Happy 2018 to all of you. We hope you had a joyous and restful holiday. Welcome to this, our inaugural post for 2018 and what we hope to be a timely look at two critical technologies who’s time has certainly come. We are talking about Software Defined Networks (SDN) and Network Function Virtualization and what is most certainly a game changer for our industry and at the same time a lament for its chronic foot dragging.
No doubt SDN/NFV have risen to buzzword status over the last few years. But for me it really came home to roost around 2011 at Cebit. Of course those of us with a front row seat to the waves of innovation in our industry benefit from such previews, we also bear the frustration of the slow pace of adoption. Like many industries we are quick to herald new developments but painfully slow to deploy them and the SDN/NFV revolution is no exception. As it stands today barely 15% of enterprise networks employ this critical technology and its truly baffling when you consider their irrefutable benefits. I am by no means here to start the year off on a negative note, but rather to attempt, in as plain language as possible to make the case for these truly groundbreaking capabilities. I recall back in 2011 being, and as geeky as this may sound, positively giddy at the thought of network virtualization. It was just mind blowing to consider the possibility of increasing network capacity in a just a couple of minutes with a few clicks of a mouse. This is certainly the core benefits of SDN/NFV and its most significant disruption, but it’s the larger implication for the industry that I find the most fascinating and it is the primary thrust of this post.
Telecom has always been deep pocket game and its traditional product adjective, “telecom grade” and its promise of 99.999% reliability has ever come at a steep price. This has traditionally meant custom designed hardware components sold in low volume but at very high prices. While this is an age old dynamic and now poised for a massive, disruptive shift, traditionally this has meant that only the very largest blue chip type companies can play and even those have been know to falter. Think Nortel in Canada.
This is all in very stark contrast to IT where reliability has never been a defining feature, and yet the two have come increasingly to be married in the functioning of modern networks. This is also due to the fact that IT networks have always been by their nature DIY projects often hacked together with a combination of hardware, software and most importantly the arrival of virtual machines. Imagine that this is now finally arriving to telecom networks. With the arrival of NFV, this traditional hardware dominated marketplace is rapidly coming to be replaced by a leaner, faster, more agile software driven market. While Radio Frequency transmission will remain a hardware based business, it won’t be forever. But let’s take a deeper look at the differences to draw out the importance of the sea change that is now afoot.
Let’s start with a comparison between IT and telecom’s primary components, a WLAN Access Point and an LTE Pico eNobeB respectively. While they both essentially serve the same function the eNodeB comes at roughly 5 times the cost of the WLAN. This is no wonder as WLANs are produced by hundreds of companies in a highly competitive red ocean marketplace, while eNodeBs are available through no more than 5 five major vendors.
And ironically, though WLAN is not considered telecom grade technology it is the vehicle for some 75% of internet traffic including mobile broadband. WLAN is used in scores of mission- and even life-critical applications including hospitals, government and the of course the world’s banking systems and just about every web-based service out there. And again, necessity being the mother of invention these core elements of open source IT infrastructure have always been more than available to just about anyone with even a modicum of programming ability. In this virtualized environment just about any company, large or small is free to generate network functionality, deploy switches, write policy and serve content and applications. And while telecom standards are precisely that, standard, consistent, transparent, updated frequently and publicly available it wasn’t until the arrival of network function virtualization and software defined networks that these standards could become the basis of innovation in a larger ecosystem of smaller players. It is only now with SDN/NFV’s arrival that the marketplace has opened and not just to new virtual OEMs but a sea of integrators as well. This finds a close parallel in retail where all of sudden a world full of upstart online stores collectively muscled out established brick and mortal brands, and even those a with a strong online presence. Let the games begin!
Looking at the these two novel and interdependent capabilities it is important to distinguish the business benefits they serve. In a nutshell, as SDN delivers flexible networks that no longer require technicians in the field but rather programmers that can configure the network at their desks. This directly results in lower OPEX for carriers who will save millions in direct hardware configuration and months of costly labour that can now be delivered in a matter of minutes. And because there is theoretically no end to the number of products that can be built upon an SDN framework we are already seeing a generation of smaller innovators coming to the opportunity.
NFV on the other hand serves to reduce CAPEX with the ability to replace once costly custom hardware with high flexible virtual components. And once again, while traditional OEMs will remain the core of the telecom business they will come to embody the traditional mall in the retail space. A place for strong recognized brands focused on delivering the big costly network elements while a wave of smaller players build businesses around niche functionality that will be essential to the evolved telecom network in its next generation. Certainly it is an exciting time to be in telecom, and now for the first time to enjoy real opportunities as a startup in the space.