, hopefully cheaper solutions.

In the same blog post, Donovan called out the virtualization of MVNO-focused mobile packet core gear. That gets a little closer to grand visions of revenue-generating NFV, but it’s still somewhat narrow – moving incrementally on NFV with a bounded use case. And that’s all okay. More than okay, it’s a smart way to embark on any new network journey.

The takeaway, however, is that NFV in support of new revenues and NFV in support of existing services are not mutually exclusive. Vendors need to engage with carriers on the orchestrated, business-focused aspects of NFV (potentially leading with them) but be prepared to start smaller and support narrow use cases. They need to make sure that those narrow use cases can be orchestrated into larger solutions and, ideally, help connect disparate sources of NFV support within their customers. Operators, meanwhile, cannot let lofty orchestrated service-enablement NFV goals get in the way of single use-case investigations; nor can they ignore the need for those use cases to be linked into broader service-enabling platforms going forward.

If this all sounds like a complex dance, that’s because it is. But, the payoff promises that it’s a dance worth learning.

About Peter Jarich
Peter is Vice President for the Current Analysis Consumer and Infrastructure services. Peter and his analyst team monitor and evaluate activities in the markets for Consumer Services and Devices, Digital Media, Fixed Access, IP Services, Mobile Access, and Transport and Routing Infrastructure, Telecom Vendor Services, and overall coverage of the Mobile Ecosystem.

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