Major U.S. Telecom Carriers Aggressive on NFV Deployment

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As per a research report by analytics firm IHS Markit, V erizon Communications Inc. VZ , CenturyLink Inc. CTL and AT&T Inc. T have been aggressively implementing Network Functions Virtualization (NFV) in their business service offerings. The technological adoption of this capability enhances scaling functions and service delivery times which leads to improved end user experience along with higher growth in the business services segment. Notably, the business service segment is a rapidly growing industry in the telecom space.

Network Virtualization - A New Trend

At present, cloud based functions are provided by service providers through a series of expensive dedicated hardware. Through new software defined networking (SDN) and network functions virtualization capabilities, any service provider can run its network functions on a less expensive hardware by delivering services through virtualized enterprise customer premises equipment (vE-CPE). This will allow the service providers to provide cloud based functions to their clients at much lesser cost, increasing margins in the process.

Race towards Virtualization

As per survey by HIS Markit, almost all of the services are targeting 100% deployment of NFV capabilities in the near future. AT&T is targeting in getting 30% of its network virtualized by the end of 2016, with a goal of reaching 75% by 2020.  It's evident from AT&T's recent collaboration with Intel Corporation INTC , to develop new software-centric network technologies to aid optimizing its NFV capabilities for its AT&T Integrated Cloud (AIC) service. Verizon too has been active in pushing towards NFV by completing an OpenStack cloud deployment across five of its data centers in the U.S. Also, CenturyLink is committed to build a robust networking platform using SDN and NFV capabilities, through which it aims to serve its enterprise customers better. In line with that, CenturyLink acquired certain core networking assets from a company formerly known as Active Broadband Networks Inc in June.

The Bottom Line

Software is the new hardware; this efficient trend is catching up in the industry. As more and more businesses are utilizing cloud computing and other IT services for running its day to day operations, it is obvious that virtualization will play a major role in providing these services in the future. Additionally, as internet of things (IoT) gains traction, software defined services is going to be the ultimate growth driver in this market. However, integrating such capabilities into existing infrastructure remains a challenge for these industry players going forward.

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This article appears in: Investing , Business , Stocks
Referenced Symbols: T , VZ , CTL , INTC

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