Cisco says NFV to be a Revolution

Shocking words from an equipment provider?

Jared Headley who heads up Cisco’s service provider mobility marketing said to me recently, “We still believe the best way to simplify service delivery is to virtualize it, put it on COTS and really drive virtualized service chaining instead of physical plug-in router blade chaining for delivering services across the mobile network.” He continued to say this will drive costs down 40-45% in the first year while changing service delivery speed from months to weeks. He called this a revolution over the next couple of years.

He went on to say although this is generally considered “boring” stuff because it is back-end related but he emphasized this is what makes operators more agile.

He relayed a discussion he had with an operator on an island near Africa where the number of SIMs sold was almost double the number of people on the island. When he inquired about their non-SIM devices and generating revenue from them, they said they were told by their incumbent equipment vendor that it would cost tens of millions of dollars to set up policy to interconnect wireline, 3GPP and WiFi to provide subscriber services.

Cisco showed them their virtualized policy solutions running on COTS servers which could speak with their incumbent vendor and implement web and EAP-SIM services. This solution would allow the operator to harness a business opportunity worth tens of millions of dollars while paying the networking leader less than a million dollars.

If you remember my post on Cisco’s NFV initiatives from this past summer, this news shouldn’t be too shocking. Here is an excerpt:

Cisco’s Kelly Ahuja SVP, GM, Mobility Business Group spent about an hour discussing the impact of NFV on the company’s business. The bottom line is Cisco expects the move to software to be less lucrative but the flipside is they expect to expand their business into many other areas as part of the carrier transition to software on COTS servers utilizing network functions virtualization.

The bottom line for equipment providers is if they are last to the NFV party, there may not be anyone left to dance with. Don’t expect NFV leaders to wait patiently until you are ready to compete with them.

Metaswitch says the time is NOW for NFV

Steve Gleave from Metaswitch had some interesting points to make about the market. He commented at a recent conference we both attended that WhatsApp is said to be paying 4 cents per subscriber and this compares nicely to the 2 cents per subscriber signaling cost his company has been able to show recently using NFV or network functions virtualization and open source software.

His point was, at least NFV will provide a fair fight for operators. He continued by saying the move will be complex but that doesn’t mean Elon Musk didn’t go to the moon. Carriers, he added – need to embrace NFV and the sooner the better.

Cisco: NFV is Transformational

Cisco’s Josh Bottum recently told me by email, although several public announcements have shown that large service providers and data center operators are adopting NFV, it is still common to speak with CLECs executives who are just starting their NFV investigation. NFV potentially impacts every major function (directly or indirectly) in a service provider’s network and we are actively validating network designs and supporting deployments. He concluded by telling me NFV continues to gain momentum because it delivers transformational benefits to Service Providers, their subscribers and their vendor partners.

This revolution will be hyper-threaded

Even more important may be the idea that commoditized hardware means a massive focus on software efficiency. Currently, network operator hardware does not have to be efficient because the supplying vendor can charge more money for less efficient solutions.

We are however in a new age where the hardware is the same so software performance becomes paramount. Of course there are things that specialized hardware and DSPs can do that off the shelf CPUs cannot but when the software can be orders of magnitude more efficient thanks to hyper-threading and other techniques, the game changes dramatically. In fact the number of cores in servers is not decreasing and efficiently using them will be the holy grail of the carrier market for years to come.

NFV: The future is now

Software-based services is the direction the service provider market will be going in for the foreseeable future and this is why all carriers need to be ready for this shift. The planning will happen this year and next and we can expect really large orders in 2015.

I would be remiss if I were not to tell you my company TMC will be hosting the defacto NFV event, Software Telco Congress November 20-21, 2013 in Santa Clara, Ca where both Josh Bottum from Cisco and Steve Gleave from Metaswitch will be giving keynote presentations along with Chris Koeneman of Adtran, David Amzallag of Alcatel-Lucent, Paul Miller Jr. of GENBAND, Dr. Craig Farrell of IBM, Norman Fekrat of Lemko and Bill Beckett of Saisei Networks.

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