A Read on Operator Priorities for the Fall Planning Cycle

The network operator technology planning cycle that typically happens annually between mid-September and mid-November is just getting underway, and I want to share some of the “talking points” operators have told me about.  None of these positions are firm this early, but in past years a decent number of the early positions were solidified into policy.  That, by the way, is the reason most vendors try to get announcements they want considered out before mid-October.

The most significant point I got from operators was that nobody thinks they have the budget for a major infrastructure transformation, by any technology means, for 2017.  Capital budgets are therefore going to continue to be under pressure as operators push on vendors for discounts.  There will be no onrush of SDN or NFV displacing IP or Ethernet.  In fact, nobody thought those new technologies would hit even 2% of their capex.

Nearly all of the operators have lab trials or limited field trials of next-gen network technology underway, but they say that the trials are still “early stage” and “limited scope”, meaning that it’s going to take longer to get to a potential deployment and the early deployments are very likely to have a narrow customer/service target.  I asked one whether they thought they could reach a thousand SDN- or NFV-customers in 2017, and he said “Dream on!”

Obviously the reason for this lack of infrastructure-revolution enthusiasm is the lack of a convincing business case, but another interesting talking point emerges here.  Operators say that they are not looking for a business case to justify SDN or NFV.  What they are trying to do is to tie SDN or NFV to a business case, which is a very different thing.  What they’re trying to tie things to is the general goal of transformation, which has been a goal for eight years now.  It means, simply put, wringing out cost and augmenting revenue by technology means.

Holistic visions of change don’t match the narrow product visions.  SDN and NFV are technology standards that offer a different way of doing connectivity or offering network features.  In both cases, the responsible bodies set very strict limits on scope of activity, and this isn’t uncommon in technology standards.  There are a lot of standards bodies and you don’t want to overlap, and the bigger your mission the longer it takes and the harder it is to sustain momentum.  But a narrow scope of activity means that neither SDN nor NFV intersects much of the total process of end-to-end, top-to-bottom, service-building.  That limits how many benefits you can claim, which means a business case would likely have to extend beyond the scope of the technology.

A lot of vendors see this, and that’s why we still hear a capex-driven approach to SDN or NFV.  In the case of NFV, we’re even seeing the dominant early model (agile CPE hosting of VNFs, deployed almost one-off per customer) as a rather insignificant subset of the originally conceptualized mission (which was cloud-hosted VNFs on a large scale).  The biggest virtue of this approach is its ability to control first cost, to deploy a subset of (or even just the concept of) hosted virtual functions on a per-customer basis.

In some ways this is not only unsurprising, it’s old news.  Both AT&T’s and Verizon’s architectures may have been characterized as being NFV architectures or SDN/NFV, but they are in fact service transformation architectures that had a role for both legacy and new network technologies.  The people I talk to do not say that the goal of the transformation is the adoption of SDN or NFV, but that it’s goal is to reduce costs overall and improve network/service agility.  There are a lot of pieces that have to be addressed to realize those goals.

Another interesting talking point related to the first two is the priority areas operators have identified.  Not surprisingly, mobile infrastructure is the top priority in terms of transformation exploration.  Operators, as I’ve already noted in earlier blogs, are committed to 5G modernization, though they don’t think that will start in 2017.  What they look for in the near term is a way of insuring that any improvements in metro connectivity can be leveraged for 5G.  They’ve said they’d love to see a good 5G architecture based on a framework that could also be applied in the near term to improve 4G.  In fact, IMS/EPC signal and data plane modernization (not necessary for 5G because it’s not supposed to use either in current forms) that would be based on a common virtual-network-and-resource model with 5G is a high priority.  Interestingly, operators say that vendors aren’t pitching that earnestly, perhaps because they don’t want their deals held up till 5G planning can be driven forward confidently.

The number one priority on the business service side was to create effective customer service and care portals, which is a task that’s hardly hand-in-glove with transforming network technology.  In fact, even operators say that it’s more closely tied to OSS/BSS processes than to network infrastructure.  No facility-based carrier believed they would rebuild network technology to create these portals, in fact.  They do say that they believe that both SDN and NFV could, over time, increase the effectiveness of portal-based customer service and care by improving their infrastructure’s response to service changes.

Does “more closely tied to OSS/BSS processes” mean that operators think they’ll get transformation support from OSS/BSS vendors more than network vendors?  That’s not clear.  One priority talking point is to assess the merit of an operations-centric approach to service automation versus an orchestration-driven approach outside OSS/BSS.  One reason why there’s an open question here is that operators really identify only two OSS/BSS vendors (Amdocs and Netcracker, with the latter leading) as having a strong integrated-orchestration service automation approach.  However, even though I believe that there are seven or eight vendors in total who could make a full service-automation business case, the great majority of operators didn’t recognize any of the options other than the OSS/BSS vendors.

This doesn’t mean that it’s over for the “SDN” or “NFV” vendors.  Well over two-thirds of operators I’ve checked with tell me that they do have “plans” to try to expand their current SDN or NFV lab trials vertically toward their service automation transformation goal.  I was struck by the fact that there didn’t seem to be a huge interest in a specific PoC or trial, even mobile.  This suggests that current trials are driven substantially by the vendors’ interests rather than by operator transformation goals.

And that, I think, is the key point.  We have no shortage of PoCs and trials, but we seem to have a shortage of connections between them and transformation goals.  It seems to be the latter, and not business cases for SDN/NFV, that everyone is really looking for.  This represents a bit of a shift from what I was hearing even a couple months ago, and that could mean that the fall planning cycle is already focusing people on the CFO’s goals, which are broader and more business/financial.  The link between technology and these goals still has to be proven.

We can expect to see some success for both SDN and NFV in operator networks in 2017, but it’s less clear that we’ll see it in the form of a model that expands into a carrier-cloud commitment that would result in the kind of server deployments and virtual-function opportunities that people have expected.  To get that, the alignment between SDN and NFV on the technology side, and transformation on the business-case side, will have to be clearer than it is now.

Which, of course, it could still become.  The underlying truth about the current planning cycle is that it can’t plan something that will succeed convincingly in 2017, and so even those wheels that might be set in motion could still be turned in another direction.  But I think that 2017 is the end of the period when creating an SDN/NFV-centric vision of the future could be central to transformation.  Time, as always, marches on.