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Network operators will find 2015 the most eventful year of the decade in telecom because network operators will begin the journey to deploy their next-generation networks (NGNs) -- at last. These networks will have the first network architecture that recognizes software and server as equals in network equipment, and virtualization becomes the architecture's universal tool in creating network efficiency and agility. But the year isn't just about NGN. Mobile services will also remake the whole nature of the Internet and cloud computing, and regulations on open Internet are in the spotlight yet again.
Let's start with software-defined networking (SDN) and network functions virtualization (NFV), which promise to substitute hosted software for hardware device features. For most operators, 2014 was the year of the proof-of-concept, which many network operator CXOs see as "science projects" intended to prove that technology options really exist, not to address whether those options would be profitable to exploit. In contrast, 2015 is expected to be the year of the field trial, the time when options either rise to the level of business class or fall by the wayside.
Proof of concept efforts for SDN and NFV will evolve to the trial stage this year. Operators' hopes are high for both technologies because early technology testing has been generally positive. What operators also need in 2015 is a complete operational framework for SDN and NFV. With a framework, they can evaluate the total cost of ownership of SDN and NFV alternatives to legacy technology and assess the SLAs they could offer with each.
Standards group progress on SDN and NFV efforts
Neither the Open Networking Foundation (ONF) for SDN nor the ETSI Industry Specification Group SG for NFV are likely to take up operations in time, if at all. The Telemanagement Forum (TMF) is working on a new and agile operations model suitable for SDN and NFV, and we can expect the first real detail on that in late 2015. Some vendors are preparing to offer their own vision of integrated operations, and some of these will be available early in 2015
When an operations framework is in place, it will be possible to demonstrate and even exploit the efficiency and agility benefits SDN and NFV have been promising.
Mobile snags lion's share of capex investment
In mobile services, we're seeing a kind of perfect alignment between buyer-generated opportunity and network operator capex growth. Wireline infrastructure's ability to transform itself is hampered by the fact that operators are generally reducing capital spending on wireline. That drives wireline goals toward cost management rather than service and revenue enhancement. As a result, even technologies like SDN and NFV may end up being in wireless networks first—because that's where the money to change things is going.
It's already clear that users depending on their mobile devices for "answers," not "information" is transforming Internet search and advertising, and in 2015 the transformation will extend to cloud computing and to enterprise applications, particularly collaboration.
Mobile users rely on their devices more as personal assistants. That creates opportunities for network operators to leverage location-based services, analytics on social interaction, and user interests to create "as-a-service" features that can be offered as cloud software as a service (SaaS) or NFV virtual network functions (VNFs).
The concept of "feature as a service" may be the big transitional revenue opportunity for the network operators -- something that can be used both to support over the top (OTT) services as incremental revenue and as a platform for their own services. It may also be the pathway for operators to reduce their dependency on key mobile device platforms and vendors. If compelling mobile features are available in feature-as-a-service form from operators, developers can use these to enhance applications and reduce their dependency on specific mobile device platform features at the same time. The seeds for this will be sown in 2015.
Telecom regulatory environment in flux
Regulations obviously play a big part in the way network operators plan services and invest in infrastructure. And regulatory changes, including big ones, are possible in many of the world's market areas this year. In the U.S., the FCC and Congress are both looking into net neutrality, and in the EU,the European Commission is taking a new look at telecom rules and legislation.
In major markets, the current debate is centered more on protecting the OTT business model than on dealing with any threat that lawful traffic could be blocked. The Comcast/Netflix dispute on payment was resolved when Netflix began paying major ISPs to handle their video streams efficiently. That raised questions about paid prioritization of traffic and settlement among ISPs for delivery. Believers in strong neutrality policy oppose all of this, while others believe such practices could improve the Internet business case for network operators, increasing their incentive to invest.
It is likely that the new direction in neutrality will be set in 2015, though legal appeals will likely extend into 2016. However the debate is resolved, it will frame the way operators invest in services and how technology can evolve the current network toward a new model. Relief from prohibitions on paid prioritization and inter-ISP settlement could reduce pressure on operators to reduce costs, allowing them to focus their SDN and NFV projects on new services and revenues. The opposite would be true if "strict" neutrality were to become the rule.
For all three of these market shifts, 2015 will be the year where lab trials and planning interest translates first into actual change. The changes themselves will continue for the remainder of this decade, but 2015 will go a long way toward eliminating uncertainties about the future that have plagued the market for the last three years. Confusion of any sort is the enemy of investment, particularly for network operators with historically long capital cycles. Much of the confusion will end in 2015.
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