Discussion Papers

No. 461: SDN/NFV and its implications for the costs of mobile and fixed networks in the regulatory contextAuthors: Fabian Eltges , Gabriele Kulenkampff, Thomas Plückebaum, Desislava Sabeva

Authors: Fabian Eltges , Gabriele Kulenkampff, Thomas Plückebaum, Desislava Sabeva

(full version only available in German)

Summary

Software Defined Networking (SDN) and Network Function Virtualisation (NFV) are the next steps in the development of NGN-based telecommunication networks and its architecture. This applies equally to the fixed and mobile networks. Key functions of network management and service provisioning will be subject to further automation and virtualisation and will not any longer be allocated to network elements which are performing transport functionalities. Now, these management and control functions will be provided by a specialised cloud-oriented platform which is managing and controlling traffic flows by centralised means. By decoupling transport network elements into distinct network hardware and software-based network management functions an increasing network flexibility can be achieved, which then allows for a more efficient use of network resources. A prominent example of SDN/NFV implementation are so called network slices which can be configured individually and flexibly. Several types already have been standardised in the context of 5G mobile networks.

In this discussion paper, WIK captures the new architecture in its essential elements in the current and planned future development stage. The study gives an overview of essential use cases of the SDN/NFV architecture and analyses their possible effects on the cost structures of fixed and mobile networks. A special emphasis is given to the impacts on costs for regulated wholesale products. It is expected that telco network costs become less CAPEX-intense due to more centralised network control and virtualisation of network functions. This may become even more obvious if network operators begin to source out parts of the network management to cloud providers. This would even more lower the weight of CAPEX on the overall costs.

Discussion Paper is available for download.

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