At the heart of telcos’ transformation


Virtualisation is being heralded as one of the main avenues for telcos to create new opportunities. A disruptive paradigm, virtualisation gives network architectures the flexibility and agility needed to create new business models.

Virtualisation expected to increase substantially over the next five years.

A growing number of telcos are incorporating virtualisation into their network, as part of their transformation strategies. The market for SDN and NFV – the two main strands of virtualisation – is forecast to reach 40 billion EUR by 2023, with average annual growth of 17% starting in 2019. The bulk of this market is generated by cloud solution suppliers and businesses, but operators’ share of it will continue to rise and, with the expected increase in their commitment to virtualisation, is expected to reach 21% by 2023.

Virtualisation market is growing

Regional progression of the global virtualisation market

Source : IDATE DigiWorld in "Network virtualisation to 5G slicing"

Telcos still cautious about embracing virtualisation

Network virtualisation is a hotly debated topic amongst telecoms and IT industry players. On the operator side of things, IDATE DigiWorld tallies more than 50 players that have adopted virtualisation in 2019, compared to six in 2016, along with 180 virtualisation projects from operators, of which two thirds are actual deployments. But operators remain cautious on the whole, confining themselves to three strategies:

  • Network virtualisation, as part of a more general transformation, such as Telenor and Swisscom have done;
  • Network service virtualisation targeting the business market, with SD-WAN solutions, such as PCCW, Tata and BT have done;
  • Network and service virtualisation, a good example being AT&T which has been the most aggressive in this area, setting a target of virtualising 70% of its network functions in 2020.

Major operators involved in virtualisation, led by AT&T

Telcos' positioning with respect to network virtualisation

Source : IDATE DigiWorld in "Network virtualisation to 5G slicing"

Operators exploring the potential of network slicing through a host of trials

Breakdown of network slicing trials by use case

Source : IDATE DigiWorld in "Network virtualisation to 5G slicing"

SD-WAN: a prime application of virtualisation

The capacity that virtualisation provides to manage resources on demand, creates the ability to implement customised value-added services that can be configured on the fly. A good example is software-defined networking in a wide area network (SD-WAN) which creates the ability to interconnect a company’s various sites over the web, using their connectivity solution of choice, offering a more flexible and economical alternative to existing links like MPLS. SD-WAN is catching on with telcos. According to IDATE DigiWorld, more than 30 of them had joined the fray in 2019, up from four in 2016: BT, China Mobile, Telstra and Verizon being among the pioneers.

Telcos in Asia-Pacific and Europe lead the way on SD-WAN

Geographical distribution of SD-WAN rollouts in 2019

Source : IDATE DigiWorld in "Network virtualisation to 5G slicing"

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