Light Reading

Carriers Say SDN Won't Save Capex

Carol Wilson
10/30/2013
50%
50%

SAN JOSE — Digital Disruption 2013 — Contrary to popular opinion, software-defined networking will not produce major capex savings for network operators, according to the two men responsible for virtualization strategy at CenturyLink and at Sprint.

Speaking on a Tuesday afternoon panel here on the impact of virtualization, James Feger, vice president, network strategy and development for CenturyLink, and Fred Feisullin, senior network architect in the CTO's office of Sprint, said there are advantages to deploying SDN and network functions virtualization (NFV), including getting new services to market quickly and, at some future point, opex savings. But capex savings isn't something they are expecting.

"When it comes to capex, I'd say it's a wash," Feger said. "Can I buy a virtual router today that is cheaper than buying a regular router? Sure. But transforming the telco environment into an SDN/NFV environment initially is going to cost more."

Telco central offices weren't built to house datacenter equipment and will need to be outfitted to do that, making the total cost of ownership (TCO) of a virtualized network about the same as today's capex budgets, he said.

In Sprint's case, the initial move to virtualization will take place in the evolved packet core, which isn't where most of the wireless network operator's costs lie, Feisullin explained.

"The core is a fraction of our capex, our costs are in the radio access network, mostly in radios, and those aren't going to be virtualized right now," he said. "The bigger gains are the new revenue sources that can be generated, then followed on by lower opex which will take much longer to be realized, then capex, maybe."

Like Feger, Feisullin sees higher opex associated with the initial deployment of new equipment to "get the infrastructure to work."

There may be more capex savings at the edge of the network and in CPE, such as set-top boxes, Feger said.

One further challenge in the early days of SDN/NFV is that creating virtual functions running on commercial off-the-shelf hardware creates complex operations challenges in the era when each function may be managed by a different siloed management system, Feger said.

New services acceleration and the ability to "fail fast" -- i.e., try something and then shut it down quickly if it doesn’t work -- are key advantages to a virtualized approach, according to both men. They balked at a suggestion from fellow panelist Jeff Edlund, CTO of CMS-Enterprise Solutions at Hewlett Packard, however, that network operators are willing to accept a lower level of overall reliability when they move more functions to COTS gear that is not built for the five nines of proprietary telecom boxes.

"It's not that we are tolerant of fewer nines or less reliability," Feger said. In a virtualized network, the reliability burden may be shared among multiple boxes that are logically connected rather being built into a more expensive individual component.

Service providers are willing to move ahead of standards development, however, because they see virtualization as important to future business models and may, in fact, be influencing standards by what they deploy and use, Feger said.

Feisullin sees "as many different strategies out there as there are service providers," when it comes to what to virtualize first and how much legacy gear continues to function for some time to come.

He also credited ETSI with getting the ball rolling on NFV, regardless of where its standards process ends up.

"ETSI is already a success because it has torn down walls between service providers and vendors and between vendors and that has shaved years the deployment cycles," Feisullin said. "Are we there yet? No, we have a long way to go."

— Carol Wilson, Editor-at-Large, Light Reading

(18)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
Page 1 / 2   >   >>
TomNolle
50%
50%
TomNolle,
User Rank: Light Sabre
11/22/2013 | 9:24:11 AM
Re: Service providers may not benefit that much
I agree; there is a major risk that application awareness becomes stateful behavior that we already know doesn't scale in a cost-efficient way, particularly wrt opex.  I think that the SDN community will need to prove in an operations strategy, and to do that they'll also have to prove in a holistic approach to SDN--is it a complete strategy or a limited-area solution that still has to fit inside a bigger picture like IP.  If the former, how do we make it scale.  If the latter, how can it make enough of a difference to matter?
varkonyib
50%
50%
varkonyib,
User Rank: Light Beer
10/31/2013 | 4:18:26 AM
Service providers may not benefit that much
Centralization we had already with PDH/SDH, or ATM. Centralization of PNNI has failed miserably, although we still have some of those ATM switches in operations... :-)

The real issue would be a standard flow-through provisioning. But this is still far away. A standard interface between the switch and the controller does not help too much, when for each vendor's controller we need to develop to a different API.

