The exponential increase in the size and complexity of networks, coupled with surging data traffic, has created a need for the adoption of advanced network management systems. To cater to this emerging need, global telcos, enterprises as well as other service providers are turning to network function virtualisation (NFV) solutions that have the ability to transform networks into more open and programmable frameworks. By implementing a decoupled centralised control layer, which optimises network resources, NFV aids in reducing network congestion, enhances user capacity, and minimises the costs associated with hardware requirement for network expansion. Further, the ever-increasing demand for cloud-based services, enterprise mobility, the rising internet of things (IoT) deployments as well as security agility have driven the adoption of virtualisation across the globe. Telecom service providers, cloud service providers as well as enterprises alike are actively leveraging NFV to optimise networks, improve service delivery times, increase revenue, and reduce capex and opex. Owing to this increased uptake, industry experts project that the global network function virtualisation market is expected to grow at a compound annual growth rate (CAGR) of 22.9 per cent, from $12.9 billion in 2019 to $36.3 billion by 2024. A look at the key emerging trends in the global network virtualisation space and the way forward for the segment…
Regional insights
In terms of region-wise adoption, North America is estimated to account for the major share of the NFV market. Surging NFV adoption in the region would be driven by early and fast adoption of technologies, such as cloud computing, softwaredefined everything (SDx) and IoT. Fur
ther, countries in North America have favourable standards and networking regulations that help in increasing the uptake. In fact, numerous NFV infrastructure providers, including Cisco, IBM, Juniper Networks and Extreme Networks, are based in the region. Moreover, increased 5G deployments have also triggered increased adoption of NFV in the region.
North America is closely followed by countries in the Asia-Pacific (APAC) region. Key drivers for surging NFV deployments in the region include the adoption of cloud computing, big data analytics, IoT, favourable policies and regulations, the demand for data storage and security, the expansion of the data centre ecosystem, and large-scale investments in 5G testing and commercialisation by telecom carriers. In fact, a report by Global Market Insights, pegs the CAGR of the NFV market in the APAC region at around 50 per cent by 2024, the highest globally.
Global telco experience
World over, telcos have started jumping on the virtualisation bandwagon to move towards virtualised networks that enable them to deliver enhanced user experience and leverage new business opportunities emanating from the digital revolution. For instance, US-based AT&T announced plans to control 75 per cent of its network resources using virtualisation technologies as early as 2014. While the operator had aimed to complete this exercise before 2020, it was successful in completing only 71 per cent network virtualisation by January 2020. The operator now aims to achieve its target by end 2020. Further, Europe-based Deutsche Telekom has recently collaborated with VMware Inc to work together for virtualising radio access network (RAN). Under the partnership, the two entities would work together for testing and validating an open and intelligent virtual RAN (vRAN) platform based on O-RAN standards and Intel’s FlexRAN architecture. The platform will improve RAN agility for both the existing LTE and future 5G networks.
In the Middle East, the Saudi Telecom Company (STC) in Kuwait, which was earlier known as VIVA Kuwait, was one of the first operators to introduce network virtualisation. The virtualisation process, which began in 2015, helped the operator resolve network complexities, reduce opex, accelerate time-to-market and simplify network maintenance. Meanwhile, in South Korea, SK Telecom was one of the first operators to debut proof of concepts of virtualised evolved packet core (vEPC) and virtualised its IP multimedia subsystem in 2013. The operator started its migration to the virtualised network in 2015 and now operates numerous commercial virtual network functions (VNFs) in its data centres.
Enabling role in 5G roll-out
While leading telcos are embracing the concept of virtualisation, they still run relatively low volumes of their total network traffic over virtual infrastructure. A key reason for this is the immense complexity involved in the management or orchestration of virtualised infrastructure along with the interoperation of the underlying traditional network infrastructure. However, the commercialisation of 5G networks is going to provide a major stimulus to NFV, as the only affordable way to operate 5G networks is to virtualise, change network design, and increasingly manage the network and services from the edge. A number of 5G use cases that can be monetised would rely on high levels of service assurance, maximum network availability, uptime, and quality. Managing these attributes would call for increased network virtualisation and automation in terms of service management and network management. Further, the 5G virtualised infrastructure would have to be automated because the costs of handling this network manually would be impossible to meet within a telecom business.
Net, net, global service providers would need to accelerate their use of virtualised infrastructure to make the deployment of 5G viable. The two technologies can be seen as complementary to each other. While 5G needs virtualisation to ensure it can be rolled out profitably, virtualisation needs 5G for providing a unique opportunity to showcase the advantages of a fully virtualised operational environment.
The enterprise opportunity
In addition to telcos, virtualisation has opened up a plethora of opportunities for the enterprise space as well. World over, enterprises are rapidly adopting NFV to gain significant benefits such as improved network efficiency through centralised management, enhanced IT agility, and network customisation via fast and reliable application services. Key enterprise verticals at the forefront in terms of NFV adoption are banking financial services and insurance, retail, manufacturing and healthcare. These verticals are deploying cloudbased NFV solutions to scale up their networking infrastructure to meet increased workloads and reduce the cost incurred in procuring additional hardware appliances for supporting new network services. The increased adoption of NFV is also helping enterprises enhance their ability to deliver better network performance with lower data centre rack space, power and cooling requirements. Further, NFV is helping enterprises automate firewall rules, security groups and load balancers, and hybrid cloud networking, which are often handled through manual configuration. Going forward, enterprises are expected to move towards bring-your-own-licence and payas-you-go cloud infrastructure NFV models to derive an enhanced value from network virtualisation. The small and medium enterprises (SME) segment too is projected to witness a heavy usage of virtualisation solutions in the future. SMEs in particular can leverage virtualisation to consolidate servers and applications, improve disaster recovery and handle multiple workloads with maximum uptime and improved performance.
Challenges and future outlook
While virtualisation promises significant improvements with regard to network performance and cost optimisation, the transition towards a full virtualised network is fraught with challenges. For one, till the time the migration to all-virtual networks is completed, enterprises and service providers have to deal with a combination of legacy networks and new virtualised networks, thus requiring them to manage a multivendor environment. In this scenario, a partial virtual environment with physical devices can cause performance issues in service delivery. Further, unlike conventional IT environments, NFV requires managing IT outside the enterprises’ own premises; this removes the element of controllability and raises security concerns. Moreover, the migration to NFV-driven networks requires operators and enterprises to not just modify their network architecture but also overhaul their business models and make organisational changes, thereby necessitating a completely different approach to network and employee management. However, challenges notwithstanding, virtualisation of networks is projected to witness significant traction across the globe in the coming years. Telcos and enterprises alike are going to scale up their adoption of the technology to build future-ready networks that have the capability to harness opportunities arising from the ever-expanding digital ecosystem.
