Market Insight

Operator Survey: Smart central offices to be in 85 percent of service provider networks this year

January 25, 2018


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Following is information and insight from IHS Markit about our latest Routing, NFV and Packet-Optical Strategies Survey

Highlights

  • In 2018, 85 percent of operator respondents plan to create, or will have already deployed, smart central offices — that is, installing servers, storage and switching to create mini data centers in selected central offices. These mini data centers are used to offer cloud services, and as the network functions virtualization (NFV) infrastructure on which to run virtualized network functions (VNFs) such as vRouter, firewall, CG-NAT and IP/MPLS VPNs.
     
  • More than half of operators (55 percent) surveyed plan to move each of 10 different router functions from physical edge routers to VNFs running on commercial servers in mini data centers in smart central offices, including customer edge (CE) router, route reflector (RR) and others.
     
  • Seven out of 10 respondents plan to deploy central office rearchitected as a data center (CORD) in smart central offices.
     
  • Operators expect 44 percent of their central offices will have mini data centers (or smart central offices) by 2023, and deploy CORD in half of those central offices.

Our analysis

SDN and NFV are spurring fundamental changes in network architecture, network operations and how carriers are organized, which is illustrated by the purchasing decisions of operators worldwide. Nearly every operator around the world is undertaking major efforts.

More importantly, the move to SDN and NFV is changing the way operators make equipment purchase decisions, placing a greater focus on software. Although hardware will always be required, its functions will be refined, and software will drive services and operational agility.

A basic architectural change in motion is the deployment of new functions in large central offices that are closer to end customers. These also serve as locations for distributed broadband network gateways (BNGs), content delivery networks (CDNs), mini data centers and other new functions. Mini data centers (i.e., servers and storage) are used to deliver cloud services within a metropolitan area and house applications including augmented and virtual reality and gaming, to give users better response time as well as provide a place for NFV and VNFs, including vRouters, which run on servers. These central offices with mini data centers are known as “cloud central offices” or “smart central offices.”

Cloud services for business, and internet usage in general, have caused carrier network traffic patterns to change dramatically in and out of data centers. This is true not only for the hyperscale data centers of Google, Apple, Facebook, Amazon, Microsoft, Baidu, Alibaba and Tencent, but also for their smaller metro and regional megascale data centers, and large enterprises, as well as smaller data centers used by enterprises and government.

In a large metropolitan area, there might be 10 or more smart central offices aggregating traffic from smaller end offices. Based on our discussions with operators around the world, a common long-range plan is to identify 10 percent to 25 percent of central offices as smart central office locations — all candidates for CORD. The smart central office is the new location of the IP edge, which is creating a need for a new class of optical transport equipment and a new class of routers designed for data center interconnect (DCI) applications.

Routing, NFV and Packet-Optical Survey Synopsis
The 30-page 2017 IHS Markit routing, NFV and packet-optical strategies survey is based on interviews with router/CES purchase decision-makers at 20 global service providers that control a third of worldwide telecom capex and 27 percent of revenue. The survey covers hot and emerging topics in the carrier Ethernet, routing and switching space, with a focus on the IP edge. It looks at deployment plans, strategies and locations, router bypass, 100GE port mix, price per port and more.

Research by Market
Enterprise & IT Mobile & Telecom
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