The hype cycle for software defined networking (SDN) and network function virtualization (NFV) has been long and steady. SDN separates control plane (network management) from data plane (traffic handling), allowing dynamic bandwidth, provisioned with quality of service levels. NFV replaces hardware with software apps able to operate in a compute environment, eliminating specialty WAN equipment and associated costs. The world's major network providers are trialing these technologies heavily to understand their benefits, both for themselves and for their business customers. They also seek to understand how, if they are not first-in, competitors with disruptive business models might try to use these emerging technologies against them.
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The end goal for a fully software-driven and virtualized network is clear: A dynamic, on-demand global fabric where each application can order, set up and tear down services, performance and features as they are needed through automated API function calls. But the correct steps from the current state to this future end state are anything but clear. It may seem that operators based in Asia and North America have pioneered SDN/NFV, and that European operators (with notable exceptions such as Colt and Deutsche Telekom) are not as advanced. When it comes to customer-facing commercial service launches, this is partly true. But large operators realize the risks of misplaced technology bets and single vendor lock-in. A growing number use SDN/NFV internally; they are also exploring and trialing the technologies externally, to see what benefits they can bring to customers. SDN's on-demand bandwidth is capturing business from companies with seasonal variations, or with temporary needs. Many large enterprise IT departments however underscore the skills gap: they are not yet ready to embrace a fully dynamic, virtualized future. New SDN/NFV technologies need real-time monitoring and management control that includes dynamic portal presentation to let customers reconfigure services as well as real-time updated billing information. Besides SDN/NFV technologies, competitors should also keep a watchful eye on software defined WAN (SD-WAN) technologies, an adjacent category of services that is usually an intelligent overlay that threatens to commoditize underlying network resources.

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“SDN/NFV technologies: Innovative use cases and operator strategies” provides insights around the functional areas where network operators are clustering with SDN and NFV technologies SDN in the access network, SDN in the core network, NFV centralized in the cloud, and NFV in distributed virtual CPE (vCPE). The report covers network provider motivations for each category of service, notes some of the network providers active in each space, and lists what related competitive areas and/or services might be threats to the business model. The report looks at case studies in each category: Level 3 SDN access, Telstra SDN in the core network, CenturyLink centralized NFV and Masergy vCPE. NTT Com and ATandT are among other iconic early adopters of SDN/NFV; all of these competitors are active in more than one of the four SDN/NFV categories we define.
Table of contents
Section 1: SDN in the access network
Market view
Implications
Case study: Level 3 Communications
Section 2: SDN in the core network
Market view
Implications
Case study: Telstra
Section 3: Centralized NFV
Market view
Implications
Case study: CenturyLink
Section 4: Virtual CPE
Market view
Implications
Case study: Masergy
Section 5: Key takeaways
Appendices
Acronyms and definitions
Companies mentioned
About Pyramid Research
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