A NFV study by PA Consulting Group, commissioned by Intel Corporation and launched at the Mobile World Congress
Virtualisation in a telecoms network is now widely acknowledged as a credible route for cutting costs and creating opportunities for new revenue. This NFV white paper quantifies the wider range of potential benefits of adopting NFV solutions and architectures in the mobile core network.
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Virtualisation in a telecoms network is gaining significant momentum across the industry. Intel® Architecture servers have been rolled out in the first generation of telecom core networks to use Network Functions Virtualisation (NFV) and entered commercial operation in early 2014.
PA's analysis presented in this NFV white paper covers a wide range of potential benefits from adopting NFV solutions and architectures in the mobile core network. We have not just described but quantified the benefits that could be realised from implementing the network using NFV in comparison with a conventional implementation.
Savings are set out as quantified total cost of ownership (TCO) benefits for service providers. This includes Capex and Opex factors both in the network itself and in the surrounding support processes and equipment.
The analysis also addresses the potential for additional revenue that can be realised by adopting NFV in the mobile core network. This is quantified using the same assumptions for timescale and size of operator as for the TCO assessment. The results are given in terms of the relative size of TCO and revenue benefits.
The results are that:
NFV can save 40% on like-for-like core network costs
Based on a mobile operator with a one-third market share in a mature West European market, NFV could deliver a total cost saving of 40%, compared to a conventional core network. This assumes a combined GSM, 3G and LTE core network and is costed over 10 years.
NFV can save 54% if three operators share a common core network platform
Based on three of the operators described above sharing a common network platform, NFV could deliver a total cost saving for each operator of 54% compared to three separate conventional core networks. Again this is for a combined GSM, 3G and LTE core network and is costed over 10 years.
This paper describes how platform sharing can work and why it delivers greater overall savings than for three individual NFV core networks.
Revenue benefits can improve the business case for NFV by 300%
One of the major challenges facing MNOs currently is the loss of revenue to OTT and third-party service providers that use the mobile networks for access only. Our analysis describes how NFV can help to recapture some of this lost revenue. Based on a single operator as above, our analysis shows that the revenue benefit could be worth three times the magnitude of the cost savings.
Could NFV help operators regain lost ground?
The software for the main network functions is likely to be supplied by the main industry suppliers as at present. However NFV also enables other software such as end-user applications to be installed on the core network platform. These applications can be sourced more widely since there are already many companies developing software that will be familiar with the standard high volume server environment. They can develop services outside of the standardisation process that can be rapidly trialled and deployed or withdrawn as necessary.
With a greater freedom to innovate and shorter time to market, operators can reclaim some of the ground lost in recent years to OTT operators and third party service providers. Our analysis shows that this aspect of NFV could ultimately be worth far more than the cost savings.
To find out more about PA's NFV expertise and our wireless product development and consulting services please contact us now.