At the end of the day all comes down to prices and technology architectures are secondary. SDH could not conquer the world because of pricing, not because it could not solve all technical problems. Recently, it has provided fully dynamical bandwidth control and common provisioning with other layers.

The real motivation for carriers is in OPEX savings in most cases. Managers are typically measured by EBITDA, and rarely on cash-flow. So CAPEX savings are virtual, and controllers never accept it, because it is too easy to falsify.

 

 

 

 
TomNolle
50%
50%
TomNolle,
User Rank: Light Sabre
10/30/2013 | 6:05:41 PM
Re: And the operators say...
I would hope that the IETF group thinks about some of the deeper issues (beyond simply deploying VNFs) but I can't say whether that will be what comes out.  If you look at service chaining, or any NFV element, it's kind of two-dimensional.  One dimension is how you deploy it and manage it, and the other is how the functionality itself has to be structured in order to achieve your service quality and availability goals.  It's not clear to me whether the IETF is fully engaged on either point but I think they do have a more general model for deployment and management than the NFV ISG does (because they have a broader scope of interest).
Dredgie
100%
0%
Dredgie,
User Rank: Light Sabre
10/30/2013 | 5:38:27 PM
Re: Vendor messaging
I can't talk for data center SDN, but suppliers should absolutely talk capex reductions when it comes to carrier SDN (as described superbly by dwx*). With on-demand provisioning, you can dramatically increase path efficiencies and reduce oversubscription. Throw-in an additional low-end edge layer – a whitebox MPLS switch – you can even reduce the overall traffic hitting costly LERs. All while keeping your core optics and switches unchanged.

 

*Full disclosure: I have no idea who dwx is – but adding to my xmas card list!**

**Fuller disclosure: I don't actually have an xmas card list.
DOShea
50%
50%
DOShea,
User Rank: Blogger
10/30/2013 | 4:45:03 PM
Vendor messaging
I think there is at least some vendor messaging out there that mentions capex savings as a benefit, though I have never seen it mentioned prominently. Maybe some companies are hard-wired to list capex savings as a benefit of anything they do.
sam masud
50%
50%
sam masud,
User Rank: Light Sabre
10/30/2013 | 3:37:28 PM
Too early
With all due respect, I don't think we can predict whether SDN will produce major or moderate savings in capex (and/or in opex) for the simple reason that we're much too early in terms of adoption of SDN. There will be a shakeout/consolidation in this market and vendor pricing models will change as the market matures. Also, I would not be surprised if opex savings from SDN aren't as expected because a more dynamic network that supports an increasing number of apps and let's service providers tailor services on a per user basis could impact opex.
dwx
50%
50%
dwx,
User Rank: Light Sabre
10/30/2013 | 3:30:19 PM
Re: That's their story and they're sticking to it
But Google is not using or have any plans on using open flow on their much larger backbone network. They are looking at hybrid central/distributed control using a PCE. The reality though is carriers have been using things like RSVP-TE to run links at 80-90 percent for 10+ years now on high capacity backbone networks. Where SDN may help those networks is at the edge and finding ways to control the spigots in and out of the network traditionally hard to control. Or optical+IP integration to turn up circuits dynamically or collapse layers. But you still need all the infrastructure in place to do those things, so capex isn't lowered dramatically. SDN adds some tweaks to that but the overall network doesn't change and the economics of using cheaper hardware in core networks doesn't really pan out. Like was said you are better off issuing a RFP and beating vendors up for better pricing.
gleavieboy
100%
0%
gleavieboy,
User Rank: Moderator
10/30/2013 | 3:03:32 PM
Re: That's their story and they're sticking to it
Good post Carol and kudos to the panelists.  But this shouldn't be a shocker.  ONF's original whitepaper on "SDN: The new norm for networks" doesn't sell Cap-Ex as the driver.  It's all about centralizing management and control, improving automation, increasing programmability, speeding innovation and offering more granular network control -> needs driven by today's east-west traffic patterns, big data, access from any device anywere etc...

