Virtualizing network functions like remote access networks and evolved packet core can help mobile virtual network operators and communications service providers get to market faster, at lower cost. Tim Kridel looks at a second wave of virtualization in the mobile world and how it is changing business models.
If it can be virtualized, then someone else can and probably should host it. That sums up the strategy mobile operators, communications service providers and other businesses increasingly are applying to infrastructure such as radio access networks (RANs).
This strategy is fundamentally changing the competitive landscape. One example is by enabling businesses like content creators, and search and advertising companies to enter the market faster. What’s more they have lower overhead and less risk than if they had to buy and maintain network infrastructure themselves.
Consider Google’s recent foray into the mobile business. Becoming a mobile virtual network operator (MVNO) doesn’t cost Google a lot, but it helps the company provide a full portfolio of services to control customer experience end to end. This could spell trouble for infrastructure providers, as TM Forum’s Founder, Keith Willetts, points out in this blog.
Catching the second wave
Virtualization today goes beyond the well-established MVNO model. Now the established infrastructure owners are themselves looking to someone else to own and run big parts of their networks. They see this as a way to reduce their costs of providing services to OTT players like Google and Facebook.
“You hear all of the Tier 1s talking about how they don’t want to buy specialized hardware anymore,” says Steve Zitnik, Executive Vice President and CTO, Interop Technologies. His company’s CorePlusX suite of infrastructure-as-a-service offerings include voice over Wi-Fi (VoWi-Fi), voice over Long Term Evolution (VoLTE) and Rich Communication Services (RCS).
Call it Virtualization 2.0. The strategy is enabled by a variety of recent and emerging technologies, such as network functions virtualization (NFV), software-defined networking (SDN) and even LTE.
For example, LTE supports virtualized RANs and evolved packet cores (EPCs). This architecture allows those nodes to be hosted by data center operators using commercial-off-the-shelf (COTS) IT equipment rather than specialized networking gear in central offices. Outsourcing lowers capital and operational expenditure, so the mobile operator has greater flexibility to price its services competitively yet profitably. The savings also can be poured back into R&D to create market-differentiating services. Either way, those competitive and bottom-line benefits highlight one of the business cases for virtualization.
Not your father’s MVNO
Virtualization 2.0 also has the potential to breathe new life into old business models, such as by giving MVNOs additional options for lining up the network infrastructure necessary to provide service.
“In an idealistic, competitive world, MVNOs are a good example of a rudimentary form of virtualization,” says Tom Guldberg, CEO, Cloudberry Mobile. “However, there is not much competition for hosting MVNOs, so this view could be considered slightly unrealistic.
“If network operators were viewed as virtual platforms, MVNOs could choose different network operators to host the network based on changing requirements,” he explains. “However, the fact is that mobile network operators are the service providers dictating the terms. MVNOs are tied to their network hosts and are forced to abide by the pricing and various other requirements dictated by the bigger players.”
Guldberg believes heterogeneous networks using both licensed and unlicensed spectrum could become a greater differentiator than SDN or NFV for MVNOs. In that model, MVNOs could play cellular operators, Wi-Fi hotspot aggregators and others against one another to get the mix of access options that best fits their business model.
Meanwhile, other suppliers believe outsourcing the core is key. “The switchless resellers [of the past]were required to purchase the smallest possible version of very large expensive switches, which limited them from day one,” says Steve Coppins, Business Development Manager, Quortus, a virtual mobile core software provider. “In contrast, an MVNO can invest in a virtual mobile core solution, which can be deployed on a very cheap COTS hardware platform, or hosted within a data center, for a tiny fraction of the price of a traditional mobile core network.”
Waste not, want not
Virtualization also gives network operators more flexibility in delivering services. A prime example is a mobile operator using Wi-Fi to alleviate the strain on its cellular network. The more efficiently an operator can use its spectrum and infrastructure, the better able it is to support not just more customers, but also highly price-sensitive ones such as Internet of Things (IoT) users.
“Cloud RAN enables operators to manage traffic at the network level, rather than at the cell level, and allocate traffic to different air interfaces or cell types (for example, small cells or macro cells) depending on the traffic type, subscriber/device [and]policy,” says Monica Paolini, Founder and President, Senza Fili Consulting. “In turn, this enables operators a more fine-grained management of traffic and services, which enables them to improve support for IoT services and devices; to introduce new contextual services and to optimize quality of experience in real time.”
AT&T is an avid adopter of NFV and SDN, with a goal of virtualizing over 75 percent of its network by 2020. Like some of its rivals, the company sees virtualization partly as a way to offer bandwidth and other services on demand. The company’s first service from its software-centric network is Network on Demand (NoD), which uses software to add or change network services rather than the previous method of modifying, installing or replacing hardware to make network changes.
“What the cloud did for the corporate data center, AT&T NoD will do for the corporate network,” says Margaret Chiosi, Distinguished Technical Architect, AT&T. “Many of those same benefits apply: It’s a virtualized solution, can be provisioned in near real time and can scale up or down to meet changing needs of our customers.”
For more about AT&T’s transformation to a software-centric business, see this case study.
Old habits die hard
For all its benefits, virtualization has a few hurdles to clear. A big one is service providers’ concerns about the quality of service they will be able to deliver when multiple companies are providing some or all of their network.
Some cloud providers address that concern by offering end-to-end solutions, where disparate vendors’ products are tested and monitored to make sure they all play nicely. Cloud providers have a vested in interest in enabling that harmony because it helps win business.
“There is a single, wringable neck,” says Damian Sazama, Vice President of Corporate and Product Marketing, Interop Technologies. “That’s one of our biggest value-adds: We take the multi-vendor equation out of the picture for operators. We’ve got the IMS core, the VoWi-Fi infrastructure and the VoLTE infrastructure.”
Another example is Expeto, which provides a managed, on-demand EPC platform.
“We’re doing a lot of the hard parts – the automation and orchestration – of the individual components within the EPC,” says Ryley MacKenzie, CEO, Expeto.
TM Forum is working to help service providers with the critical partnering requirements for ensuring that service quality is maintained end to end when multiple partners in a value fabric are involved in delivering a service (see panel and also see our Extra Insights publication NFV: Can it be managed? Blueprint for end-to-end management. By using best practices, service providers can ensure that service level agreements are met, end to end, so they can sort out problems more quickly and easily.
Managing the value fabric
TM Forum’s standards-based tools and best practices provide important capabilities that support collaboration in a value fabric – a mesh of interwoven, cooperating organizations and individuals. Value chains tend to be sequential with well-defined roles for each party in the chain. Value fabrics, on the other hand, are not sequential and often involve multiple parties collaborating in a variety of ways.
Some of the parties engaged in a value fabric deliver services directly to their customers and assure that customers’ expectations continue to be met (think MVNOs), while others deliver and assure value indirectly (for example, the network operators supplying services to MVNOs). Customers also play a role in the ecosystem represented by the fabric. Below is an example of a cloud value fabric.
The key to making the most of the value fabric is that all parties are able to collaborate effectively in delivering goods and services to customers. The TM Forum approach is based on operationally deployed solutions as described in the Online Partnering Guide and the B2B2X Partnering Accelerator. Both are based on companies’ experience and expertise. Building the bridge using Frameworx best practices and associated business metrics provides common language, business processes, information, key performance indicators and APIs for successful digital partnerships.