TBR estimates 30% of total global CSP spend (capex and external opex) will be on or related to NFV/SDN in 2023

5G will push CSPs to accelerate and broaden their NFV/SDN initiatives

According to Technology Business Research, Inc.’s (TBR) latest NFV/SDN Telecom Market Forecast, covering 2018 to 2023, 5G will push CSPs to adopt a new network architecture and both NFV and SDN will be critical aspects of that architecture going forward. As such, TBR expects NFV/SDN-related spend growth will correlate with 5G deployments. Since CSPs will need to upgrade their networks from an end-to-end perspective to realize the full potential of 5G, this will naturally drive CSPs toward the virtualization and cloudification of their networks. This trend will impact most, if not all, of the major network domains from an NFV/SDN perspective over the next five years. TBR notes that 5G core is inherently virtualized and that this will also naturally push CSPs deeper into the NFV/SDN space over the next five years as they transition to a stand-alone 5G network.

Rakuten’s legitimization of vRAN will also drive NFV/SDN market growth

Though significant skepticism remains in the industry that Rakuten will be able to make the vRAN model work, should this scenario occur, TBR believes it would embolden CSPs to double down on their own NFV/SDN initiatives, especially as it relates to vRAN. RAN is one of the costliest domains in the construction of a network, and it is a key area CSPs will be keen to virtualize to reap cost savings.

White-box adoption will proliferate, portending significant OEM disruption

TBR expects the use of white-box hardware in NFV/SDN environments will proliferate through the forecast period, accounting for 60% of NFV/SDN hardware spend in 2023, up from 15% in 2018. This industry shift toward white-box hardware will significantly disrupt incumbent OEMs’ business models, prompting them to evolve into software-centric companies. Industry organizations such as the Open Compute Project (OCP) and initiatives spearheaded by leading CSPs such as AT&T will fuel the rapid uptake of white boxes during the forecast period.