ITEXPO.JPGOn August 26, I participated in an SDN/NFV panel discussion during the SDN Precon event that is part of ITEXPO. While the panel session itself covered a range of topics, one of the more interesting aspects of the whole SDN Precon event was that there were a number of presentations that highlighted new use cases that can be enabled by NFV.


In his presentation, Mike Sapien, Principal Analyst at Ovum, reviewed the likely impact of SDN on telecom and enterprise applications. He talked about various current SDN deployments, such as those at NTT, Google and Equinix (this last example comprising both connectivity between data centers as well as communication between the data center and a variety of ecosystem partners). He discussed the opportunities for appliance-based enterprise services and explained how SDN results in the simplification of services together with centralization.

Ronald Gruia, Principal Analyst at Frost and Sullivan, explained that VCs are expected to invest over $500M in SDN and NFV companies during 2013. He highlighted a number of NFV use cases, including data center cloud infrastructure, home network management, mobile operator applications such as video optimization and network visualization. He also stressed some key “caveats” or challenges that must be addressed in order for NFV to achieve widespread deployments, including scalability, interoperability, security, V & V (validation and verification) and Carrier Grade reliability.

Mark Durrett, Director of Marketing at Overture Networks, introduced the CloudNFV initiative (Overture is one of the six founding companies, along with 6WIND). He explained how managed CPE appliances (e.g. firewalls and routers) represent a compelling use case, with significant cost savings to be achieved through the elimination of CPE appliances, through pay-as-you-go services and through CAPEX/OPEX savings.

From Huawei, Mike McBride, Director of Technology and Strategy, presented a detailed approach to the virtualization of the home gateway appliance, explaining that current solutions suffer from a high volume of service calls, increasing equipment costs and decreasing service margins. He described how, as a first phase, the home gateway (HGW) function in the ONT equipment at the customer site would be replaced by a virtual home gateway (vHGW) instantiated within the OLT in the carrier network, reducing cost and complexity. Subsequently, a soft BNG (Broadband Network Gateway) controller would implement service chaining within the edge network, eventually co-located with IT functions in the core. As a next step, all these functions would be migrated into the telco cloud for ultimate cost savings.

Of course, all these use cases are examples of cost reductions compared to traditional physical implementations of network functions and network orchestration. In a post published a few weeks ago, I observed that most of the NFV discussions at conferences appear to be around cost reductions rather than revenue growth. Not much seems to have changed since then.

Clearly, significant CAPEX and OPEX savings are expected through the virtualization of functions that have traditionally been implemented as stand-alone, dedicated, fixed-function equipment. From the perspective of service providers, though, top-line P&L growth ultimately comes from making money, and specifically from increasing their Average Revenue per User (ARPU). That means new services that bring real value to subscribers, both enterprises and also consumers like you and me.

As the NFV network-level architecture details and deployment strategies firm up, so that service providers have confidence about the new capabilities of the infrastructure, I would hope that we’ll see a lot more discussions about interesting new services that will raise our monthly bills as subscribers and boost the service providers’ top line revenue.

What are your thoughts on this? What new services do you see being introduced thanks to NFV that will bring real value to subscribers, whether enterprises or consumers?