Mobile and broadband communications service providers (CSPs) are facing a proverbial “good news / bad news” situation. The good news: network usage is exploding as subscribers make accessing broadband services a central part of their busy lives. The bad news: Many of the apps subscribers are accessing over the network—Amazon, Netflix, Hulu, Google, etc.—consume boatloads of bandwidth without generating offsetting revenue for the CSP. To meet the growing demand, CSPs are forced to expand costly bandwidth or risk losing subscribers when their quality of experience (QoE) doesn’t meet expectations.

Traditional CAPEX approaches to adding bandwidth are too costly, eating into CSPs’ thinning profit margins. Instead, they need to take a new approach—a paradigm shift in how they deliver services that drives infrastructure costs down and business agility up.

The answer lies in the cloud. Moving to virtualized, software-defined, “cloudified” networks will enable CSPs to transform not only their operational cost structures but their business models, as well. It will enable them to rapidly and cost-effectively deploy the highly personalized mobile and broadband services that will attract and retain subscribers, while protecting CSPs’ profit margins.

But how will CSPs get to this cloudified future? I think they will do it in four distinct steps. Let’s take a look at them.

Step 1: Network Functions Virtualization (NFV)
Just as virtualized computing transformed the enterprise data center, so it will for telco networks. The first step in that progression is NFV. Simply put, NFV virtualizes network functions into modular “building blocks” (called virtualized network functions, or VNFs) that can be strung together to enable a variety of network functions—from session border control to load balancing. Instead of individual systems running on costly proprietary hardware to perform a single dedicated function, these functions are performed in software as virtual machines running on low-cost COTS hardware. In effect, this provides a highly efficient, “liquid pool” of dynamically allocated computing resources that can perform any network function with intelligent, policy-based control.

Some CSPs are also moving to software-defined network (SDN) architectures to further abstract the network’s control plane from the underlying data plane. SDN enables efficient, centralized routing—in contrast to traditional architectures that require each network component to individually identify its peers and what it should be doing in the presence of those peers. This “de-coupling” significantly reduces operating costs.

Virtualization not only drives down the cost of delivering communications services, but it enables a degree of agility CSPs could only dream of with their legacy infrastructures. And it’s already happening. A number of leading telcos are conducting NFV trials now with plans to deploy in their commercial networks by 2016.

Step 2: Virtualized Resilience Layer
Virtualization will drive down costs and increase flexibility. But what then? The next logical step is migrating to cloud technologies that enable CSPs to deliver innovative, new services that generate additional revenue. Leveraging sophisticated cloud orchestration capabilities will enable CSPs to create and deploy services that combine service elements and functions dynamically, creating highly personalized services that subscribers can provision themselves. CSPs will be able to offer high-end services currently available only to the largest enterprise subscribers to just about anyone. And they can do it rapidly, cost-effectively and (most importantly) profitably.

Moving to a cloud model will also help drive down costs. Today’s advanced cloud technologies provide the automation needed to allow scaling to accommodate huge subscriber bases and complex service offerings, while controlling CAPEX and OPEX.

In my next blog post, I’ll look at the last two steps leading to true telco cloudification.