State of telco virtualization 2017

This week, thanks to FUI, I had the opportunity to hang out with 1700 telecom executives in The Hague at the SDN NFV World Congress, the world’s largest conference for the network technologies software-defined networking (SDN) and network function virtualization (NFV).

This is my summary.

What’s SDN and NFV?

In a market that is getting more and more saturated, communication service providers (CSP) have recently been turning to virtualization as a way of cutting costs and delivering services in new ways with faster time to market.

As part of this trend, SDN and NFV was conceived of a couple of years ago. Instead of relying on vendor specific hardware to deliver network services like firewalls, CDN and gateways, operators are now creating software-defined network functions running on general purpose servers. This avoids vendor lock-in and in theory allows for a ”pick and choose” approach to the kind of services you choose to offer in your network. As virtualization and automation drives down the cost of launching new services it can also potentially open up for ”long tail” business models for service providers similar to those of online businesses, where service providers can afford to provide more specialized and nisched services to a smaller segment of the market.

Virtualizing a telco network in practice though is whole other beast. Many carrier networks are composed of a bunch of separate networks, often acquired through M&A, and it’s just recently that proof-of-concepts for specific green field projects like CDN or SD-WAN has taken off.

The vision of closed-loop, ”zero touch” telco operations

Until now, focus has been on the infrastructure and getting virtualization to work at all in the complex environment that is legacy telco. Now when the VMware and OpenStack environments are up and running, everybody has turned their eyes toward actually getting it to work in a intelligent and coherent way using Management and Orchestration (MANO) tools. An orchestrators job in the NFV world is basically to manage the virtual network functions (VNF) that sits on top of the virtualized infrastructure.

A lot of companies has built orchestration tools of different kinds (Ericsson, Huawei, Ciena, NEC/Netcracker, Cloudify, ECI etc). The challenge now is to take them to the next level and solve for the whole closed-loop vision, where networks can be managed automatically with a ”lights out”, no human intervention approach. Here things like A.I, predictive analytics, control theory and machine learning will make it possible to actually act in realtime on the huge amount of data that exists in the carrier networks.

The promise of these kind of autonomous systems is to help enable carrier grade availability (~99.999%), cut down on manual work, reduce human mistakes and create faster time to market for new services.

IBM has a pretty neat approach that is similar to what we are doing at Elastisys, which they call ”cognitive operations” with the idea being to go from reactive operation mode to a proactive and learning approach where the system responsible for operations decisions actually improves over time.

Telco and devops

Many carriers are realising that to stay competitive, they have to evolve into software companies. Being good at managing hardware probably won’t be their competitive edge going forward, but moving into being more of a ICT provider and delivering great user experiences through software services might. Therefore carriers are quickly adopting IT practices like agile development, devops, CI/CD and automated testing into their processes. Technology is not a problem today as much as the organizational culture and processes that needs to change.

A problem is that carriers have a hard time attracting the IT-talent they need in this new software-defined world. The picking order today for young talent is hyperscalers first (Facebook, Google, Amazon etc), startups and tech companies second and then maybe the vendors and operators in telecom. The remedy here is branding and attracting young talent with all the interesting initiatives the industry is driving in for example IoT and 5G use cases with self-driving cars etc.

Telco and innovation

One other problem keeping the younger generation away is that the ecosystem is not really built for innovation and change. Traditionally, the R&D in telecom has been driven by the big vendors. Venture capital and startups in the telco industry is almost non-existent due to a saturated market, a small pool of vendors and operators that are hard to break into and and the inability to actually fund innovation by writing checks to smaller companies. Operators instead often rely on doing free/low cost proof-of-concepts and sending out RFI:s that requires huge organisations, feeding on the status quo.

There are some initiatives though that aims to broaden the ecosystem, like the Telecom Infra Project Ecosystem Acceleration Centers (TEAC), driven by BT, Orange, DT, SK Telecom, Facebook and others where they pool telecom startups and investors in cities like London, Paris, Berlin and Seoul. Telia in Sweden is also an example of an operator that tries to work closer with smaller companies and give access to their networks through initiatives like Coach Your Business. In the end though, the evolvement of the ecosystem will depend on if operators will fuel innovation by actually buying from small players as well as their traditional legacy vendors.

Telco open source and standardization

It is clear that a lot of operators are currently leaning heavily on open source. A big driving force behind the NFV movement is that carriers want to get away from vendor lock-in by enforcing the use of standards such as ETSI as well as encouraging open source solutions, with many operators leading the way and open sourcing a lot of their internal work (AT&T, China Telecom etc).

Many operators are advocating a no compromise attitude towards how their vendors follow standards. Having experienced deep vendor lock-in for years, many operators are careful of stepping into the same trap again and are very actively driving the standardization of the SDN/NFV space and also themselves developing open source solutions together like the OpenSource MANO (OSM) initiative.

Summary

Service providers are not making their money on virtualized services today but on their legacy network and services. Even so, NFV and SDN are seen as the next step to handle the increased pressure on revenues from over the top players like Netflix and Skype and allow to branch out into new services and business models.

Telco and IT have been converging for a long time and this will only increase, leading to even more adoption of AI, analytics, IT tooling, microservices and containers in telecom. Virtualization in telecom has come a long way and one of the next big steps is intelligent automation to move towards the vision of zero-touch operations.