Heavy Reading's Future of Virtualization report shows most CSPs don't expect opex savings until after 2020, which could impact investment.

July 6, 2016

3 Min Read
Could Delayed Opex Savings Slow SDN/NFV?

A growing number of communications service providers don't expect to see opex savings from their virtualization efforts any time soon, according to the latest Future of Virtualization report from Heavy Reading. That reality could actually threaten the pace at which virtualization happens, says Rosalyn Roseboro, the analyst who conducted the study and authored the report.

Only 11% of operators expect virtualization to lower their operating expenses within the next two years, a number that has held steady since the first FoV survey from Heavy Reading last November. But a shrinking number -- about 49% -- expect to see opex savings in the next three to five years, down from 60% in that first survey. Twenty-nine percent don't expect lower opex until after 2020, and 11% say they don't expect virtualization will lower opex at all. The latter number is up from 2% last November.

Figure 1: (Source: Heavy Reading) (Source: Heavy Reading)

What's even more telling, Roseboro notes, is that 42% of the CSPs surveyed don't see even 10% opex savings until 2020 or after, as reflected in the chart above. And that could put investment in virtualization at risk, she says.

"Either carriers are not seeing opex savings, or they think it is going to take a long time, probably because they will have to essentially run parallel networks," she says. "Even five to six years out, they are not confident they are going to see a 10% reduction in opex. That's a lot of investment for a relatively low return. And I think that does put this thing at risk."

The issue isn't virtualization itself, but how long it will take network operators to automate the systems they want to put in place to manage and orchestrate their networks, Roseboro says. For some period of time -- what operators now are saying is four years or more -- there will be the need to maintain existing operating and billing support systems even as newer systems are put in place for the newer virtualized functions and services.

"Virtualization by itself is not enough -- you need automation," she says. That’s a major impetus for the multiple open source efforts that have sprung up around the so-called MANO layer, which handles network management and orchestration. But there seems to be little optimism among CSPs that those efforts will pay off in the near term.

"That might mean things move more slowly," Roseboro says. "We could see a pushback from management, because they are always looking for the business case to do this. Opex is traditionally said to represent 85% of spending, and if you can only achieve 10% savings on that, it may not be enough to justify the spending."

The FoV report doesn't reflect a slowdown at this point, although it does show deployment plans are a bit all over the map. We'll have more on those results tomorrow. You can also download a copy of the report from the Virtualization Research Portal of our Virtuapedia site, located here. Forty CSPs were invited to participate in the study from the four major regions, representing a diversity of carrier types and sizes. Most operate converged networks and have a national footprint.

— Carol Wilson, Editor-at-Large, Light Reading

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