This Industry Viewpoint roundtable summary was authored by the MEF.
An older carrier network can be deceptive. It often is perfectly suited for today’s business needs, solid, predictable and reliable. It may be largely paid for, or at least depreciating on schedule, with minimal need for significant CapEx outlays. Yet that trusted technology can fall flat when faced with new opportunities. Fortunately, even the most mature carrier network can learn new tricks, thanks to Software Defined Networks (SDN) and Network Functions Virtualization (NFV).
A roundtable discussion on mature service-provider networks, and the coming wave of SDN/NFV-enabled opportunities, was held on 15 October in Düsseldorf, Germany, at a meeting of the Metro Ethernet Forum (MEF). Participants were:
- Michael Howard, Co-Founder and Principal Analyst Carrier Networks, Infonetics Research
- Phil Tilley, Managing Director, Cloud Strategy and Solutions, Alcatel-Lucent
- Prayson Pate, CTO & Vice President of R&D, Overture Networks
- James Armstrong, Executive Vice President Network and Applications and Infrastructure, Spirent Communications
- Ulrich Kohn, Director of Technical Marketing, ADVA Optical Networking
- Marc Cohn, Senior Director of Marketing, Ciena Corporation
- Andrew McFadzen, President, Orange Business Services
- Gint Atkinson, Vice President, Network and Strategy & Architecture, KVH
- Chris Purdy, CTO, CENX
- Neela Jacques, Executive Director, OpenDaylight Project
- Abel Tong, Director of Solutions Marketing, Cyan
- Mitch Auster, Senior Advisor, Market Development, Ciena
- Christopher Cullan, Christopher Cullan, InfoVisa, Director of Product Marketing, Business Services Solutions
- Zeev Draer, VP of Strategic Marketing, MRV Communications
- Prabhu Ramachandran, director at WebNMS, a division of Zoho Corporation:
The panel moderator, Michael Howard from Infonetics Research, laid the groundwork by going straight to the big question that is a long way from the nuts-and-bolts of technology implementation: “How can SDN and NFV help service providers grow revenue from their existing and the new network services and how can they drive margin improvement?”
Andrew McFadzen from Orange Business Services fired back by referencing operational cost savings: “We've got a lot of kit out there in the market, delivering the service by and large that the customer is asking for today. Why would we replace that? When it's not depreciated. So that's the starting point. Does it save us money? Does it improve our efficiency and productivity? Or is there an opportunity for incremental business as a result of new services that can be generated by either adopting SDN or NFV?”
McFadzen continued, “It's fair to say that we start off in the camp looking at SDN and NFV as a potential way of saving cost and therefore improving margin. I'll use an example of NFV. Today, Orange Business Services' core business is providing wide-area networks for enterprise customers. So if you take a typical customer, they've got 1500 locations on their wide-area network around the world, some of which are very large, some of which are very small. Each of those locations has a fairly complex piece of kit sitting on it which is a router. Now, in order to implement that site, we'd have to send an engineer to site, we'd have to ship the box, we'd have to go and repair it when it gets broken. That truck roll, as the Americans seem to like to call it, that cost of fuel, engineering and delivering that box to site is a pretty significant part of my operational cost. So if network function virtualization means that I can take all of the functionality of that box and put it in the cloud, and therefore have a very simple network connection at that customer's site, which potentially can be provided by the guy that I'm buying the local access circuit from, then that saves me a lot of money.”
Overture Networks’ Prayson Pate saw opportunities for revenue growth, as well as cost savings: “Going back to the beginning of the question, we talked about growing revenue. To me, that's the most important thing here. I saw a very interesting article talking about U.S. service providers. It said between 2008 and 2013 they grew revenue by 13 percent. That's pretty good. At the same time, they were able to cut payroll by two percent. So they're already being able to do more with less. But even with that, their margins are getting worse and worse because the demand is so much more.”
Pate continued, “What's really interesting is that most of that revenue growth came from the wireless side. So what that really means is they're driving revenue from the wireless side but they're also driving more demand back onto the wire line side. So they're growing revenue but they're not really growing margin. So as we talk about NFV and SDN, they are enabling an environment where we can create those new services. With the cloud, there’s a huge opportunity for providing dynamic services that connect users to new facilities at a lower on-demand cost point. But you can't do that without effective control of the network.”
