While SDN advocates replacing network protocols with centralized software applications that may configure all the elements in the network, NFV advocates virtualizing specific network functions. The advantages are similar: agility, cost savings, and simplification that enables the fast creation and deployment of new services. It’s important to realize, however, that virtualizing network functions is not the same as introducing a new product or protocol; it’s a change in network architecture. This brings us to vCPE. vCPE is essentially a virtual representation of a gateway with the ability to adapt functions through an operator-controlled services cloud – it lets providers regain control of many of the functionalities traditionally found in CPE gateways.

Building on the basic concept of NFV, vCPE separates network functions from the underlying hardware — in this case, the customer’s gateway device. vCPE does not eliminate the need for hardware at the customer site. Rather, it eliminates the need for single-purpose hardware and vendor-specific software, as network functions typically performed in traditional CPE can be controlled from the cloud. This means that vCPE implementations don’t always require new hardware and may be appropriate for legacy devices, since built-in features like WiFi are still bound to the physical hardware.

vCPE is network agnostic, which means the technology operates using overlay network technologies readily supported by both cable and carrier access networks. Several vCPE models on the market are currently being trialed in residential and commercial environments. In most cases, operators may decide how many network functions are controlled by a vCPE solution.

A vCPE Network

Essentially, vCPE virtualizes the functions of the gateway. These functions could include DHCP, firewall, port forwarding, DLNA discovery, parental controls, or future functionality that may be added as a service offering. Two vCPE approaches are being trialed: the gateway-hosted model and the operator cloud model.

The gateway hosted application model is where a network service function is deployed and run within the subscriber gateway device. Using the gateway to run network functions reduces the need for costly access routers, load balancers, voice and security boxes into software running on a single physical device. This is more commonly found in enterprise vCPE solutions where the business model supports a higher cost on-premises device, although there has been work to validate whether this business model will work for residential services.

The second approach is to move all the software functions into the cloud, where through network isolation each subscriber continues to have a rich set of features delivered via a simplified, often lower cost device at the premises. This is most commonly seen as the residential vCPE model, although both approaches have proven to be valuable and cost-effective in commercial vCPE models.

Cost Savings and Quality of Experience Enhancements

vCPE represents an ability to improve the customer experience and increase retention, while also offering the potential for new revenue streams.

Service providers undoubtedly want to reduce costs without losing capabilities at the network function level. By gaining flexible virtualized functions, an operator can improve utilization and power density, simplify their operations, and in turn, reduce CAPEX and OPEX investments. Analysys Mason estimates communication service providers spent $101 billion on telecoms hardware worldwide in 2013 and expect that number to decrease with NFV and SDN hardware spending to just $18.5 billion by 2023.