Telecom service providers create new revenue opportunities with virtualization.

 

It’s a brave new world for telecom service providers to survive in outpacing technology year over year. Emerging connected technology such as the Internet of Things has placed additional strain on network infrastructure and driven demand for faster data, more bandwidth, better uptime and a more reactive network.

However, as Fidelity noted, despite growing network usage figures, telecom profits haven’t necessarily increased to go along with higher user demand. With telecom network services being increasingly commoditized, providers need to find new sources of revenue to maintain their profitability and feed enterprise appetite for advanced network features, more flexibility and a more satisfying overall user experience.

In short, these companies need to stop being just telecom service providers and become virtualized service providers.

Virtualization finds a business case

The early days of virtualization in telecom – network function virtualization, in particular – were characterized by largely theoretical applications. CIMI Corporation President and Gartner contributor Tom Nolle stated that NFV and other virtualization technology’s benefits were generally viewed in the abstract, and companies had trouble seeing tangible use cases within their own operations.

“Most everyone agreed this was a better and more flexible approach, but it was also totally different, complicated and didn’t seem to have any accepted business-value propositions to drive it,” stated Noelle. “The specific benefits were unclear, as was the path to them.”

The technology has proved to be far from an empty promise in recent years, paving the way for telecoms to lower operational costs while also creating new avenues of service delivery, new products and services. Telecoms also stand to find the opportunity to provide managed services due to their ability to scale both knowledge and skills across multiple customers.

So, what changed?

Telecom service providers have found that by virtualizing the network, they can build out capabilities without needing to add on expensive hardware. Software, rather than physical devices, can power many different network tools. Once that door was opened, the potential applications became nearly endless.

Virtualization can lead to the development of new services.Virtualization can lead to the development of new services.

“Enterprise customers stand to benefit immensely from this arrangement.”

Creating virtualized services for enterprise customers

Virtualization technology allows telecom service providers to spin up new features faster than ever before and deliver them to customers whenever needed. Telecom customers can apply additional features like virtual firewalls, storage and expanded bandwidth in an on-demand model. We wrote more about VNFs here.

Customers can build out or contract these tools as they like and pay only for what they use. In this way, service providers can employ payment models that are more in line with utilities than traditional telecom companies. That pay-as-you-go approach will help improve the overall customer experience by providing more transparency into service costs and giving users final say on what features are included in their service package.

Enterprise customers stand to benefit immensely from this arrangement, as they will be able to incorporate numerous network, cloud and virtualized features from a single telecom service provider. Even modestly sized businesses require a great deal of performance and capabilities from their networks, but enterprise environments are more complex and demanding by orders of magnitude.

Enterprises require, among other things, advanced network security capabilities, SD-WAN solutions to improve connectivity at branch locations and additional bandwidth to manage traffic spikes. A company may go to different vendors for each one of those solutions, but with virtualization technology, it could conceivably get all three – plus much more – from a single service provider.

Completing the virtualization evolution

This reinvention from telecom service provider to virtualization service provider won’t happen overnight, but there are concrete steps telecom companies can take to start down that path. Automation, for one, is a very important piece to this particular puzzle. Noelle explained that by incorporating automation from top to bottom, organizations could reduce the amount of time needed to provision service add-ons and roll out new features.

Telecom service providers can streamline their journey to virtualization maturity by working with an experienced telecom software solution partner like CloudSmartz.