& cplSiteName &

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        ADD A COMMENT
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   >   >>
From The Founder
The independent evaluation of Nokia's key virtual network functions (VNFs) was a defining moment for the Finnish giant.
Flash Poll
Live Streaming Video
Charting the CSP’s Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it’s going from two industry veterans.
LRTV Documentaries
Leading Lights 2016 Highlights

5|25|16   |   02:26   |   (1) comment


Some of the high points from this year's Leading Lights awards dinner at the Hotel Ella in Austin, Texas.
LRTV Documentaries
Light Reading Hall of Fame 2016

5|23|16   |   05:43   |   (0) comments


Find out who has been welcomed into Light Reading's Hall of Fame this year.
LRTV Custom TV
ZTE TM Forum Highlights

5|23|16   |     |   (0) comments


ZTE showcased its new ICT solutions at TM Forum in Nice.
LRTV Interviews
Gamma's MD on the Emergence of UC2

5|20|16   |     |   (0) comments


Gamma Communications Managing Director David Macfarlane believes the unified communications (UC) market has reached a tipping point.
LRTV Custom TV
The Ultimate 5-Minute Guide to Digital Customer Engagement

5|20|16   |     |   (0) comments


In this short video, you will hear all about how Digital Customer Engagement is the key to meeting customer expectations, keeping them happy, and maximizing revenue. VP Product & Marketing at Pontis, Ofer Razon, breaks down for us the five essential capabilities for successful Digital Customer Engagement. Don’t miss!
LRTV Custom TV
NFV in 2016: Part 1 – NFV Use Cases Get Real

5|19|16   |   05:57   |   (0) comments


Consensus is building around the key use cases for NFV, including managed IP services at the network edge and on customer premises, which can generate new revenues from enterprises/SMBs and consumers; Evolved Packet Core to support LTE migration; and adjacent technologies, such as TAS and IMS, to support VoLTE and next-generation charging and policy control ...
LRTV Custom TV
Nokia's Steve Vogelsang on NFV – Part 3

5|19|16   |     |   (0) comments


Steve Vogelsang discusses the challenges of operational transformation and how Nokia helps its customers. Join Steve at the Big Communications Event in Austin the morning of May 24, on his keynote and optical networking panel.
LRTV Interviews
Level 3: Why UC Is In Demand

5|17|16   |   04:12   |   (1) comment


Andrew Edison, Level 3's senior VP of sales, EMEA region, talks about the drivers of growth in the unified communications services market.
LRTV Custom TV
ARM's OPNFV Action

5|17|16   |     |   (0) comments


At the ARM booth at MWC 2016, Joe Kidder and Bob Monkman speak to Light Reading about OPNFV and their upcoming action.
LRTV Custom TV
Nokia's Steve Vogelsang on NFV – Part 2

5|16|16   |     |   (0) comments


Steve Vogelsang gives advice to service providers on how to move to NFV. Join Steve at the Big Communications Event in Austin the morning of May 24, on his keynote and optical networking panel.
LRTV Interviews
Interoute CTO on NFV's Maturity

5|13|16   |   06:46   |   (1) comment


Matt Finnie, CTO at international operator Interoute, explains how NFV has made life easier in terms of logistics and how Interoute can now enable a 'software-defined moment' for its customers.
LRTV Huawei Video Resource Center
UBBS 2016 Highlights

5|12|16   |     |   (0) comments


Highlights of Huawei's UBBS event in Hong Kong.
Upcoming Live Events
September 13-14, 2016, The Curtis Hotel, Denver, CO
December 6-8, 2016,
June 16-18, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
A new survey conducted by Heavy Reading and TM Forum shows that CSPs around the world see the move to digital operations as a necessary part of their overall virtualization strategies.
Hot Topics
WiCipedia: Short Skirts & Back-Up Plans
Eryn Leavens, Special Features & Copy Editor, 5/20/2016
AT&T to Start 5G 'Friendly' Trial by 2016 End
Dan Jones, Mobile Editor, 5/24/2016
DT: Telcos Must Escape Vendor Prison
Iain Morris, News Editor, 5/24/2016
Google Doubles Down on Machine Learning, AI
Mitch Wagner, West Coast Bureau Chief, Light Reading, 5/19/2016
Eurobites: Be More European, EU Tells Streaming Services
Paul Rainford, Assistant Editor, Europe, 5/20/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
In this latest installment of the CEO Chat series, Craig Labovitz, co-founder and CEO of Deepfield, sits down with Light Reading's Steve Saunders in Light Reading's New York City office to discuss how Deepfield fits in with the big data trend and more.
Grant van Rooyen, president and CEO of Cologix, sits down with Steve Saunders, founder and CEO of Light Reading, in the vendor's New Jersey facility to offer an inside look at the company's success story and discuss the importance of security in the telecom industry.
Animals with Phones
Live Digital Audio

Our world has evolved through innovation from the Industrial Revolution of the 1740s to the information age, and it is now entering the Fourth Industrial Revolution, driven by technology. Technology is driving a paradigm shift in the way digital solutions deliver a connected world, changing the way we live, communicate and provide solutions. It can have a powerful impact on how we tackle some of the world’s most pressing problems. In this radio show, Caroline Dowling, President of Communications Infrastructure & Enterprise Computing at Flex, will join Women in Comms Director Sarah Thomas to discuss the impact technology has on society and how it can be a game-changer across the globe; improving lives and creating a smarter world. Dowling, a Cork, Ireland, native and graduate of Harvard Business School's Advanced Management Program, will also discuss her experience managing an international team focused on innovation in an age of high-speed change.