“With SDN and NFV, I'm going to take a lot of classical features like protection and I'm going to start charging for it,” KVH’s Gint Atkinson continued on the theme of revenue generation. “I want to start charging for features. How much protection do you need? Do you need 24 by 7 protection? Today, our customers tend to get either protected or unprotected services, but that's not what they need and it's definitely not what they can afford to pay, nor can our margins handle it.” If carriers can offer protection as a service, he said, that’s a tremendous opportunity for both the carrier and the customer.
ADVA Optical Networking’s Ulrich Kohn saw opportunity to centralize functionality with NFV, such as to implement intrusion detection across a carrier network, or across a customer’s end-to-end services. Talking about an NFV test recently done with British Telecom, he said, “It was really excellent to see, in an open environment, in an open connectivity environment, the implementation of a self-provisioned solution. It was a matter of hours,” he explained, to providing new services – not weeks or months, as is so often the case in a mature network.
Throwing in a dose of reality, CENX’s Chris Purdy argued that, “One of the first things you actually have to do is explain what you mean by SDN, what you mean by NFV, and what you mean by service orchestration. These terms have taken on a marketing perspective which can confuse customers.” For example he said. “What ends up happening is they'll think of NFV and that gives you service flexibility which means people think, oh, that means connectivity on demand. But those two don't necessarily follow from each other.”
Purdy admitted that with NFV, “I totally see the potential value of it. The whole notion of this shared compute infrastructure and, rather than installing a box every time, I can install a virtual network function and instead of physically cabling it to other boxes, I can set up logical connections within a server. So I can totally see the value of that. But I've heard about it for a long time and I go into service provider after service provider and I see activities going on in labs but real world implementations? Not so much yet,” he said.
Returning to focus on savings, rather than new revenue, Spirent Communication’s James Armstrong said, “The potential for cost savings in the fixed costs are there for NFV, and I think that's very clear. The flexibility holds a lot of promise. Will it really work reliably to the extent that the enterprises have now grown accustomed to, the reliability of the physical network? Can NFV at load, when it's fully adopted, when it's fully rolled out, will it work? Then if there's a problem, the question is, how much extra cost is there to figure out what went wrong? So is the cost of ownership going up on that side in order to compensate for the flexibility and everything else that it offers?”
McFadzen agreed: “You're absolutely right. If a customer's physical firewall goes down, you can send an engineer out to fix it. If we're running multiple customers on the shared server environment, it's going through a software firewall and that goes down, we're in big trouble!”
Pate urged a bigger, longer-view prospective on NFV: “We can't fall into the trap of thinking that the only services we can virtualize are the ones we're offering today. There's also going to be an opportunity to distinguish between services.” For example, he said, “Most of us came out of the telco world where for years and years you had pin drop quality in phone calls. So who would go for a phone call that was crappy? Well it turned out a lot of people would because it was free or almost no cost. There was a whole different market for a different solution and a different customer set that led people to offer very low cost services as well as advance services.”
How does the industry — including the network operator — implement these technologies? By being open, said Cohn. “What's unfolding with SDN and NFV is this challenge of how do we create new platform that allows multiple participants to be able to thrive together instead of trying to create their own individual platform? There's two ways to do that. One, I think, is open source, such as with OpenDaylight, platforms like that that are not controlled by any individual organization. The second is for operators to take their newfound empowerment and then be able to insist that multi-vendor is not just the challenge, it's about making it vendor neutral. Which is really what openness is about. If not one vendor can control the infrastructure, that's open, that's truly open. That means everybody has to be aware and everyone has to converge on the direction that operators want to move into. “
From that perspective, said Neela Jacques from the OpenDaylight Project, “There's a range of people with ranges of capability. On one extreme, you've got Twitter and Google and Facebook who are like, I don't want to pay anybody for anything, I've got all these Ph.Ds., I can invent it myself. On the other hand, I've got a number of operators in some developing countries who are like, I have almost no capabilities, just give me something that works. We've got the full range, certainly in the telco operator side, and we see the same thing in the data center.”
