 | Issue: | Latin America 2015 |
| Article no.: | 2 | |
| Topic: | NFV in Latin America: The promise and the pitfalls | |
| Author: | Guido Candiani | |
| Title: | VP, Global Service Providers | |
| Organisation: | Italtel | |
| PDF size: | 204KB |
About author
Guido Candiani joined Italtel in 1991 and is Vice-president, responsible for TI Group, Telefonica Group and the whole Latin America Region.
Starting his career in 1989 at Aerovironment (USA, California) and having spent the following 2 years in Telettra Spain, the Spanish subsidiary of the Fiat Group’s telecommunication manufacturer company, Mr Candiani joined Italtel and covered various roles of growing responsibility in the product and marketing management and in 1996 he became COO of Cubatel, a joint venture between the Ministry of Electronics Industry of Cuba and Italtel group.
In 1999 he started up operations in Brazil and acted as Italtel Brasil COO. In 2002 he returned to Italtel headquarters to take on the responsibility for the product and project management of the Group.
In 2008 he assumed the P&L responsibility of Telecom Italia Domestic operations and in 2010 of all EMEA Service Providers (in Italy and Europe).
Guido obtained his degree in Electronic Engineering at Politecnico of Milan in 1989 and followed the YTMP Executive program at INSEAD.
Article abstract
With so much progress, the future of NFV certainly seems to be headed towards widespread adoption. Again, a crucial factor remains on a single point: standardization. While attempts are being made – for example, by the European Telecommunications Standards Institute (ETSI) – achieving this could take much more time than carriers can wait. Furthermore, in Latin America, the same level of collaboration does not currently exist, with many businesses calling in European vendors to compensate for the lack of home vendors that offer NFV solutions. Such challenges, however, often breed innovation, and this is especially true in Latin America.
Full Article
The telecom Industry is an eyewitness to how the growth pace of processing capacity and energy efficiency, associated with the reduction of production costs (as declared by Gordon Moore in the 1960’s), is dramatically changing the way networks are built up. Associated with this is the ‘square meter’ cost in cities that demand telecom services, which has risen significantly, followed by environmental costs (energy, cooling, etc.). Both trends, combined with the aggressive competition from pure software-based service providers (Over the Tops – OTTs), are pushing telecom operators to adopt Network Functions Virtualization (NFV). In this sense, NFV is an industry answer that enables carriers to become more efficient, flexible and speedy.
But while the benefits provided by virtualization are clear to see, many challenges still exist between where the technologies are today and widespread adoption.
Perhaps the most important obstacle yet to be overcome is interoperability, with many systems being developed in isolation and, therefore, not designed to complement each other. This is hindering further take-up of the technologies because operators are used to being able to pick and choose different vendors for different parts of the network, according to different companies’ specialties (following common industry standards). Collaboration and standardization of NFV are evolving but not yet completely mature to replicate the ‘status quo’ of legacy initiatives and technologies. However, this is a key point to reach the level where NFV establishes itself as commonplace within networks and its benefits become much more wide-reaching.
In Latin America specifically, the deployment of NFV solutions is further challenged by other factors. For example, the ecosystem of companies specializing in NFV solutions is limited when compared to other regions like Europe or America. On the flip side, due to Latin America’s legacy architecture being quite different to that of systems in other countries, sometimes deploying NFV makes more sense and works better than it would elsewhere.
Smooth virtualization strategies may lead to a “gradual” network disruption
Despite the current lack of standardization and expertise, there is cause for optimism. Deployments of proprietary NFV and SDN solutions have taken place, with a number of operators upgrading either part of or their entire network in order to realize new services and advantages. Vodafone Germany, for example, implemented Vodafone’s global ‘Telco Over Cloud’ strategy. This project, which we supported via a partnership with worldwide IT leader Cisco and announced early this year, involved a large network evolution program, including NFV and Software Defined Networking (SDN) technologies. The result offers next-generation parity features in terms of user, network and regulatory services, as well as invariance of OSS/BSS processes. With early adoptions like this one, best practice can be developed and eventually translated into industry-wide guidelines.
Even more encouragement can be found from predictions being made about the technologies. Infonetics Research, for example, forecasts that global carrier SDN and NFV hardware and software will grow from less than US$500 million in 2013 to more than US$11 billion by 2018.
