Software-defined networking has quickly transformed from a prospective technology with potential applications in the telecom field to a disruptive force that could alter the entire global market. Telcos have long expressed interest in SDN, particularly regarding its capacity to improve the delivery of services and reduce carrier overhead expenses.
SDN's potential cost-saving features are of considerable interest to this sector given the vast amount of revenue being allocated toward capital expenditures. According to a March 2014 Ovum report, capex for communications service providers will hit $367 billion by 2019. Keeping up with network maintenance is an expensive but absolutely critical aspect of the telecom industry. SDN could potentially help carriers reduce the amount of money they spend on network components as the technology allows for greater flexibility when it comes to operating this equipment.
Typically, telecoms get locked into contracts with component vendors that offer few financial incentives because they need to maintain uniformity across the network to ensure that everything works in concert together. As IT consultant Sarah Sorensen explained to TechRepublic, SDN enables organizations to potentially invest in best-of-breed solutions instead of being locked into one brand or product. SDN can do this because it connects network components as an overlay solution, operating above the physical component level.
Ovum researchers cautioned that the rise of SDN could pave the way for a new breed of vendors to challenge the position of traditional service providers. This could adversely affect those carriers that fail to adapt to the changing times and begin taking advantage of SDN to offer more dynamic and customizable services.
"The telecom world is changing," said Ovum analyst Matt Walker. "Established market boundaries are falling by the wayside. Competition is tougher, service innovation is faster, and margins are often slimmer. Value (and profits) are shifting among industry segments."
SDN shouldn't be viewed as a threat to the telecom industry, however. This technology presents a golden opportunity for carriers to offer a better service to customers than previously imaginable. At its full potential, SDN can enable carriers to shift network resources on an ad hoc basis, diverting assets to meet localized demand and keeping customers satisfied.