Jacques continued, “We are moving into a world in which open is a way of doing, in a sense, the basic research. It's allowing us to fast-track the standards process. To innovate but get to de facto standards and provide a layer of technology which anybody can access and anybody can use. Then from that, there's a range of offerings that get built up where proprietary adds the differentiation. Some people will do a light layer around the open source code, some people will add a full, end-to-end solution. Some people say, I've got to have it perfect and it has to be tested to the Nth degree. Great, someone's working on that for you on top of open source.”
Summarizing the conversation and ending the panel, Jacques said, “I personally believe that as we move towards SDN and NFV, we will be able to increase the agility and the cost of being able to change something is going to go down to the point where suddenly we're going to unlock a whole set of use cases that we don't know now.”
Outside of the panel discussion, several experts weighed in on the question of adding SDN and NFV to mature carrier and service-provider networks.
Abel Tong from Cyan said that, “A common misperception of SDN and NFV is that it represents revolutionary change and requires major infrastructural overhaul. This misconception leads to the complex multi-stage phased approaches to implementing SDN and NFV. Let’s consider a more practical and simpler approach. SDN gives operators the end-to-end network control, automation capabilities and service agility. This allows the network to support on-demand and highly dynamic services, and allows them unique technological advantages not achievable by conventional means.”
“The Communications Service Providers’ competitive advantage is built on their metro/access networks and the CO footprint,” Tong continued. “Providers pushing cloud technologies to the edge create an advantage in latency, performance, security and proximity. Leveraging cloud technologies plus NFV for managed network services provides network operators with a strong opportunity for market differentiation and high-margin service revenues. In some cases, however, the metro/access network is a heterogeneous mix of legacy copper, TDM, SONET/SDH along with more modern Ethernet and optical connections – each delivered over independent networks. As operators look to create an infrastructure to deliver services built on virtual network functions, they are also looking to streamline and simplify the metro service edge by collapsing disparate access technologies into a single simplified switching and aggregation platform that serves as the entry point to software-defined services. With a simplified metro service edge and carrier-class service orchestration software, CSPs can deploy high-margin hosted enterprise services over the top. Rather than deploying CPE appliances to deliver managed L3-L7 services over this network, the CSP can host them as virtual appliances in mini-datacenter at a PoP or Central Office.”
Mitch Auster from Ciena added that, “Each individual operator must assert their goals for SDN and NFV, and embark upon the journey at their own pace, driven by budget cycles, strategy, competitive factors and scope. While no doubt some may be concerned about the complexity of SDN, telecommunications operators are confronted by an evolving competitive landscape that requires them to take action. Operators are struggling to recapture value lost to over-the-top providers, end-users are seeking to bypass carriers altogether by operating their own private networks, and a new generation of cloud-savvy providers are emerging in various geographies and vertical markets.”
Auster continued, “Operators can leverage SDN-based applications today that do not require revamping their entire network. For example, Ciena’s V-WAN application is a multi-tenant network resource broker and scheduler that allows an operator to immediately offer on-demand services for increased topline revenue while providing operational experience in SDN-based applications and solutions.
And Zeev Draer from MRV Communications advised that, “Management aspects tend to be the weakest part of the implementation chain. This is the area that requires substantial planning for smooth processes and justification for new and attractive business cases. From our analysis, we still see this area as an empirical case and as we move forward, this should be the cornerstone for SDN and NFV service planning.”
Draer added, “The other critical area that should be inspected as CSPs move forward is how their network is designed today and how much can be reused for new networks and service paradigms. Many networks already have a centralized architectural approach, while others prefer a distributed model. For distributed models, it will be a complex decision to move to a centralized approach, with centralized intelligence as a fundamental guideline. From our experience, transport oriented networks will find a comfort zone with a centralized approach and IP-savvy networks will require a hybrid approach that will not create heavy disruption. From MRV’s standpoint, we have the right building blocks to retain the existing values of the network while helping serviceproviders transition to both approaches without radical disruptions as technology and service architectures mature.”
The above summarizes the main points in the discussion. The full transcript is now available at https://zonicgroup.box.com/s/tykb85zcjklv126kuvbt