Virtualized networks will transform the MVNO model November 17 2014

by Caroline Gabriel, Research Director, Maravedis-Rethink

When AT&T describes its User-Defined Network Cloud, the future network it is developing on top of its Domain 2.0 virtualized architecture, it often talks in terms of consumers and direct enterprise customers. But in fact, the platform it envisages would perfectly support one of the most important emerging business models for network infrastructure owners, mobile network-as-a-service (NWaaS).

Whether or not AT&T takes this route, many carriers following in its architectural footsteps intend to. NWaaS is the logical next step after enterprise-focused „aaS‟ models, in which organizations access software, platforms and infrastructure from a cloud-based provider, on an as-required basis. The latest iteration would see network operators creating their own cloud platforms, or working with cloud partners, to be able to offer network capacity to large numbers of enterprises, vertical players, MVNOs and web service providers, on an on-demand basis. The customers would pay for what they used, rather than signing rigid virtual operator or wholesale deals as they do now – thus removing a key barrier for smaller service providers or those which only need to be active at certain times of day or year.

This could create an important new business models for carriers which are investing heavily in infrastructure, but largely recognize that the rising tide of consumer data will be increasingly unprofitable. Some may opt out of the consumer retail space altogether to pursue enterprise and wholesale models, where customers are less fickle and, if service quality is good, more lucrative. But the NWaaS approach opens up a whole new range of potential customers which want to include mobile connectivity in their services – device makers; smart home and other internet of things (IoT) providers; mobile content firms and so on.

NWaaS may also be an opportunity for cloud platform providers. A rising number of mobile operators already outsource all or part of their network operations, and in future, major managed service vendors such as Ericsson are highly likely to start offering flexible, on-demand NWaaS options to MNOs, not just to MVNOs. 47% of mobile users are currently covered by networks managed by a third party (Ericsson claims to be the world‟s largest MNO). And according to NSN analysis, while RAN sharing can achieve 40% opex savings, a shared network managed by a third party in the cloud can add up to 15% to that figure.

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