For VNFs, Cloud Native is the Name of the Game

Several vendors are progressing their NFV strategies and pursuing the end game of every telco virtualization strategy, where virtualized network functions are deployed in a cloud-native environment. This brings considerable benefits, including portability, resource availability, and being able to adapt to network and traffic demands in near-real time. Several vendors are now pursuing cloud-native strategies while telcos are now issuing request for proposals (RFPs) that have a strong requirement for cloud-native capabilities. For example, Nokia recently won a contract with 3UK for a cloud-native packet core, and Oracle has repositioned its telco strategy toward providing cloud-native capabilities for several different parts of the telco cloud stack. The cloud-native capability may be the foundation for even more advanced features, including hybrid clouds, service sandboxes in public clouds, and more flexible networks toward 5G.

However, the question remains whether cloud-native capabilities are more important than multi-vendor, hardware agnostic networks, but initial large-scale contract announcements indicate that cloud native is a higher priority during early 2017.

A cloud-native telco network broadly translates to commoditized (but carrier-grade) servers, a virtualization or container layer, cloud-native VNFs, and an agile control platform to manage the lifecycle of services and maintain the health of the network. However, deploying a multi-vendor, hardware-agnostic, cloud-native network is a complicated and risky, and requires long-term commitment. ABI Research expects more single-vendor, end-to-end contracts to be awarded around the world, with some Tier One telcos choosing to integrate their own systems, being the exception to this rule.

As illustrated in our previous ABI Research Insight, there are several challenges to overcome before deploying advanced telco cloud features, including network slicing, service chaining, and cloud-native capabilities across the network. Now, different vendors are using different interfaces, as well as different definitions, and interoperability is being investigated in the several market initiatives currently in the market, including NFV-ITI. Yet, it will be a long while before a telco can mix and match components from different vendors and just deploy them without middleware, abstraction layers, and other complicated software that manages the integration.

This current situation has somewhat changed the dynamics of the telco cloud market, which is now evolving to take these advanced issues into account.

When NFV and telco cloud concepts were still in their infancy, IT and enterprise vendors positioned their expertise for the telco vertical. However, early attempts were somewhat short of expectations, since these vendors could not solve telco problems in the same way they solved enterprise IT and web-scale challenges. In the latter domains, resource redundancy guarantees network health but in the carrier-grade domain, systems need to be online for 99.999% of the time. As such, important contracts (most of them end-to-end) were primarily awarded to telco vendors that had carrier-grade skillsets that were more important than the cloud-computing experience.

As of 2017, important open-source projects are reaching telco-grade maturity (e.g., Openstack) while there are other important projects that will likely change telco cloud deployment and vendor business models, especially ONAP. This brings enterprise and IT vendors back into perspective, where cloud-native capabilities will become more important than carrier-grade experience. Several vendors are now repositioning their strategies to tackle this mindset change, and ABI Research expects more opportunities will appear for IT and enterprise vendors as telco cloud deployments reach a critical mass.