NFV: Addressing Global Challenges for Telecom Service Providers

NFV: Addressing Global Challenges for Telecom Service Providers Charlie Ashton 2015 Wind River. All Rights Reserved.

Topics Critical business challenges for service providers The promise of NFV Industry cooperation Some key hurdles remaining 2 2015 Wind River. All Rights Reserved.

Topics Critical business challenges for service providers The promise of NFV Industry cooperation Some key hurdles remaining 3 2015 Wind River. All Rights Reserved.

Business Challenge #1 How do we carry network traffic profitably? Exponential increase in network traffic Driven by growth in video Ongoing increase in network equipment costs To address subscriber bandwidth needs Flat to declining per-user revenue (ARPU) Network cost increases are outpacing subscriber revenue growth 4 2015 Wind River. All Rights Reserved.

When Does Basic Traffic Become Unprofitable? 5 2015 Wind River. All Rights Reserved.

Business Challenge #2 Who s extracting the most value from network traffic? OTT projected to cost service providers $14B in lost revenue in 2015 Up 26% from 2014 Social media, IM and VoIP are primary sources of lost revenue User loyalty and stickiness All about speed, agility, ease-of-use and innovative services Providing value to subscribers 6 2015 Wind River. All Rights Reserved.

Who s Paying for this Infrastructure? 7 2015 Wind River. All Rights Reserved.

Business Challenge #3 IoT: A threat or an opportunity? Exponential growth in devices connected over service provider networks Corresponding increase IoT in traffic Critical demands on network capability Security Latency Availability How will service providers monetize IoT? Analytics, contextual-based services etc. 8 2015 Wind River. All Rights Reserved.

Where s the Opportunity for Service Provider Value? SENSORS/ ACTUATORS DEVICES/ MACHINES GATEWAYS NETWORKS CLOUDS 9 2015 Wind River. All Rights Reserved.

Topics Critical business challenges for service providers The promise of Network Functions Virtualization (NFV) Industry cooperation Some key hurdles remaining 10 2015 Wind River. All Rights Reserved.

NFV Architecture Concept From this To NFV Service Orchestration Firewall Gateway EPC Virtual Firewall Virtual Gateway Virtual EPC Other VNFs Network Virtualization Software Platform Industry-Standard Servers 11 2015 Wind River. All Rights Reserved.

Business Benefits Promised by NFV OPEX reductions plus top-line revenue growth Reduce OPEX Improved resource utilization through consolidation Simplified network management Boost ARPU and top-line revenue Accelerated service introduction: service agility Innovative, value-added services 12 2015 Wind River. All Rights Reserved.

Topics Critical business challenges for service providers The promise of NFV Industry cooperation Some key hurdles remaining 13 2015 Wind River. All Rights Reserved.

Unprecedented Industry Cooperation around NFV Early 2012: informal discussions between service providers worldwide June 2012: Cloud Summit in Paris, France Term Network Functions Virtualization created, white paper initiated October 2012: OpenFlow / SDN World Congress in Darmstadt, Germany White paper published, written by representatives of 13 service providers ETSI board created NFV ISG with 7 founding members January 2013: First formal NFV ISG meeting in Sophia Antipolis, France 70 companies participating Mid-2015: 274 member companies, including 38 service providers 14 2015 Wind River. All Rights Reserved.

Topics Critical business challenges for service providers The promise of NFV Industry cooperation Some key hurdles remaining 15 2015 Wind River. All Rights Reserved.

Four Key Business Challenges for NFV Protecting top-line revenue during the transition to NFV Minimizing OPEX to fully leverage the benefits of NFV Gaining market share through accelerated deployments of new services Maximizing flexibility through adoption of open solutions 16 2015 Wind River. All Rights Reserved.

Protecting Top-Line Revenue during the Transition Even with traditional physical infrastructure, network outages cause major revenue impact for service providers $15B per year (1% to 5% of revenues) Customer churn plus operational expenses plus SLA penalties Thousands of dollars per minute, per server 17 2015 Wind River. All Rights Reserved.

Impact of Network Outages (Heavy Reading) 18 2015 Wind River. All Rights Reserved.

NFV Has the Potential to Make this Much Worse Traditional physical infrastructure typically delivers six 9s reliability (99.9999% uptime) Carrier Grade reliability developed and proven over many years and thousands of deployments NFV adds significant risk factors New, virtualized network applications Dynamic reallocation of VMs across servers, racks and data centers Complex, hard-to-debug traffic flows Need to implement Carrier Grade reliability in NFV deployments Significant risk to service providers revenues if network uptime not maintained 19 2015 Wind River. All Rights Reserved.

Enterprise Platforms Don t Provide Telco Reliability Fault detection (in hardware or virtualization layer) Detection of failed VMs Detection of failed platform management services vswitch performance Network link failure detection for compute nodes Live migration for DPDK-based VMs Enterprise IT Platform Capability ~ 1 minute > 1 minute No support 1-2 Gbps Depends on Linux distribution No support Carrier Grade Telecom Infrastructure Requirements Sub-second Sub-second < 10s Line rate with minimum core utilization 50ms Full support Network Reliability is Key to Commercial Success of NFV 20 2015 Wind River. All Rights Reserved.

Four Key Business Challenges for NFV Protecting top-line revenue during the transition to NFV Minimizing OPEX to fully leverage the benefits of NFV Gaining market share through accelerated deployments of new services Maximizing flexibility through adoption of open solutions 21 2015 Wind River. All Rights Reserved.

Minimizing Service Providers OPEX with NFV When cost-per-bit exceeds revenue-per-bit, networks are no longer profitable Cost-per-bit is exploding because of growth in video Revenue-per-bit is flat to declining because of competition and subscriber expectations NFV promises to address this through OPEX reductions Reduced network operations costs Lower cost-per-subscriber Need solutions that deliver these savings Despite the overhead of virtualized applications 22 2015 Wind River. All Rights Reserved.

Four Key Business Challenges for NFV Protecting top-line revenue during the transition to NFV Minimizing OPEX to fully leverage the benefits of NFV Gaining market share through accelerated deployments of new services Maximizing flexibility through adoption of open solutions 23 2015 Wind River. All Rights Reserved.

Accelerating Deployment of New Services via NFV OR First-to-market advantage is critical when deploying NFV infrastructure NFV promises to accelerate trials and deployment of new services generating increased subscriber revenues Unique opportunity for service providers to gain market share and acquire new, high-value customers Need a pre-integrated infrastructure platform that enables this competitive advantage Allowing service providers to focus on orchestration and revenue-generating services 24 2015 Wind River. All Rights Reserved.

Four Key Business Challenges for NFV Protecting top-line revenue during the transition to NFV Minimizing OPEX to fully leverage the benefits of NFV Gaining market share through accelerated deployments of new services Maximizing flexibility through adoption of open solutions 25 2015 Wind River. All Rights Reserved.

Maximizing Flexibility through Open Solutions Flexibility is key to leveraging full range of suppliers of NFV software Traditional TEMs unbundling their applications Open Software Network equipment suppliers introducing software versions of hardware solutions New ISVs with innovative products Service providers have well-defined requirements for open software Provided by company that is major contributor to open-source Fully-compatible with all relevant industry standards No vendor lock-in at component level Major open-source contributor No vendor lock-in on components Need a solution that checks all the boxes Standard APIs 26 2015 Wind River. All Rights Reserved.

Summary Service providers worldwide face critical business challenges NFV promises a solution Industry cooperation is phenomenal There are still some key hurdles to be addressed 27 2015 Wind River. All Rights Reserved.