New Study Reveals: SDN Could Save Operators $4 Billion in Capital Expense by 2017

NAPERVILLE, Ill., Aug. 29, 2013 /PRNewswire/ -- A new study sponsored by Tellabs defines the value of Software Defined Networking (SDN) in mobile backhaul networks. New research by Strategy Analytics finds that SDN can save mobile operators more than $4 billion in capital expenses by 2017.

Savings stem from 5 key SDN applications for mobile backhaul networks. These savings can help close almost half of the $9.2 billion "backhaul gap" identified in Strategy Analytics' earlier report, "Future Backhaul Needs of Mobile Network Operators."

Multimedia

• Video of Strategy Analytics' Sue Rudd
• Executive summary of the Strategy Analytics study
• Infographic on how SDN addresses the "backhaul gap"
• Blog.

As mobile data traffic grows, the investment required to meet users' experience expectations escalates. The "backhaul gap" is the difference between required backhaul investment and planned spending.

The earlier report found that a capacity shortfall in backhaul networks has already begun to build. The "backhaul gap" may reach 16 petabytes globally by 2017.

Key SDN Applications Cut Capital Expenses

To evaluate SDN's impact on mobile backhaul investment, Strategy Analytics researched 5 SDN applications. Strategy Analytics anticipates these areas are where SDN will have the most impact: Metro Aggregation/Load Redistribution, Local Breakout/Internet IXP, Small Cells, Cloud RAN and Wi-Fi Offload/Video Redirect.

The largest single saving in capital expense value terms will come from Metro Aggregation/Load Redistribution. This application could contribute savings of $96 million in 2013, rising to $1,116 million in 2017.

Across the SDN applications, the value of capital expense savings by 2017 is forecast to be:

• Metro Aggregation/Load Redistribution - $1,116 million
• Local Breakout/Internet IXP - $1,083 million
• Wi-Fi Offload/Video Redirect - $1,021 million
• Cloud RAN - $777 million
• Small Cells - $202 million.

Regional Breakdown

In addition, the research showed savings that SDN could generate by region.

Asia Pacific is the region facing the most significant backhaul funding shortfall. Asia Pacific will also be most likely to benefit from SDN. Estimated capital expense savings by region in 2017 are:

• Asia-Pacific - $2,662 million
• North America - $599 million
• Western Europe - $574 million
• Middle East & Africa - $162 million
• Central & Eastern Europe - $112 million
• Caribbean & Latin America - $89 million.

So far, SDN has been used to optimize data center resources and service platforms in the cloud. Recently, operators have tested SDN applications for operational network elements. Applying SDN to transport and backhaul optimization is so new that standards work began only recently.

"Until now, we've seen too little quantification to support SDN business cases for service providers," said Dan Kelly, Tellabs CEO and president. "The Strategy Analytics report provides solid evidence and examples to demonstrate SDN's true value to customers.

"Based on customers' input and the compelling business cases we've identified, we plan to incorporate SDN functionality into the Tellabs 8000 intelligent network manager, and into Tellabs 8600 and Tellabs 7100 products, early in 2014."

Earlier this year, Tellabs demonstrated its Congestion Control Application, which applies SDN to head off bottlenecks in the backhaul network – even before users become aware of a service issue. SDN is expected to drive demand for Tellabs optical and data solutions in customer networks.

About Tellabs – Tellabs innovations advance smart networks to help our customers succeed. That's why 80% of the top global communications service providers and 40 of the Fortune 100 companies choose our mobile backhaul, packet optical, business and services solutions. We help them get ahead by adding revenue, reducing expenses and optimizing networks.

Tellabs (Nasdaq: TLAB) is part of the Ocean Tomo 300^® Patent Index and several corporate responsibility indexes, including the Maplecroft Climate Innovation Index, FTSE4Good and eight FTSE KLD indexes. www.tellabs.com

SOURCE Tellabs