The Disappearing Central Office: Implications of SDN and NFV

Brainpower was on display at the Metaswitch Forum this week in New Orleans, where discussions on the implications of SDN and NFV dominated. These two networking technologies are fundamentally changing the approach and architecture of telecom networks, or as Metaswitch so metaphorically highlighted this week in New Orleans, the brains of the network.

The implications of SDN and NFV are far reaching, but could be simplistically described (in a telecom context) as moving the historical main role of the central office, switching, away from the local network into the cloud. The ‘brains’ of a local telco network, which historically resided in a central office, can now be hosted elsewhere, on some external data center’s rack. The concept suggests telcos won’t need their own sophisticated switching apparatus. They can obtain that capability and capacity from the cloud, and concentrate on their physical access network and their customer relationships.

Switching becomes a hosted service, where telcos could ultimately decide to get out of the switching business entirely. I’ve phrased it the disappearing central office. And while the physical central office isn’t necessarily disappearing, its historical role very well may. That opens up other opportunities for that physical asset, including becoming a data center itself, offering data center capacity to local and regional business customers.

This is complicated stuff and it won’t happen overnight. We’re at the beginning of this process and some companies will move more quickly than others. Some will choose not to move at all, at least from an external hosting perspective. They’ll implement SDN and NFV on their own, within their own network. Metaswitch insists they’ll allow their customers to move at their own pace and assist accordingly. This is about a “…sensible, step wise approach,” commented Metaswitch CEO John Lazar during a panel this week in New Orleans. Lazar and Metaswitch coin this transition as moving to the software telco approach, where the real intelligence of the network (the brains) resides in software, which is accessed via ‘commoditized hardware.’ Whether telcos choose to maintain their own commoditized hardware locally or allow a data center to host it remotely is immaterial.

Can Small Carriers Keep Pace?
There was a lot of discussion this week in New Orleans about the impact of these trends on smaller telcos, which make up the majority of Metaswitch’s U.S. customer base. Larger telcos are embracing NFV in particular – Metaswitch CTO Martin Taylor pointed out those larger carriers spearheaded the idea – but will smaller telcos keep pace? It’s an interesting question, especially considering in a logical sense, the approach would seem to favor smaller telcos because of their lack of scale. I like Lazar’s view on the small carrier, large carrier debate.

“I don’t agree in the demarcation of small carrier to large carrier,” Lazar said on Wednesday. “The difference is really about forward thinking, agile carriers and those who are not.” That’s a great context for this ongoing debate regarding whether smaller carriers are up to the challenge presented by the changing telecom landscape.

While Metaswitch characterized this discussion in the context of the brain, I think I would look at it differently. It’s really more about the ‘soul’ of these carriers. In one context, the historical role of the central office might be considered the soul of a small independent carrier. Its potential disappearance is one more reminder of the radical transformation local telcos are now undertaking. I have no doubt that they are up to the challenge.