Innovation opens doors
The biggest value of NFV is doing things that we couldn’t do before. For example, with virtualized services operators can speed up the activation of existing services and deploy new services very quickly without a technician using direct shipment and zero-touch provisioning. That’s because they have decoupled the software-centric services from the underlying hardware. What’s even better, they can extend that dynamism to end users. Here are some examples of how end users can benefit from virtualized services.
Services on demand
Operators have talked about service on demand for a long time, but there were always a lot of caveats. Now, virtualized services running on uCPE platforms gives end users true service on demand. The end user can add, change and remove services – without needing a technician or a box change. The user can access a customer portal, which many service providers already support. The service provider can extend those portals by connecting NFV orchestration platforms to their existing BSS/OSS systems. The result: a full digital transformation of telecom services.
End users today expect telco contracts to be long term, and three years or more is standard. But they don’t like it. They want to be able to acquire short-term services and terminate them without penalties. The move to virtualized services enables a new pay-as-you-go model, just like with cloud-based services. Now operators can support the demand for short-term services – and do so profitably. They don’t need any additional hardware on site for the temporary services. And the required third-party components needed for virtualized services (e.g., routers, firewalls and SD-WAN) usually support flexible licensing models. That could include pay-as-you-go models, so the payment model is aligned with the revenue model. Or it could mean that service providers can maintain a pool of permanent licenses, and unused licenses can be reclaimed and redeployed. In either case, the barrier to short-term opportunities is gone.
With virtualized services, the previous barriers of installing and reclaiming equipment are gone, enabling operators to use a try-before-you-buy model to upsell the end customer.Try before you buy
Almost all cloud-based services support a try-before-you-buy model. The first 30 days or more are free. There are three big reasons that cloud providers support this model:
- Customers like it. They can see if a service really meets their needs before committing to a contract, or even paying.
- The incremental cost of providing the service is low. It can be supported by the existing infrastructure, so the operator can be aggressive in pushing this option.
- The conversion rate is high. A large percentage of the people who try a service will go ahead and pay for it.
With virtualized services, telcos can adopt this cloud-centric technique. That’s because the previous barriers of installing and reclaiming equipment are gone. Once a customer site is served by an operator, they can use the try-before-you-buy model to upsell the end customer.
End user applications
End users are adopting a multi-cloud model for many of their applications. And they expect part of that cloud will reside on their site. With uCPE, service providers can deploy one compute platform that hosts the applications needed for connectivity. And it can also host end-user applications running in their own segregated “sandbox,” ensuring no impact on the operator’s applications. A big benefit for the end user is the simplification of onsite compute hardware. A small retail location or office might have all its communications and application needs handled by a server (or server cluster) managed by the telco, rather than having to own and manage servers. This simplified deployment model eliminates the need for hardware maintenance by the customer! And that’s a big win for sites that may not have a resident IT engineer.
Telcos have focused on standard services because customized services or “specials” are very expensive. They are normally reserved for the largest customers, and they require a large commitment on both sides. That situation changes with a virtualized model, and especially with cloud-native technologies. Now it becomes feasible for the operator to customize services much more quickly and economically. And the customization may include collaboration between the operator and the end user.
Embracing virtualization drives new revenue – and happier customers
All the services I mentioned above are valuable for the telco and create new revenue opportunities. More importantly, they reflect services that end users want. By giving customers what they want, telcos can drive sticky revenue growth and create differentiation – which is tough to do if you’re just selling pipes.