Asia-Pacific is driving the telecommunications industry forward by adopting Network Functions Virtualization (NFV), a transformative shift that is reshaping the sector. Telecom companies in the region are taking a proactive approach and embracing NFV technologies as part of their digital transformation. NFV enables operators to improve agility, optimize resources, and quickly deploy innovative services. As Asia-Pacific becomes a leader in digital transformation, NFV becomes a crucial component, providing a flexible and scalable infrastructure that positions the region at the forefront of global telecom innovation.
NFV is transforming how networks are built and operated, and it's happening fast in Asia Pacific. NFV takes network functions like firewalls, load balancers, and routers that traditionally run on specialized hardware and virtualizes them, so they can operate on commercial off-the-shelf servers. The NFV market in Asia Pacific is expected to grow from USD 646 million in 2018 to USD 1.86 billion by 2028. The solutions segment dominates, but services are gaining ground.
The Rapid Growth of NFV in Asia Pacific
The Asia Pacific region is leading the charge when it comes to adopting NFV. Network operators in countries like China, Japan, South Korea, and Australia have been early adopters of virtualization technologies. As 5G rolls out, NFV deployments are accelerating across APAC.
For network operators, NFV offers a host of benefits. It allows them to reduce costs by using standard servers instead of proprietary hardware. It also gives them more flexibility and agility to deploy new network services faster. Instead of waiting months for new hardware, new network functions can be spun up in hours using NFV.
- According to research from STL Partners, over 50% of operators in APAC have commercial NFV deployments in place.
- China is the largest NFV market in APAC, accounting for over 50% of spending. Major Chinese operators like China Mobile, China Unicom, and China Telecom have massive NFV projects underway.
- NFV spending in Japan and South Korea is also sizable and growing quickly thanks to major network investments from operators like NTT DoCoMo, KT, and SK Telecom.
- Australia's largest operators, including Telstra, Optus, and Vodafone Hutchison Australia, have launched NFV projects to gain more flexibility and agility as they roll out 5G.
Key Drivers Propelling NFV Adoption in the Region
The Asia Pacific region is poised to lead the world in NFV adoption over the next decade. Several factors are propelling rapid growth and innovation in this market.
For starters, APAC telecoms face unique infrastructure challenges with difficult terrain, remote locations, and dispersed populations spread across thousands of islands. NFV allows them to deploy virtualized network functions without relying on specialized hardware. This flexibility and agility is crucial for cost-effective network expansions.
Governments across APAC are also pushing 5G deployments and smart city initiatives that require highly scalable, software-defined networks. NFV is essential for managing the massive connectivity demands of these next-gen services.
- Cost savings are a major motivator. NFV reduces dependence on proprietary equipment, cutting capital and operating expenses. This allows telecoms to reallocate funds to improving coverage and performance.
- There is a shortage of skilled network engineers in the region. NFV's simplified architecture and streamlined provisioning processes require less specialized expertise to deploy and manage.
- Open-source NFV platforms like OpenStack are popular, encouraging collaboration and interoperability between telecoms, vendors and developers across borders.
- Leading global vendors have dedicated NFV practices to support major clients in APAC. They provide solutions tailored to the region's unique challenges as well as professional services to facilitate transitions from legacy networks.
Major Telcos Embracing NFV to Cut Costs
Major telcos in Asia Pacific are turning to NFV to reduce costs and improve flexibility. As the telecom industry faces declining revenue from traditional services, NFV provides a way to cut operational and capital expenses. Some of the biggest players driving NFV adoption in the region include:
- China Mobile has launched NFV trials and pilots in over 20 provinces. They aim to have NFV make up 20-30% of their networks by 2020. By virtualizing network functions, China Mobile expects to cut energy usage by up to 40% and slash their equipment costs.
- SK Telecom in South Korea has an NFV infrastructure in place and launched commercial NFV-based services in 2016. They've seen a 30% improvement in service launch times and 50% lower equipment costs. SK Telecom believes NFV is critical for supporting future technologies like 5G.
- Reliance Jio in India built their 4G LTE network on NFV technology from the ground up. By going fully virtualized from the start, Jio avoided legacy infrastructure and launched services at record speed. Jio's all-P NFV network has given them a competitive advantage regarding costs and time-to-market.
- Telstra in Australia has NFV trials underway and plans to have virtualized functions make up half their network by 2022. They aim to cut operating costs by 30% and launch new services in days rather weeks. Telstra sees NFV as a key to competing with web-scale companies entering the telecom market.
The major telecom players in Asia Pacific recognize NFV as a crucial aspect for their future success. By embracing virtualization, they can slash costs, accelerate innovation, and compete more intensively on a global scale. For telcos around the world, the region provides an example of how NFV enables a faster, flexible and more efficient network. The investments being made in NFV today will shape how telecommunication is delivered for years to come.
