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SDN: A Leveler for CSPsSDN: A Leveler for CSPs

SDN will enable Tier 2 and Tier 3 service providers to compete more effectively with the current incumbents.

Ravi Kumar Palepu

November 5, 2014

4 Min Read
SDN: A Leveler for CSPs

According to data growth statistics, over the coming years we will experience a tremendous jump in data generation and consumption. Cisco forecasts that global cloud traffic is expected to grow 4.5-fold. That amounts to a 35% CAGR -- from 1.2 zettabytes of annual traffic in 2012, to 5.3 zettabytes by 2017. Overall, Cisco expects global data center traffic will grow threefold and reach a total of 7.7 zettabytes annually by 2017.

If those numbers seem impressive, consider that IDC estimates that the Internet of Everything will amount to an $8.9 trillion market in 2020. To co-ordinate IDC's estimated 212-billion things, data centers will need to shoulder the burden. This clearly puts the onus on networks to support the enormous volume of data that is being transmitted across channels. As customers' demand for bandwidth increases, there is a need for a strong network infrastructure at the back-end and intelligent devices to minimize the service latency and support this data growth.

Within this context, SDN is likely to reshape the telecom industry in new and interesting ways. Telco CTOs/CIOs worldwide are facing enormous pressure on IT spending, which will have an impact on their SDN strategy. However, they cannot ignore the tremendous benefits SDN would bring in terms of agility, flexibility and cost savings (both capex and opex), as enterprises are shifting from physical infrastructure to cloud based infrastructure.

Reducing costs and improving network efficiency
With SDN, carriers can increase the flexibility and manageability of their networks, helping to deliver bandwidth where and when customers need it with a (more) self-serve model. Operators can potentially improve both their network flexibility to improve customer value, while also reducing the high operational costs of supporting OTT providers such as Google, Amazon and Skype, which otherwise could challenge carriers' ability to grow their revenues and affect their margins.

SDN would provide the bandwidth flexibility that will give carriers the edge they need to successfully deliver a range of cloud-based services. In particular, SDN will help carriers to:

  • Automate the provisioning and maintenance of network services, which are highly people-intensive in the current scenario. For example, some estimates suggest that enterprises could see up to a 95% reduction in capital costs by implementing commodity silicon within switching infrastructure.

    • Streamline multi-tier architectures into a flatter, fabric-based infrastructure, so reducing operational costs associated with real estate, power, cooling, cabling and a host of other factors.

    • Automate traffic management, improve bandwidth engineering and enable CSPs to tailor the network "on demand" to customer needs. Today, large carriers are unable to offer customers truly flexible data networks, where customers can pay for only the bandwidth they use and automatically burst traffic as applications require.

      Building bolder business models with SDN and NFV
      SDN with NFV offers a way for CSPs to break out of their established, inflexible business models. CSPs can develop flexible models that are based on tiered services and on elastic services (e.g. security-as-a-service, unified communications-as-a-service, etc.) They can also pay network equipment providers on a per-use basis for network functions as needed, as opposed to capital expenditure tied to under-utilized equipment.

      The SDN-driven environment will not only help incumbent providers become more agile and able to adapt to market trends and subscriber demands more effectively, but will open up the market to Tier 2 and Tier 3 players that may not have had the deep pockets needed to develop proprietary hardware. It will allow new carriers to quickly scale and compete, as they won't have to load up on costly central office equipment to get started.

      Tier 2 and Tier 3 CSPs will benefit from:

    • Shorter time to market and lower costs for new services through running production and test and reference facilities on the same infrastructure, and not using commoditized hardware

    • More choice and less risk as pure software competitors emerge, due to the fact they don't need to invest in hardware anymore

    • Near real-time resource allocation to ensure network resiliency and protection from failures

    • Multi-tenancy support allowing carriers to securely share hardware resources

    • Improved power management; servers can be switched off or go into low power mode during non-peak hours

    • A competitive advantage against OTT services through easier integration of third-party services

      The early bird gets the worm
      SDN adoption is still in its infancy. While some carriers have realised early adoption can substantially benefit their organization, others are taking a cautious approach due to the capex required and the negative impact on the company's competitiveness associated with the immature product. Yet as the technology matures, we see most operators turning to SDN to protect their future and benefit from lower cost of operations, new revenue streams and strengthened network services. Failure to plan for SDN now, could put CSPs at risk tomorrow.

      — Ravi Kumar Palepu, Head of Telco Solutions, Virtusa Corp.

About the Author(s)

Ravi Kumar Palepu

Ravi Kumar Palepu heads Virtusa's Telecom Solutions Group. In his role, Ravi has led technology council for Telco across locations and drove consistent standards, best practices as well as domain and technical competency across the Telco accounts. He was also part of the Global Technology Office leadership and has bridged the gap between the GTO and the global Telco accounts. Prior to joining Virtusa, Ravi served as Principal Consultant with Tech Mahindra from July 2002 to Nov 2010. He has been responsible for managing the CRM Centre of Excellence and helped Tech Mahindra deliver green field implementation in Europe and Asia region. He has over 17 years of experience in Telecommunication, managing large complex transformation programmes and innovating industry solutions. Ravi graduated from Delhi University with Bachelors in Commerce, earned his Master in Computer Application from NCC UK, and earned his Master's in Business Administration from Cass Business School, London.

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