Helping to reach that destination is the implementation of Virtualized Network Functions (VNFs), which take advantage of cloud-oriented software architecture and cloud design patterns. Many operators are beginning to look at installing these within their networks in a bid to ensure a smooth transition to a fully virtualized system. In Latin America this approach is crucial, since it takes into account existing infrastructures in the form of legacy software. In response to this demand, we are, along with other vendors, refactoring existing network products to include VNFs. Operating on both the control and user plane, these are now implemented on the NetMatch-S (our Session Border Controller) and iMCS (IMS Core & NGN Suites) platforms. This enables us to give an equivalent performance to physical network functions, while newly installed network solutions that will support new services (such as VoLTE, VoWiFi and WebRTC) can be deployed gradually. Refactoring our products portfolio in this way will ensure network solutions follow a clear progression path and, therefore, avoid the pitfalls associated with more ‘greenfield’ approaches. Additionally, the strategy we have chosen enables us to open doors to let service providers make use of virtualization benefits, without having to change network architecture.
With so much progress, the future of NFV certainly seems to be headed towards widespread adoption. Again, a crucial factor remains on a single point: standardization. While attempts are being made – for example, by the European Telecommunications Standards Institute (ETSI) – achieving this could take much more time than carriers can wait. Furthermore, in Latin America, the same level of collaboration does not currently exist, with many businesses calling in European vendors to compensate for the lack of home vendors that offer NFV solutions.
Such challenges, however, often breed innovation, and this is especially true in Latin America. As we have been present in the region for a long time, all our intelligence, experience and presence in the local telecom ecosystem enables us to be able to innovate, as well as maintain compliance with local standards (for example, custom specification of protocols and physical interfaces initially based on European and American standards).
The Latin American way
Over the past two years, there has been substantial growth in NFV solutions in the Latin America market. The primary reason behind this is that there is a lot of ongoing discussion about the kind of networking infrastructure that is still to be put in place. In Latin America, there are a lot of legacy issues that aren’t present in Europe, but paradoxically this presents a lot of opportunities for software vendors which have taken advantage of the situation to ‘jumpstart’ virtualized solutions over existing physical infrastructures and prove their advantages. Additionally, Latin America economies are dramatically impacted by the variance of exchange rates and importing taxes. Considering most server manufacturers have established production plants in the region, an important part of the investments to be carried out by operators are less exposed to the variations of monetary and fiscal policies in each country.
Recently, for example, we partnered with a leading operator in the region to provide its customers with an innovative VoWiFi solution. Based on an NFV platform, the solution works via a Smartphone application and provides VoWiFi capabilities when no 2G/3G coverage is available. Voice calls are routed inbound and outbound by the WiFi, ensuring uninterrupted quality calls, even in areas without mobile coverage and for Smartphones not ’WiFi’ calling-ready”. As such, the service is one of the first to be provided on a commercial scale, leapfrogging more traditional approaches and immediately improving service quality for the operator’s customers.
This anticipation of and reaction to upcoming trends is typical of Latin America and goes back as far as 2013. During this year, the region saw a 45.3 per cent increase in Smartphone users, as revealed in research by eMarketer. In fact, as it stands, Latin America has the fastest growing Smartphone market in the world, according to a report written by GfK UK earlier this year.
However, considering Latin America “particularities” again, the largest part of the Smartphone base is comprised of medium to low end terminals which are not LTE and ‘WiFi calling-ready’. We have captured this trend and worked to have a smarter and faster solution that fits local markets.
Following this, operators clearly saw an opportunity to overcome any technological challenges in existing terrestrial infrastructure. Additionally, Latin American operators have found NFV to present a convenient mid-term solution. With new services growing at a faster rate, companies can adopt flexible ‘pay-as-you-grow’ models which complement their existing legacy infrastructure and software, therefore, aiding business development.
Overcoming future challenges
Considering this early success, it is understandable to expect that the road to all future NFV deployments turning this technology into something commonplace in Latin America will be smooth and less challenging than elsewhere in the world. However, achieving widespread growth in the region is not without its own obstacles.
As NFV continues to grow in popularity, vendors will probably find themselves facing stiff competition in the future. While previously the market has been dominated by a handful of key players, such as Alcatel-Lucent and Siemens, we are likely to see more and more companies, even smaller ones, entering the market and we suspect we will find some local players taking up more space than in the past. While this will address the issue of the current limited ecosystem of NFV players, it will present further challenges in terms of standardization and different versions of technologies coming to the market which might not be interoperable with each other.
In this scenario, collaboration between vendors and operators is essential to help develop consistent and end-to-end NFV architecture. Lots of adaptation and customization will certainly be required for each operator, which will demand from vendors and system integrators the ability to develop, adapt and integrate their own solutions within the whole NFV ecosystem. Only when this happens can NFV become massively adopted within each of the carrier’s networks which must become, each day, more resilient, flexible and efficient to support customers’ exigencies and the pressures of multi industry competitors. This is what we are offering to our customers.
