As cable operators seek to move upmarket, cater to larger, more sophisticated enterprises and roll out new services faster and more efficiently, they should look at adopting NFV technology.
That's because NFV promises to offer a range of benefits to MSOs aiming to expand their reach in the commercial sector. In fact, the potential business services benefits are considered so compelling that some cable technologists believe that the industry should initially deploy NFV primarily in the commercial market, rather than in the residential space.
There are several reasons why it makes sense for cable operators to start leveraging virtualization techniques for commercial network services. First, the implementation of NFV should enable MSOs to launch new business services faster, easier and with less expense because virtualization would eliminate, or at least reduce, the need to install new, purpose-built equipment at the customer location. Instead, operators could use, or re-use, existing standard hardware to deliver new cloud-based and managed services.
With such increased ease of delivery, cable providers could also develop substantially more business services than they can today. They could boost their portfolios in relatively little time by speedily trotting out new products, tweaking them when necessary, discarding the ones that don't pan out and replacing them with more worthy entries. As a result, providers could improve their competitive posture against the incumbent telcos, which already offer large, well-established suites of commercial products, particularly for larger firms.
Further, NFV offers cable operators a more flexible and agile architecture to tailor services to the needs of particular business customers, rather than just offer cookie-cutter products to all firms. With the aid of virtualization techniques, operators can customize their offerings through software upgrades or app settings, instead of needing to carry out costly truck rolls and switch out equipment.
What's more, the adoption of virtualization promises to cut both capital expenses and operating costs for MSOs in the long run. Despite the hefty initial upfront investment in network virtualization, operators could reduce their overall costs significantly by having less purpose-built equipment to order, install, maintain, fix and replace.
These benefits can make a notable difference to cable's bottom line. In a recent study commissioned by Amdocs Ltd. (NYSE: DOX), Analysys Mason calculated that the deployment of virtual customer premises equipment (vCPE) solutions could produce $1.1 billion in net present value (NPV) benefits over the next five years for a service provider, with that sum almost equally split between added revenues and cost savings. As presented in the following video interview with Amdocs's Justin Paul, the study estimated that it would take slightly over three years for providers to pay back the investment in virtualization.
Analysis Mason also emphasized the importance of providers investing in vCPE early, noting that the "first movers' advantages" include higher profit margins. As they use vCPE to cut costs, early movers could still keep prices steady because rival providers wouldn't be able to cut their prices yet. In contrast, providers late to adopt virtualization would bear increasingly higher lost opportunity costs.
Of course, cable operators face some daunting challenges in adopting NFV for business services. For one thing, operators must possess the technical capability to virtualize their networks and make the shift from a hardware-driven to a software-driven architecture. That's no easy task, and it does carry some risks.
For another, cable operators must thoroughly automate and orchestrate their service delivery, provisioning and billing processes to take full advantage of NFV's potential. As part of this effort, they must turn to a more advanced tool set that will enable them to design, test and launch new services rapidly. Otherwise, they will be stuck with long, drawn-out, harder-to-manage manual processes, impeding their ability to roll out new services to business customers quickly and realize significant cost savings.
With the migration to virtualization not about to happen overnight, cable providers will find themselves operating in a hybrid world for at least several years. To cope in this hybrid environment, providers will need to improve the delivery of their traditional business services through the use of service automation and orchestration as well. That will make it easier for them to manage both traditional and virtualized services at the same time and upgrade to greater virtualization over time.
— Alan Breznick, Cable/Video Practice Leader, Light Reading
This blog is sponsored by Amdocs.