Mobile operators have spent the past decade selling off their tower portfolios to focus on their core business: delivering services. With the rise of NFV and SDN, some are now questioning which other parts of their network can be outsourced.
Many parts of the LTE radio access network (RAN) and evolved packet core (EPC) can be virtualized into applications capable of running on off-the-shelf IT hardware. One extreme example is Amarisoft's LTE 100, which is a full eNodeB reduced to software designed for use on a regular PC. A more common approach is putting an eNodeB on a blade that can be plugged into a server such as the HP C7000.
Data centers rising
This shift away from telecom-specific hardware creates the opportunity for RANs and EPCs to live in data centers. Some operators want to own those data centers because they believe that gives them more control over performance and service quality. Others are comfortable with having a data center operator host everything. The mobile operator's size is one factor influencing the choice.
"We have seen Tier 1 operators pushing their own data centers and ramping up for them," says Morgan Kurk, a CommScope Inc. senior vice president who has blogged about how virtualization affects cellular infrastructure. "The strategies they tend to talk about involved lower latency and content delivery closer to the customer. If your data is near the edge, you will have faster access times. Tier 2 and 3 players may not have the scale to do data centers themselves effectively and could have some interest depending on geography."
Geography also affects the types of data center operators that can pursue the hosted RAN market. Today's LTE standards prefer a delay of no more than 20 milliseconds for traffic between a cell site's remote radio head and its data center, which means they can't be more than about 40 miles apart. If a data center operator has just one facility in a major, sprawling metro such as Chicago, it might not be close enough to many of a prospective customer's cell sites. Data center providers that have fewer facilities around a country could choose to focus on the EPC market because that part of the LTE network is more tolerant of latency.
Telcos are a potential fit for the RAN segment because they typically have multiple central offices around a metro. Those could double as data centers -- and increasingly already are, such as for enterprise cloud services.
"Four, five years ago, carriers thought about selling those off," says Andrew Coward, vice president of service provider strategy, Brocade Communications Systems Inc. (Nasdaq: BRCD). "They're now seeing these as a place for servers to deliver services."
Two more geographic considerations are fiber and governments. Countries with a lot of fiber, such as the US, are a better fit for virtualized RANs and EPCs because the fat, speedy links are already in place. Meanwhile, many states, municipalities and other governments worldwide offer tax credits to attract data centers. Those and other incentives lower the data center operator's cost of delivering service, regardless of whether that owner is a mobile operator, telco or another type of company.
Having a third party host the RAN, EPC or both also creates some colocation opportunities for mobile operators. Suppose a data center operator also hosts infrastructure for a content or application provider that's a partner of the mobile operator. That proximity could save money and latency if it eliminates the need for that traffic to traverse a country.
Colocation also could be a way for application providers such as Google and Microsoft to become mobile virtual network operators (MVNOs), at least for enterprise customers of their cloud services.
"We see opportunities for the cloud service providers to start delivering some of these mobile services themselves because they're hosting the enterprise's applications and services," Coward says. "It brings the mobile traffic directly into that cloud service."
The cloud provider could give those enterprises SIM cards so their smartphones and Internet of Things (IoT) devices connect directly and securely to its infrastructure.
"That comes up in conversations we've had with cloud service providers," Coward says. "It's a very interesting, compelling new way to reinvent the MVNO."
— Tim Kridel, Freelance Contributor, special to The New IP