NFV and SDN payoffs are in the core

Glen Ragoonanan/Analysys Mason
The benefits of cloud computing (virtualization of standard IT computing and storage) are well understood, and it is implemented in data centers worldwide.
 
Major communications service providers (CSPs) are now convinced that virtualization has matured sufficiently to virtualize network functions. CSPs and vendors agree that the primary target benefits of network function virtualization (NFV) and software-defined networking (SDN) are cost reduction and operational flexibility. However, the role of software-based solutions to control, manage and operate CSPs' networks has steadily been increasing from legacy intelligent network (IN) architecture in circuit-switched networks, to cloud computing, self-organizing networks (SON), NFV and SDN.
 
The success of cloud computing and SDN in data centers is attributed to the simple all-IP core networks, compared with the multi-technology and complexities of CSPs' costly transport and access networks. This article examines the opportunities for virtualization in CSPs' core networks and use cases being explored by a number of CSPs.
  
Virtualization in the core
CSPs worldwide spent about 77% of their capex ($267 billion) in 2012 on their networks - hardware, software, professional services and associated network infrastructure. CSPs have expansive and regulated responsibilities for their costly access networks, which virtualization does not yet address. Field force operations and workflow constraints on transport and access infrastructure limit the extent to which CSPs can automate without human intervention, which limits virtualization use cases outside the core network layer. This makes the business case for virtualization less compelling beyond the core network for CSPs.
 
The lines between cloud computing, NFV and SDN are blurred, and not just between IT and telecom. These lines will continue to be blurred as virtualization overcomes traditional hardware barriers over time. Cloud computing and NFV have some similarities, but are essentially different.
 
Cloud computing is the virtualization of commodity IT hardware (namely x86 servers) and applications/software, which can run at least 99% availability level.

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