Of all the telco virtualization projects underway, Telefónica's Unica initiative is arguably the most ambitious. Even after the sale of some assets, the Spanish operator's business empire spans countries in Latin America and Europe that have little in common. Developing the virtual tools that can be used across these networks, and the processes that support them, was never going to be straightforward. (See Telefónica Upbeat Despite Slump in Profits and Telefónica Unveils Aggressive NFV Plans.)

The overhaul is taking longer than anyone had originally imagined, largely because of technology immaturity. Right now, Telefónica is focused on virtualizing its core network functions, and it will be some time before it can turn its attention to the radio access network (RAN), executives admit. But the goal remains the same: to build a more automated, software-based global network that will reduce costs, speed up service development and fuel innovation. (See Telefónica CTO: It's Time for Unica Phase II.)

Figure 1: Watch Out, Blanco's About Enrique Blanco, Telefónica's chief technology officer, has been a driving force behind the Spanish operator's virtualization program.

Much like Germany's Deutsche Telekom AG (NYSE: DT), which is virtualizing networks across most of its European markets under its pan-net initiative, Telefónica has recently shied away from brandishing any firm targets for the transformation. It has already hit some important milestones, however, and is getting ready for some big Unica moves. (See DT's Pan-Net Still at Start of the Marathon.)

Those will include the opening of new data centers in the markets of Chile, Mexico, Spain and the UK. Mexico is first on the list, says Javier Gavilan, Telefónica's planning and technology director, and will probably get a new facility this year. That will complement the Unica points of presence that Telefónica already maintains in Argentina, Colombia, Germany and Peru, he says.

Besides making these investments, Telefónica has been virtualizing network functions as and when it can. With Ericsson AB (Nasdaq: ERIC) now firmly entrenched as Unica's lead virtualization partner, having replaced Hewlett Packard Enterprise in that role last year, Telefónica is currently using four different suppliers of virtual network functions (VNFs) in a sign of its determination to pursue a genuinely multivendor rollout. (See Telefónica Chooses Ericsson as Its New Virtualization Kingpin and Telefónica Ditches HPE as Virtualization Lead.)

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Those VNF suppliers represent some of the world's biggest equipment vendors. China's Huawei Technologies Co. Ltd. is supplying virtualized evolved packet core technology in Argentina and Peru, for example, while ZTE is contributing a virtualized IMS (Internet Protocol multimedia subsystem) in Peru. Finland's Nokia Corp. (NYSE: NOK), meanwhile, was revealed last November to be supporting a virtualized service router for Unica, and Telefónica's Colombian subsidiary is using a virtual IMS from Ericsson. But the Spanish telco is not stopping there: More than 50 VNFs from over 30 different vendors are currently "under validation," it says. "Next year we have a clear roadmap to deploy more VNFs," says Gavilan. (See Telefónica Hands Huawei a Key Virtualization Deal and ZTE Scores NFV Deal at Telefónica.)

The immediate aim is to ensure that virtualized networks can support new customer demands. In practice, that means that Telefónica's goal is to have VNFs handling 20% of mobile user plane traffic and 50% of control plane traffic in the "short term" (it will not say by when exactly). "At the moment we are focused on the control plane and the data plane in the main data centers but we will distribute Unica across the OBs [operational businesses]," says Gavilan. "In the case of Colombia, we have virtualized two central offices … the objective is to move step by step toward the edge of the network."

Next page: Next steps

Next steps
Taking Unica outside the data center poses all sorts of challenges, however. For one thing, ensuring that technologies from different suppliers are fully interoperable remains a bugbear when it comes to network service orchestration, says Gavilan. That largely explains why Telefónica has been a driving force behind Open Source MANO (OSM), an initiative the European Telecommunications Standards Institute (ETSI) is backing. The idea is to come up with a common information model that would allow telcos to introduce VNFs more easily and independently of other virtualization technologies. (See Telefónica Releases OpenMANO NFV Orchestration Stack.)

As things stand, OSM is not a part of Unica because a "product ready" OSM release has been available for about two months only, according to Gavilan. Telefónica is now trying to figure out how to integrate OSM with OpenStack, the open source cloud platform that underpins Unica. It also has an eye on ONAP, a separate project overseen by the Linux Foundation that is often portrayed as a rival to OSM. Gavilan balks at that description, saying ONAP has broader scope than OSM as a service management platform and could even support Telefónica's transformation. He has also been liaising with AT&T Inc. (NYSE: T), an ONAP founder member, to ensure that ONAP's efforts are aligned with OSM's where the two initiatives overlap. (See Telefónica Warms to ONAP, Sees Merger With OSM as 'Possibility'.)

There is also concern when it comes to the virtualization of the RAN, which Deutsche Telekom thinks could improve the economics of 5G rollout in the next few years. "We don't have a solution for cloud RAN yet," says Gavilan. "There are some good solutions but they are not mature enough." Asked to elaborate, Gavilan says there is a need to change the underlying transport architecture to support cloud RAN technology. That could point to the need for more fiber infrastructure to support connections between the baseband processors in data centers and the antennas at radio sites. (See Facebook's TIP Seizes vRAN Initiative From 3GPP and DT CTO: Costs Must Fall or 5G 'Won't Work'.)

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In the meantime, Telefónica has faced some criticism that Unica is still perceived to a network technology initiative, and not one that has relevance for other parts of the business or, indeed, for Telefónica's customers. In a recently published white paper, market research company Analysys Mason urged Telefónica to step up its dialogue with business stakeholders about Unica. "Its initial focus has been more internal, on the network, and not as much on its external customer impact," say the report authors. They also point out that Telefónica will "not reap the full benefits of Unica until it becomes the business-as-usual architecture for all of Telefónica's communications services."

Right now, Unica's immaturity and related uncertainties have left Telefónica unsure about the cost benefits it could realize through virtualization. The automation it brings will inevitably trigger job cuts, acknowledges Gavilan, but other technologies could also have an impact. "We are using a lot of techniques to do with big data and artificial intelligence," he says. "Some of them are running over virtualized environments but some are not."

From a technical perspective, Telefónica's hope is that further automation will ultimately allow it to switch off about 80% of the operational support systems it currently maintains. But it does not expect this to happen imminently, and says progress could be faster in some countries than others.

Nevertheless, in an attempt to harmonize virtualization activities across different OBs, and address some of the concerns described in the Analysys Mason white paper, Telefónica is setting up a Center of Excellence whose main purpose will be to define systems and technologies that can be used everywhere. "We are in 16 different countries and so the big challenge is to deploy the same processes and tools worldwide," says Gavilan.

The Center of Excellence will also support the rollout of services based on virtualization. Telefónica is already developing cloud VPN (virtual private network) and SD-WAN (software-defined wide area network) offerings that will eventually sit on the Unica platform. This seems likely to happen next year, as Telefónica's focus shifts gradually from the network to the services domain, and it could presage the launch of further on-demand offerings in late 2018 or 2019. At that point, Unica's various benefits for Telefónica and its customers should start to become a lot more apparent.

— Iain Morris, , News Editor, Light Reading