Spanish telecom giant
) has teamed up with software expert
) to develop network functions virtualization service (NFV)
In particular, the companies are working on a virtual
infrastructure management (VIM) platform based on open-source
software that operates on Intel-powered servers. The idea is to
avert fragmentation and vendor lock-in since operators shift to
cloud-based telco networks. Research in this regard is being
conducted at Telefonica's newly-established NFV Reference Lab.
Telefonica believes current networks, which include closed
hardware appliances and ad hoc equipment, are hindering innovation.
The role of NFV is thus crucial here as it replaces the numerous
components with software running on standard hardware.
For 2014, the company is focusing on increasing network capacity
to support data traffic growth and build network differentiation by
developing high-speed infrastructure. The company has undertaken
several efforts to enhance efficiency across European markets which
include removal of handset subsidies in Spain, gradual reduction of
subsidies in the U.K., network sharing agreement in the U.K. and
Mexico, and redundancy program in Spain. Such initiatives should
lead to further savings in the upcoming years and eventually boost
Further, the company is also gearing up in the field of network
virtualization in partnership with NEC Corporation. Based on SDN
(Software-Defined Networking) and NFV (Network Functions
Virtualization) technologies, network virtualization will reduce
the dependence on hardware while also enhancing flexibility and
network efficiency across Telefonica's platform.
Telefonica currently has a Zacks Rank #3 (Hold).
Other Stocks to Consider
Other stocks worth considering within this sector are
Level 3 Communications Inc.
). Level 3 currently sports a Zacks Rank #1 (Strong Buy), while KT
Corp. carries a Zacks Rank #2 (Buy).
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