Savvy operators also understand that SDN creates the flexible network architectures to support NFV (which in turn brings its own series of benefits). CFOs should be looking at SDN/NFV as a way of designing their networks for more contemporary needs - and establishing the elastic, programmable, scalable tenets required for future prosperity and competitiveness.  For those a tad more blinkered, there are plenty of vendors out there that will help them wring a few extra dollars out of cap-ex when doing like for like box replacements or upgrades. But work those deals now -because the vendor landscape for the new global network is going to look very different.
Dredgie
100%
0%
Dredgie,
User Rank: Light Sabre
10/30/2013 | 2:59:47 PM
Re: And the operators say...
Re. your last point, Tom: Hence, I assume, the energy that is being put behind the Service Function Chaining (Network Service Chaining as was) initiative in the IETF. Momentum that surprised even the Area Chairs. 16 drafts in progress with only one BoF behind them. One more BoF at IETF88 (next week) before the charter is approved and working group status is achieved - but if the meeting was a few week later, even that might have been negated.
TomNolle
100%
0%
TomNolle,
User Rank: Light Sabre
10/30/2013 | 2:08:26 PM
And the operators say...
...at least at the meetings I've recently had, that capex reduction is not the compelling driver of either SDN or NFV.  They say operations savings and service velocity, which is what they said in the panel Carol is quoting.  The problem is that operators spend only about 17 cents of every revenue dollar on capex lf all kinds, and neither SDN nor NFV could hope to impact ALL of that.  As one operator said, they could bring about a 20% reduction in equipment spending by beating up Huawei.

The thing is, service velocity is as facile an answer as capex.  Velocity without direction isn't progress it's just movement.  Nothing is going to make bits profitable no matter how fast you can shuffle them or arrange them to support new stuff.  The "new stuff" has to be created above the network of today.  That means that a big part of "service velocity" has to come from assembling features into new services faster and more effectively.  That's not an SDN story, and it may not even be an NFV story.  If NFV is just about virtualizing existing network functions then it's not about creating truly new services.
Page 1 / 2   >   >>
Flash Poll
From The Founder
The Swedish vendor has undergone a significant transformation during the past few years, adjusting to the demands of next-generation communications companies.
LRTV Documentaries
The 3GPP's Road to 5G Standardization

4|17|15   |   4:43   |   (0) comments


Satoshi Nagata, chairman of the 3GPP's TSG-RAN group and a manager at NTT Docomo, explains the standardization process for 5G, as well as the biggest challenges and opportunities.
LRTV Documentaries
AlcaLu CTO Makes the Case for a New 5G Air Interface

4|16|15   |   3:54   |   (0) comments


Michael Peeters, CTO of wireless at Alcatel-Lucent, explains why 5G will require a new air interface to meet its diverse performance targets.
LRTV Documentaries
AlcaLu + Nokia: The New Uber-Vendor

4|15|15   |   2:42   |   (4) comments


Heavy Reading Senior Analyst Gabriel Brown discusses the technological and competitive opportunities and challenges if a merger between Alcatel-Lucent and Nokia comes to pass.
LRTV Huawei Video Resource Center
Huawei's Data Center Power Play

4|15|15   |   6:22   |   (0) comments


Huawei has developed industry-leading energy efficiency capabilities for its indoor and outdoor data center solutions, explains Dr. Fang Liangzhou, vice president of Huawei's Network Energy product Line.
LRTV Huawei Video Resource Center
Huawei’s Routers, Switches Get the Green Mark

4|15|15   |   2:02   |   (0) comments


TUV Rheinland's Frank Dudley explains how Huawei's routers and switches have been successfully tested by energy efficiency experts and have gained Green Mark Certification.
LRTV Documentaries
A Finn, a Frenchman & a Guy From New Jersey Walk Into a Merger...

