NFV = New Revenue Opportunities

By: David Walters

A growing share of Communication service providers (CSPs) have embarked on strategic network transformation projects, whether it involves transitioning from legacy TDM networks to IP, undertaking an all IP network transformation, or evolving to IMS. Today, CSPs are looking to Network Function Virtualization (NFV), an industry standard that defines the architecture for virtualization of network functions to create and deliver communications services in a cloud environment.

But CSPs need to rethink their approach to Network Function Virtualization or NFV. In particular, many service providers see NFV primarily as a means to reduce costs via improved operating efficiencies and reduced capital investments. This approach would make sense at first glance. Consider how the European Telecommunications Standards Institute (ETSI) defines NFV, with its objective “to consolidate many network equipment types onto industry standard high volume servers, switches, and storage, which could be located in datacenters, network nodes, and end-user premises.”  

A deeper look at NFV reveals not only cost savings benefits but also the larger opportunity to increase revenue.  New sources of revenue are derived via 1) the introduction of new services, 2) enhancing existing services and 3) opening entirely new markets. In addition, for many CSPs who operate facilities-based networks, NFV may represent the most important means to leverage their existing network assets and differentiate from cloud and Over The Top (OTT) providers.    

Imagine New Services via NFV

Identifying new revenue opportunities starts with understanding that NFV is more than virtualization and operating virtualizing systems.  One can think of NFV as having the following building blocks:  1) virtualization, 2) orchestration, and 3) elasticity. 

  • Virtualization: the ability to run discrete functions or building blocks of an application within a virtual machine.

  • Orchestration: the ability to manage the lifecycle of an application including installation, deployment, configuration, and termination in an automated, repeatable manner. It includes the ability to manage the underlying infrastructure comprised of the compute, storage, and networking resources required for the application.

  • Elasticity: the ability to dynamically scale an application in or out via its individual discrete network functions.

The most powerful new services can be developed through the combination of virtualization, orchestration, and elasticity.  These may work like building blocks with elastic network functions built in an orchestrated provisioning environment.  New services are provisioned and managed more quickly and easily and can scale more dynamically and repeatedly.  


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