The mobile industry is at a tipping point. In the 4G/5G era, the status quo network economics are unsustainable. The cost-per-bit models and network architectures that dictated 4G strategies will not support 5G use cases.

Let’s look at 5 critical factors, and examine how network virtualization from the core to the RAN transforms mobile network economics through cost savings, and introduces the network flexibility and service agility needed to drive and protect revenue.

1) NFV & SDN Need Native Software Design

Cloud native software design leverages containerization, stateless processing and microservices to create VNFs that use compute resources more efficiently and reliably. Rather than just scaling up or down, native VNFs scale out to spread the capacity load across available compute resources. Native VNFs achieve the flexibility, scalability and operational efficiency promised by NFV. Ultimately, NFV will transform mobile networks to achieve web-scale, full service automation and enable Platform-as-a-Service (PaaS) offerings, completely changing the economic equation for mobile operators.

2) Cloud RAN Dramatically Reduces TCO at the Edge

Virtualization enables new functional splits in the RAN elements, allowing ethernet-based fronthaul transport (removing dependency on proprietary and costly CPRI-based fiber) and increases the distance that vBBUs can be located from a cell site, up to 200kms. The vBBUs implemented with vEPC elements in a mobile data center eliminating the need for backhaul, and vBBU multiplexing dynamically allocates baseband resources to RRUs– reducing BBU capacity requirements by > 50%. This allows operators to reduce costs and dynamically scale capacity where it is needed in the network.

3) Distributed Networks Enable New Business Models

Virtualization in the mobile core network allows key functions to be distributed out to the edge. Key features of a natively designed vEPC are Control and User Plane Separation (that allows independent scaling) and network slicing (that allows vEPC instances to be distributed across the network). The disaggregation in the mobile core is not only a tool for optimizing networks today, but also a fundamental principle of 5G network architecture. The vEPC and vBBU combined with small remote radio heads connected over Ethernet, enable enterprise private LTE networks that are more cost effective that DAS.

4) Open Interfaces are Imperative

To make the virtualized, programmable and software-defined network a reality from the core to the edge, open interfaces are vital in all parts of the system. Open APIs unlock the flexibility, manageability and cost savings that operators require by breaking open the proprietary stronghold that legacy vendors have on networking equipment and software. Open interfaces also drive innovation by allowing more innovative companies and startups to participate in the development of Cloud RAN and vEPC solutions, creating a broad, competitive ecosystem.

5) Disrupting the Traditional OEM Model

A recurring theme in mobile operator discussions about NFV and SDN is their frustration with traditional OEMs for not moving fast enough to deliver native VNF solutions that run on COTS hardware in a standard way. While mobile operators have always been focused on driving suppliers to lower price, the transition to virtualization and software-based networking puts unprecedented pressure on vendors by forcing them to disrupt their own legacy business models.

The traditional business model is based on selling dedicated hardware appliances is too restrictive for today’s networking needs as the hardware provides an inflexible, minimum amount of capacity that can only be expanded by purchasing additional equipment and hardware maintenance contracts. With software assets that are natively designed for cloud environments, the new breed of software suppliers can deliver the innovation, agility and costs savings that mobile operators need to survive.


The launch of NFV signified a recognition among leading network operators that their business models are not sustainable and that they need to change their cost-per-bit assumptions and revenue generation capabilities. The quest for new mobile network economics is more urgent than ever as the costs of keeping up with traffic demand outpaces service revenue growth.


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