Due to advancements in technology, Cable MSOs are experiencing fierce competition from OTT video providers such as Netflix, Hulu and Amazon, as well as broadband providers such as Google and leading telecom companies. MSOs are making significant investments in their infrastructure and operations to become more responsive to the competitive pressures and rapidly evolving customer demands in order to be better positioned for the digital revolution and this new high-bandwidth, mobile, multiscreen world.
Today virtualized, software-based architecture can help MSOs keep their competitive advantage, continue customer relevance, and maximize revenue by delivering network optimization, increasing agility and creating new opportunities. The cable industry is still in the very early stages of developing strategies to implement virtualization technologies and realize the benefits it brings. But, there are still questions around why operators should invest. The questions are not necessarily about the technology, rather around the business benefits.
Faster Service Introduction
Virtualization technologies move complex functions out of dedicated network hardware into virtual machines running on standard server platforms that provides an easy way to control the network. This allows operators to enable new revenue streams and introduce new services quickly and efficiently. Decoupling the service layer from the control layer helps in building and assembling new services faster without dependence on the underlying network layer. This increases the operator’s flexibility and services can be brought to market faster without upgrading the network or investing in new proprietary hardware, thereby reducing the cost/time barrier for service introduction.
Lower Costs
Cable operators’ top consideration in virtualization has been the benefits of cost. Cost reduction is reflected in operational expenditure, how easy it is to deploy and maintain services in the network, and capital expenditure, reduced equipment costs and reduced power consumption through consolidating equipment. By deploying virtualization technologies, cable operators can realize these benefits by cutting delivery networks costs related to multiscreen video service expansion or reducing CPE expenses by shifting digital video recorder (DVR) functionality to the cloud.
Virtualizing the CPE function in the cloud not only reduces the cost of the box itself, it also simplifies and shortens the installation process, where all the technician has to do is install the box and cable it. Now that functionality is centralized in the cloud, orchestration takes care of the configuration, provisioning, and upgrading automatically.
Faster Introduction of New Technology
Virtualized customer premise equipment (vCPE) also allows cable operators to take advantage of new technology faster and cheaper. Take DOCSIS technology for instance, for cable operators to take advantage of the benefits that DOCSIS 3.1 provides, when upgrading from previous versions of DOCSIS, even DOCSIS 3.0 requires new CPE hardware. What if the CPE didn’t need a hardware upgrade to offer new services or features, or increased bandwidth? That would mean big cost savings, reduced amount of trucks rolls and easier management of the deployed devices. vCPE enables all that and more, delivering greater control, visibility, flexibility, and time-to-market for new value added services while reducing operational and capital expenditure.
In a recent study, Analysys Mason calculated that the deployment of 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. There are many other efforts underway to virtualize other network functions such as provider edge, wireless LAN gateway, network access translation, and access control plane.
Cable networks are comprised of a large variety of proprietary hardware and that amount is increasing as they offer more services. To deliver a new service often requires adding new equipment to the network. When it does, finding the space and power to accommodate these devices is becoming increasingly difficult. It is also hard to find the skills necessary to design, integrate and operate this increasingly advanced network equipment. The heightened acceleration of technology and service innovation is making matters worse as it is reducing the longevity of the network architecture and shortening the life cycle of the equipment, both that may require updating with little or no revenue benefit.
Virtualization aims to address these problems by leveraging standard IT virtualization software to consolidate many network devices onto industry standard servers allowing IT to dynamically instantiate, move, or scale network functions. It will ease the burden by giving operators the flexibility to move network functions in the network without moving or adding hardware; doing so makes the networks more agile and efficient.
Adaptability
To adapt quickly to customers’ changing needs and provide new services, operators must be able to scale their network architecture across multiple devices, rather than being limited by what a single box can do. Virtualization eliminates the dependency between a network function and its hardware.
Virtualization also speeds up an operator’s time to market by creating a more flexible and adaptable network so services can be easily and quickly developed, tested, installed and provisioned. The development services are less constrained in a virtualized environment as it doesn’t rely on proprietary hardware. Now, testing and qualification of services are shortened as it can take place in a production environment by starting with a small-scale implementation (introducing no new hardware) and then rolling it out as the service stabilizes. With the deployment of services being across virtualized infrastructure, there is no need to wait for equipment to arrive and hardware to be installed, as new services can be launched on the existing infrastructure.
Lastly, virtualization eliminates the dependency on devices at the customer premise. From a logistical standpoint, CPE devices are not easily replaced whereas adding new features or services that depend on an updated CPE device could take years to roll out. With a virtualized environment, this complexity and delay is removed since the dependency on the network and CPE devices is eliminated.
Better Customer Experience
Beyond cost reductions and quicker innovation, virtualization is key to enhancing the customer experience for both consumers and enterprise customers. It will allow increased automation and customer self-service and self-care, making it easier for the customer to order the services they want, when they want, and for the operator to support the customer.
vCPE, for instance, makes it easy to deliver new, more personalized services at a lower cost, while providing more control to the subscribers. No need for a technician to come by the home for upgrades or support.
As mentioned, OTT providers represent a significant threat to cable operators, given the risk that players like Amazon.com, Apple, Google and Netflix will dominate this space. Virtualization allows the cable companies to partner and/or to compete effectively by enabling greater personalization of content and services. This even includes dynamic, targeted ad insertion based on user and/or device profiles, enhancing the customers experience even further.
It’s clear that NFV can address the key trends confronting operators and service providers. However, as with any new technology, the road ahead is lined with pitfalls. Despite that, proof of concepts are under way. If all goes well, NFV will soon be transforming the way operators design and implement networks and network services for the better.
Even as cable operators are behind their telco counterparts on trialing and deploying SDN and NFV, the reasons to jump into virtualization are not lost on them. The business benefits may look a little different, but in the end they, like all service providers, want to stay relevant, get out in front of the competition and realize both financial and customer experience benefits.
