Orange Sours on Cost Benefits of NFV

Orange says it has stopped promoting SDN and NFV technologies as a means of reducing costs and is now focusing on the service-related benefits of virtualization.

The French operator has begun investigating more detailed business use cases for SDN and NFV during lab trials, rather than simply exploring the technical aspects of deployment.

"We [originally] said savings were the first thing we should promote but now it is clear that SDN and NFV are not about savings," said Yves Bellego, Orange (NYSE: FTE)'s director of technical strategy, during a conversation with Light Reading at last week's Mobile World Congress (MWC) in Barcelona. "We need business use cases to get it done."

Analysts have made some bold forecasts of the cost savings operators will be able to realize from investing in SDN and NFV technologies, but industry executives have recently been downplaying expectations. (See Will Investing in SDN & NFV Be Worth It?)

In October last year, Noël Foret, Orange's vice president of network control, told attendees at the SDN and OpenFlow World Congress in Dusseldorf that vendors were undermining the business case for SDN and NFV by fueling unrealistic expectations at Board level about cost-saving benefits. (See Stop "Overselling" SDN, Orange Tells Vendors.)

Finance experts have suggested investments in SDN and NFV could even justify cross-border takeover activity within Europe, arguing that acquisitive operators could shut down systems and abandon procedures they would need without these technologies. (See All-IP DT Could Drive Euro M&A, Say Analysts.)

Yet Vodafone Group plc (NYSE: VOD) CEO Vittorio Colao offered a more downbeat assessment when recently quizzed on this topic by Light Reading.

"Virtualization will lead to lower costs… but you are talking about a relatively small percentage of value compared to what you have to pay to acquire someone else," he said during a Q&A session with reporters at MWC. (See Vodafone CEO: Europe Needs Uniform 5G Rules.)

Orange's virtualization reappraisal increases the pressure on the operator's SDN and NFV teams to demonstrate the service-related benefits of the emerging technologies.

One use case on which Orange is working relates to a virtualized content delivery network (CDN) that could be deployed as and when needed during times of high demand. "We could increase the CDN in one location temporarily and then retrieve the capacity," says Bellego.

Orange Business Services , the French operator's enterprise division, has also been carrying out field trials of SDN and NFV services under the EasyConnect brand.

Announced at the MPLS SDN World Congress in March last year, the EasyConnect offering has been demonstrated in a live network and allows customers to set up and manage various services through a self-care portal. "In the enterprise market [SDN and NFV] is clearly about agility," says Bellego. (See Orange Unveils NFV-Based Offering for SMBs.)

Orange Business Services is expected to provide an update on EasyConnect during this year's event, which is due to be hosted in Paris between March 8 and 11.

For more NFV-related coverage and insights, check out our dedicated NFV content channel here on Light Reading.

When twinned with future 5G technologies, SDN and NFV could also give rise to new connectivity services for large industrial sites operated by multinational clients of Orange, according to Bellego.

"Today they use proprietary systems but in future we could build dedicated services that use 4G and later 5G," he says. "This is one example of a use case that justifies virtualization."

Even so, Bellego says there is still "significant work to do" before a commercial 5G offering takes shape.

In his view, the biggest 5G challenge will be to ensure the technology is more "multi-service" and "multi-device" than previous standards.

"It needs to be optimized for smartphones as well as IoT systems that use a few bits per second and need battery life of ten years," he tells Light Reading. "These use cases are quite extreme and that is something we do not have today -- 4G is basically optimized for smartphones."

Other operators at MWC also noted the importance of what is called "network slicing" to the 5G business case. (See NFV Key to 5G Business Case, Says TeliaSonera.)

Regulation permitting, this could allow an operator to provide highly differentiated connectivity offerings to specific vertical markets. (See Telecom Needs New Net Neutrality Story and Net Neutrality Rules Threaten 5G, NFV – Telenor.)

— Iain Morris, , News Editor, Light Reading