4|15|15   |   3:17   |   (0) comments


Stop us if you've heard this one before... Light Reading CEO Founder & CEO Steve Saunders weighs in on the technical and cultural implications of a Nokia and Alcatel-Lucent merger.
LRTV Huawei Video Resource Center
Accounting for Better Solutions

4|10|15   |   02:31   |   (1) comment


Murad Yousuf, CTO at Saudi Arabia's Ministry of Finance (Dept. of Zakat & Income Tax), talks about the benefits of deploying router technology from Huawei.
LRTV Huawei Video Resource Center
What's in Store for Huawei & DataCore?

4|10|15   |   05:44   |   (0) comments


At the CeBIT trade show in Hannover, Germany, George Teixeira, CEO of software-defined storage (SDS) specialist DataCore Software, explains why he has just signed a partnership agreement with Huawei Technologies.
LRTV Huawei Video Resource Center
Du Puts Its Faith in Huawei's Routers

4|9|15   |   3:42   |   (0) comments


Adnan Masood, director of Enterprise MS Solutions Marketing at du, the United Arab Emirates (UAE) operator also known as Emirates Integrated Telecommunications Company, explains why his company chose to use Huawei's multifunctional AR routers as part of its managed enterprise services.
LRTV Huawei Video Resource Center
Huawei Gets Active in the Data Center

4|9|15   |   3:17   |   (0) comments


With enterprise users looking to maximize the use of their data center assets, Huawei’s Chief Architect & Technical Director of IT Data Center Solutions, Bruce Su, explains how the company's six-layer active-active data center solution is eradicating the need to deploy passive, redundant data center assets.
LRTV Huawei Video Resource Center
Blue Consult & Huawei for a Better Solution

4|8|15   |   4:01   |   (0) comments


Martin Rott, CEO, and Marc Metzler, head of sales virtualization, from Germany's Blue Consult discuss their collaboration with Huawei and TrendMicro to develop a secure, scalable IT platform that can meet the needs of the most demanding enterprise users.
LRTV Huawei Video Resource Center
Beach Petroleum on eLTE & Mining

4|8|15   |   3:09   |   (0) comments


Network systems integrator Jeremy Hamlyn explains how Huawei's secure packet-based trunking communications system, eLTE, can help remote communities and companies in the mining, oil and gas sectors, deploy efficient communications networks that are perfect for video and data as well as voice.
Upcoming Live Events
May 5, 2015, Hyatt McCormick Place, Chicago, IL
May 6, 2015, Georgia World Congress, Atlanta, GA
May 12, 2015, Grand Hyatt, Denver, CO
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 8, 2015, Chicago, IL
June 9-10, 2015, Chicago, IL
June 9, 2015, Chicago, IL
June 10, 2015, Chicago, IL
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
November 11-12, 2015, The Westin Peachtree Plaza, Atlanta, GA
All Upcoming Live Events
Infographics
Network Instruments, a JDSU division, shares results from its 2015 State of the Network, a global survey on security.
Hot Topics
Verizon Scores New OTT Content Deals
Mari Silbey, Independent Technology Editor, 4/16/2015
Can WiFi Calling Find Its Voice?
Iain Morris, News Editor, 4/13/2015
Senator Proposes New 'Title X' for Net Neutrality
Carol Wilson, Editor-at-large, 4/13/2015
Nokia, Alcatel-Lucent in Merger Talks
Iain Morris, News Editor, 4/14/2015
Nokia & Alcatel-Lucent: What's Going On?
Ray Le Maistre, Editor-in-chief, 4/15/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Data Center Interconnect, or DCI, is one of the hottest sectors in telecom currently. Since coming back to Light Reading last year, prodigal-son style, I've ...
LR CEO and Founder Steve Saunders sits down with the head of Qosmos to talk about the changing state of the art in deep packet inspection technology, including its role in SDN and NFV architectures.
Cats with Phones
Steve's Phone Click Here
Steve Saunders's personal phone.