Carriers Going All-In: How NFV And SDN Will Evolve The Telecom Industry

The Next Era Of Telecom

Service providers have historically relied on dedicated hardware to deliver their cloud-based functions. But software-defined networking (SDN) and network functions virtualization (NFV) are freeing up carriers to use virtualized appliances or less expensive hardware to deliver the same services. As such, most service providers -- 100 percent, to be exact -- say they have plans to inject NFV into their networks, if they haven't already, according to a recent report from market research firm IHS Markit.

The opportunities around virtualization are far-reaching for service providers and it's trickling down to their partners and end customers. Here's a few of the carriers that are aggressively investing in, and evolving their networks with the help of, SDN and NFV technology.

The Survey

The 2016 IHS Markit NFV Hardware, Software, and Services Annual Market Report tracked for the first time what service providers are spending on NFV hardware -- including NFV servers, storage and switches -- as well as NFV software. The report was authored by Michael Howard, senior research director, carrier networks, at IHS Markit,

While the report said the telecom industry is still in the early stages of a transition to SDN and NFV architected networks, all surveyed carriers indicated that they have aggressive plans. The majority of carriers -- 59 percent -- said they have either already deployed or will deploy NFV during 2016. Eighty-one percent of carriers said they expected to make an NFV investment by 2017.

What SDN, NFV Investment Means For Partners

Service providers have been among the IT hardware vendors' largest customers because the incumbent carriers have always relied on dedicated -- and often expensive -- appliances to deliver their services. The move toward SDN and NFV is turning traditional telecom network architecture on its ear.

By virtualizing network components and integrating NFV into their networks, service providers can build in more automation and create more agile services. Carriers, who have had a reputation of being slow-moving in the IT industry, will be able to cut costs by not requiring dedicated hardware.

These operational efficiencies could translate into benefits for partners and end customers. Carriers using SDN and NFV will be able to roll out new services more quickly. This could mean more access to the latest strategic services, as well as more recurring revenue, for partners.


AT&T has been injecting virtualization within its own network for the past few years, and has recently started to expose those capabilities to its end customers in the form of Network Functions on Demand. In July the Dallas-based carrier rolled out Network Functions on Demand, a managed service that lets businesses make adjustments to their networking services through virtualized functions deployed on one piece of standard, premise-based equipment.

AT&T has publicly committed to virtualize 75 percent of its own network by 2020, with 30 percent being virtualized by the end of 2016. In August the carrier said it would partner with Intel to optimize NFV packet processing efficiency for AT&T’s Integrated Cloud platform, as well as to help speed the carrier's network evolution. The partnership allowed AT&T to join Intel’s ’Super 7’ program of companies working on network and data center design, which includes industry heavyweights Google, Facebook and Amazon.


CenturyLink has been on an SDN tear, making several acquisitions recently to bulk up its network automation portfolio. In June, the Monroe, La.-based service provider announced its intention to acquire specific SDN and NFV assets from the company formerly known as Active Broadband Networks, a Framingham, Mass.-based provider of software-based broadband networking. CenturyLink said it will use the assets to virtualize core network functions and move more functions to the cloud.

Also in June CenturyLink also acquired ElasticBox, a San Francisco-based company that specialized in hybrid IT and multi-cloud management. The two acquisitions were aimed at giving partners and end customers access to more automation technology for their networks.


Verizon has been virtualizing its own network with SDN and NFV technology since 2009. In April the Basking Ridge, N.J.-based carrier completed an OpenStack cloud deployment across five of its data centers in the U.S., and Verizon claims there's more to come.

In July, Verizon rolled out its Virtual Network Services packages, which are available through partners, as well as sold directly to business customers. The bundles of network services include security, WAN optimization, and SD-WAN services, and are intended to help customers make the transition to a virtual infrastructure model.