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#NFV Solution Spotlight: vCPE



Author: Melody Yuhn, NFV Sales Enablement, C|EH, CISSP


In the NFV world, vCPE has been a lead use case and is seeing a strong interest from CSPs in each major region of the world. The story is timeless – reduced Capex budgets, pressure on Opex budgets and tremendous pressure from OTTs both on innovative service offerings and speed to market.  NFV, of course, aims to offer dramatic improvements in all of these areas, and one of the reasons that vCPE is a lead use case is that the incumbent CSPs already have tremendous business with Enterprises to deliver managed services. The opportunity that vCPE offers is for the CSPs to protect that revenue from the OTTs, while delivering cost improvements for their bottom line along with access to innovation and new services from the choice of innovative VNF providers.



One of the biggest threats to CSPs today are the OTT players. The CSPs have good inroads with enterprise customers. AT&T as one example serves 100% of the Fortune 1000, and strategic business services made up $9.7 billion of AT&T’s 2014 revenue. Many CSPs offer managed services to enterprises, and these services generally entail technologies such as VPN, Firewalls, SBC, WAN acceleration, and other items that can be combined to offer businesses Internet access. IDC forecasts that the global managed network services segment will grow from $72 billion in 2013 to $102 billion by 2017, a CAGR of 10%. These managed services typically have CPE (Customer Premise Equipment) associated with the service. CPE is generally a device that, as the name implies, is located in the customer’s premise. The device, much like a “set top box” in residential applications, provides the needed intelligence to provide the service and provide connectivity back to the CSP’s network POP.


Some of the opportunities for improvement in this scenario include the elimination of truck rolls to get the CPE installed or for any needed updates or maintenance. The truck roll adds cost not only to deploy a technician, but in speed of deploying new services, since new offerings would likely require updated or additional equipment.  Another potential improvement would be the opportunity for CSPs to provide on-demand service delivery through customer self-service portals, as well as much more customization in service offerings.


Business Benefits of vCPE

Today, enterprises rely on solutions that are defined by a host of different equipment choices and hardware configurations that add to the cost of the service. For CSPs, there are issues with maintaining and supporting myriad legacy CPE devices for every type of managed service offering. There are testing, integration, inventory, staging, truck roll, and installation costs, which add more opex and reduce profitability.  IDC estimates the TCO savings for vCPE to be between 39 - 44% versus the legacy scenario.  This estimate alone is compelling, but consider also the competitive gain of Speed to Value on new capabilities, which can be more rapidly deployed both in on the network side as well as to the customer by using virtualization technologies.


Architectural Approaches

There are several approaches to vCPE, namely a centralized model, a distributed model, or a hybrid approach.  The centralized model keeps the intelligence at the POP in the CSP network, and relies on WAN connectivity to the customer premise and delivers the managed service via a simple L2 switch for example.  In the distributed model, the CPE gear is more sophisticated, and hosts some of the needed services such as virtual routing, firewalls, etc. The distributed model is used for situations where on-site computing resource is more critical such as large campus environments. A hybrid approach can take on many forms, but the general idea is to keep some intelligence in the CSP POP, while letting critical features reside on the customer premise. Furthermore, the architecture within the CSP POP would need to have a design that evaluated which functions should be toward the edge of the network, and which others might reside in the core network.



Since CSPs are on the hunt for solutions to fend of OTT players, vCPE solutions are a hot topic. For the reasons discussed here, CSPs can benefit by strategies to implement new managed services utilizing virtualization technologies. Here at HP we provide world class infrastructure for the NFVI and MANO portions of an NFV solution, along with solutions for VSR and a host of partners that provide innovative VNFs suited to the vCPE use case. We’re seeing many carriers globally show interest in vCPE, some are on the way to deployment very soon, so stay tuned for further announcements.




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