Software-defined networking (SDN) and network function virtualisation (NFV) are the key technology disruptions driving the ongoing evolution of telecom networks. While SDN separates the control plane from the data plane of a network and centralises it, NFV decouples network functionalities from the underlying hardware. The shift to virtual networks comes with many operational benefits, including higher potential for automation, flexibility in resource utilisation, scalability, advanced redundancy and lower cost. Over a decade since their inception, these technologies have become the norm for deploying network functions and managing their life cycle. At present, most 5G core network implementations are virtualised.
Built on a similar concept is software-defined wide area network (SD-WAN), the latest evolution of WAN technology. It employs an automated, programmatic approach that offers significant improvements in the visibility, performance and manageability of WAN, making the entire WAN environment more intelligent and dynamic. It extends the capabilities of SDN to an application that enterprises can use to quickly create a smart hybrid WAN.
Market overview
The exponential growth in the number of devices connected to the network as well as the number of networking applications and services calls for new approaches to network design, management and operation. As such, telcos are rapidly transitioning to virtualised networks for greater scalability, agility and cost optimisation, leading to a significant growth in the SDN, NFV and SD-WAN markets. The expansion of cloud-enabled services and increased complexities of network traffic are further accelerating the adoption of these technologies. According to industry reports, the global market size for SDN was estimated at $1.57 billion in 2022 and is projected to reach $7.66 billion by 2030, recording a CAGR of 21.9 per cent. Meanwhile, the global NFV market size stood at $29.76 billion in 2022 and will grow at a CAGR of 16.2 per cent to reach around $99.2 billion by 2030. The SD-WAN market size is expected to rise from $2.2 billion to $21.5 billion during the same period at a CAGR of 33 per cent, the highest among the three. A key factor driving this growth is the demand for WAN optimisation solutions to lower costs and enhance network performance. Market players are upgrading their virtual and physical WAN product portfolios to deliver improved application performances.
Enterprises account for the largest revenue share in the SDN/NFV market. Due to the various use cases and advantages of NFV, such as enhanced IT agility and centralised management leading to improved grid capability, enterprise customers are rapidly adopting the technology. Telecom and IT, finance, manufacturing and government utilities are among the top sectors leveraging the technology. Furthermore, we can expect a rise in its application in broader scenarios such as medical, energy and education in the future.
Global uptake
North America, particularly the US, is leading the growth of the SDN and NFV markets. This can be attributed to the concentration of leading industry players, including Cisco, IBM, Juniper Networks and Ciena, in the region. Other factors driving growth in the region include favourable networking regulations, early and fast adoption of advanced technologies, and increased 5G deployments. North America is closely followed by countries in the Asia-Pacific (APAC) region. The region is witnessing a sharp rise in SDN/ NFV deployments driven by the growing uptake of cloud computing and internet of things (IoT), policy support and expansion of the data centre ecosystem, and massive investments in 5G networks. In fact, industry reports forecast APAC’s NFV market to grow at a CAGR of around 50 per cent by 2024, the highest globally.
The world over, telcos are rapidly moving towards network virtualisation. For instance, Belgium-based Proximus and Nokia announced new enhancements to 5G network slicing performance in congested network conditions by combining advanced radio access network (RAN) slicing functionalities in the base station with radio SDN technology. Earlier, Canada-based Telus selected Ekinops to deploy NFV and SDN capabilities on its network. Telus deployed a modular software solution, enabling a full range of built-in software services that can be activated remotely and on demand, equipping the telco with an SD-WAN-ready, carrier-grade and multi-service business data router. Indonesia-based Indosat Ooredoo selected Cisco to build a 5G-ready transport network based on SDN and segment-routing architecture. According to the company, the SDN transport network will be capable of concurrently supporting enterprise, business and consumer broadband as well as fixed and mobile services. Tech Mahindra has been working with Telefónica Germany to digitally transform its microwave network through open SDN. Further, NTT Docomo, in partnership with Japan’s NEC Corporation, launched proof-of-concept testing to establish the viability of cloud-native mobile networks leveraging public cloud for NFV. In 2022, Vodafone selected Nokia as its sole SDN manager and controller provider for its multi-access fixed network. According to Nokia, the SDN management and control functions will automate and optimise the carrier’s broadband networks, and strengthen its network-as-a-platform and other customisable services.
Key use cases
Network slicing
SDN and NFV support network slicing, which is an important aspect of 5G core networks. Network slicing separates a single physical network into multiple virtual networks over a common infrastructure. This splits networks into customisable slices, enabling operators to deliver services based on each customer’s needs.
Mobile edge computing
NFV allows edge devices to perform computational services and provide network functions by generating and utilising either a single or multiple virtual machines.
vRAN
Virtualised RAN (vRAN) applies the principles of NFV to RAN. It virtualises the functions of legacy RAN and offers them on flexible and scalable cloud platforms, significantly reducing costs while introducing smart management features and supporting 5G requirements.
M2M communications
SDN and NFV are being used in machine-to-machine (M2M) sensor networks to add programmability and flexibility features in order to cater to the exponential increase in wireless M2M traffic and enable network configuration even after deployment. Wireless SDN is a crucial concept for controlling M2M networks. It helps support node mobility, topology discovery, self-configuration and self-organisation.
Network mobility
A major challenge in wireless and broadband networks is connecting the end host to multiple networks simultaneously, allowing users to seamlessly transition between wireless infrastructure. This obstacle can be overcome by employing a combination of SDN and NFV between a home gateway and an access network. By adopting such an architecture, a major part of the gateway’s functionality can be transferred to a virtualised runtime environment.
Cooperative networks
SDN and NFV directly impact cooperative networks. SDN can provide advanced caching techniques, enabling data on the perimeter network to achieve the high capacity required for 5G systems and make data exchange between networks seamless.
Issues and challenges
A number of operational and implementation challenges are hindering the adoption of SDN and NFV technologies. The primary factors that discourage service providers from adopting these solutions include the lack of orchestration, active business cases and capabilities needed to operationalise SDN/NFV services. Complexities associated with the integration of third-party virtual network functions also impede adoption. Network operators should be able to mix and match servers and virtual appliances from different vendors without incurring significant integration costs and avoiding lock-in. Further, security is a key concern. The open interfaces that support the programmability of the network also introduce new potential attacks. A consistent multilevel security framework composed of policies and mechanisms is necessary for software integrity, dynamic threat detection and mitigation, and user authentication. In some cases, virtualisation has also been associated with abnormal latency variations and significant throughput instability. One of the major challenges is to ensure that network performance remains at least as competent as purpose-built hardware implementations.
Outlook and upcoming opportunities
The softwarisation and virtualisation of networks are enabling faster innovation and greater agility, helping telecom operators reshape various aspects of their business. In order to migrate to virtualised networks, operators will have to modify their network architectures and overhaul their business models to make fundamental organisational changes. While such a migration may initially be cost-intensive, the long-term adoption of SDN and NFV promises significantly higher returns on investments and a superior service quality experience for customers.
In India, the adoption rate is relatively slow as the technology standardisation and maturity levels of implementation are still evolving. Telcos have been in embracing SDN/NFV adoption due to their limited maturity. This presents an opportunity for vendors and system integrators to play a critical role through multivendor system integration, certification and benchmarking of vendor-supplied solutions, and managed services for end-to-end service fulfilment with assurance.
