The Rise of NFV: Telecom Will Never Be the Same

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The Rise of NFV: Telecom Will Never Be the Same

By Jim Machi, VP of Product Management  |  July 22, 2015

The rise of network functions virtualization – an initiative in which service providers are virtualizing traditional network functions now running on dedicated legacy hardware – is a growing factor in telecommunications. If you have been closely watching the telecom space, then you have witnessed this trend gaining momentum. The last few years have proven to be some of the most exciting on the NFV front, and the years ahead will be characterized by continued growth and innovation.

In fact, in a report titled “NFV Market: Business Case, Market Analysis and Forecasts 2015,” research and strategic analysis firm Mind Commerce predicted that the global NFV market will grow at a compound annual growth rate of 83.1 percent between 2015 and 2020; revenues will presumably reach $8.7 billion by that time. Furthermore, Infonetics (News - Alert) Research last year reported that the combined carrier software-defined networking and NFV market will reach $11 billion by 2018.

If you are at all familiar with NFV, then you are likely aware that SDN and NFV are terms that are often linked together. This is because SDN is a term that covers a myriad of networking technologies, including network virtualization. For the purposes of this article, however, we will be focusing more narrowly on NFV. So, let’s explore further how NFV has sparked a pivotal shift within the telecom landscape.

Why NFV Represents an Era of Change in Telecom

Like other revolutionary technologies, NFV has the potential to offer service providers both reduced capex and opex, while at the same time offering new service flexibility. That almost sounds too good to be true, but many industry experts have compared the advent of NFV to that of VoIP when it first emerged. People at the time of the VoIP revolution said the same thing about VoIP. NFV’s onset will likely usher in a wave of new players and force market leaders to adapt or expire due to market irrelevancy, just as VoIP did.

Simply put, the value proposition of NFV comes from being able to virtualize physical legacy network equipment using cloud computing. Organizations can use it to reduce expenses for both capital outlays (via eliminating physical hardware) and operating costs (through simplifying business processes) to run more cost effectively. NFV also enables companies to rapidly, and elastically, scale their services to meet demand growth, as networking operations are no longer confined to inflexible physical equipment, further lowering costs. Ultimately, NFV is paving the way for service providers to build new and more effective cost models moving forward.

NFV Means Best-of-Breed Network Infrastructure

Another critical reason that NFV will bring about an era of change is because it means best-of- breed network infrastructure is more easily attained. Up to now, a large network infrastructure vendor would likely be required to offer as much of an end-to-end environment as possible.  With software modules (called virtual network functions, or VNFs) interoperating, a service provider could obtain the best VNFs for the task at hand. For example, a software-based media server from vendor x could work with an application server from vendor y that would work with a switch from vendor z.

At the same time, there are a number of smaller players rising in the ranks that, unlike larger competing service providers that have been in the telecom space for decades, do not have to majorly rework or reinvent their end-to-end legacy network offerings to incorporate NFV. These companies, born into this era of NFV, will be able to go full- speed ahead with true best-of-breed solutions, near guaranteeing market share. As such, it will be interesting to see just which brands emerge – or re-emerge – over the coming years as NFV continues to gain traction.

NFV Challenges

For all its promise, NFV means that service providers need to shift away from their archaic, inflexible hardware to more agile, virtualized network solutions. Numerous evaluations and considerations must be made to ensure the quality of their network offerings are not compromised while adopting NFV. This challenge has prevented more than a few service providers from effectively entering the NFV market.

Another challenge lies in the VNF interoperability. Initiatives such as OPNFV are working to address that.

Despite NFV challenges, service providers should begin planning or solidifying their virtual network strategy now, if they’re not already in the works. Nearly every operator (93 percent) surveyed by Infonetics last year said they plan to deploy NFV as part of their network strategy in the near future.

2015 is expected to be the year operators will begin testing use cases in live network environments. If service providers are not optimizing for NFV right now, they will wish they had when they look back in years to come. 

Jim Machi is senior vice president of product management and marketing at Dialogic (News - Alert) Inc. (

Jim Machi is vice president of product management at Dialogic Inc. (

Edited by Dominick Sorrentino