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There are many who still question if this will really work and fulfill the promises of lower opex and shorter time to market for new services. Steve Saunders at Light Reading has described the NFV transformation as a disaster for the whole industry, where key values such as stable reliable networks based on standards have been forgotten.

Three areas of importance

The first larger steps so far have not been easy but the last year has seen some large full-scale NFV deployments come true with vEPC and also with high throughput. However, being early has paid off because, according to analyst firm TBR, a proven deployment is ranked as the most important selection criteria among 69 percent followed by commitment to open source by 28 percent.

Another area of importance is services when it comes to consulting, deployment, integration, and technical support. This rose significantly in 2017 compared to previous years, and perhaps it is a reflection of the difficulties encountered in the early cases. This proves that consulting and deployment are seen as the most important criteria. Ranked 3,7-3,8 out of 5.

Related to this is also the way to do the transformation: be the prime integrator yourself or rely on a single vendor as the prime systems integrator (SI)? Both ways are important and the T1’s are likely to take the SI responsibility themselves, but the majority (42 percent) will hire a prime SI and this has grown a lot in the last year.

The third area to highlight is the shift from paying software license fees to a subscription-based SaaS model, because this is more optimized for consumption patterns, such as pay-as-you-grow, in the new world of digital services.

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Ericsson's experience with change

Ericsson definitely has a stronghold in the areas mentioned above. Also the combination of a large legacy footprint and competence in key areas such as EPC, IMS, SDM, plus OSS has given Ericsson important contracts with some early T1’s such as Telefonica, NTT DoCoMo, AT&T, Verizon, Vodafone, Orange, Swisscom, SoftBank, and Telstra. The services arm is the strongest among the vendors, and the introduction of the Ericsson software model a few years ago leads to the SaaS direction. This is not easy, and competition will come from new entrants in this increasingly complex eco-system where traditional roles and business models are challenged.

One thing that sticks out with Ericsson is Ericsson's experience with change. During its 142-year history as a single company, Ericsson has had to transform itself several times from manual to automatic to mobile telephony (mastering all mobile standards and "Gs"), and now to internet, cloud, and IoT—not to mention all sorts of technology areas such as copper transmission, power plants, cables, silicon components, optical, satellite, traffic control and alarm systems, and TV broadcast and video streaming. All of this combined with a strong engineering culture and innovation to achieve early experience is Ericsson's strength.

The past is usually not a guarantee for future success, but the ability to adapt and change often is.

Want to know more about what the industry analyst TBR says?

Download the TBR report

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Mats Johansson

Mats Johansson

Mats is focusing on networks marketing within SDN, NFV, 5G core, Cloud and NFV MANO at Ericsson Headquarters in Stockholm. He has previously been working in various positions such as R&D for Mobile Radio Networks, Product Management for Core networks and Mobile Packet Core, Marketing for 3G Mobile, Fixed Telecom networks for Broadband Access, Metro, IP and IPTV infrastructure. Mats has a Master’s degree in Telecommunication and Computer science at the Royal Institute of Technology in Stockholm.

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