Contact Us

Posted by Yana Persky 

In this blog post, I’ll try to shed some light onto what’s really happening in the Network Function Virtualization (NFV) space and why licensing management for NFV is becoming critical. Communication Service Providers (CSPs), mainly tier one telcos, rule the world of Virtual Network Function (VNF) providers. On the one hand, CSPs complain that they need flexible business models from VNF providers to justify NFV investment and benefit from the virtualization path.

On the other hand, they are having a hard time managing more than 2-3 licensing management solutions, as every VNF vendor comes with its own licensing management scheme, most often primitive and limited. Therefore, smaller VNF players aren’t usually considered as a vendor of choice due to licensing operational overhead.

This very fact pushes CSPs to prefer the 2-3 “big players” with the widest range of products. Moreover, even with the leading VNF suppliers they choose to work with, CSPs have been known to play games and manipulate VNF suppliers by only signing trust-based deals, instead of giving over full licensing control. As it stands, NFV adoption has been slow, and this approach can slow it down even further, for several reasons.

VNF suppliers want to gain insights into the types of VNF functionalities that are used in their customer network, and ensure that their IP remains protected at all times. They also need to track VNF instances against the VNF license terms and bill the service provider accordingly. Meanwhile, CSPs expect a license management system to guarantee their service continuity, while also ensuring that they only pay for the VNFs and VNF functionalities they actually use.

This very situation contributes to the confusing mess about the real value behind the NFV concept.

Let’s refresh our memories by looking at the promised benefits of NFV adoption for CSPs:


  1. Reduce CAPEX and OPEX by using standard commercial off-the-shelf (COTS) hardware
  2. Open up the market to pure SW entrants
  3. Support subscription-based or pay-as-you-go approach: Only VNFs which are required are used and purchased
  4. Enable dynamic scaling
  5. Decrease development and deployment time by fully implementing functionality in software
  6. Lower power consumption by consolidating equipment types

The issue is, without accurate usage tracking, license management, or widespread adoption of NFV, these promised benefits haven’t been gained.

  • How can CSPs reduce CAPEX or OPEX if a subscription-based model isn’t implemented? Without fully implementing a subscription-based model, they will continue paying for additional VNFs and VNF functionalities that they aren’t using.
  • How can CSPs enjoy the promised benefits of more competition if smaller vendors aren’t in the game? As of now, smaller software vendors have yet to enter the market in a significant way.
  • How can VNF providers compete in this market if they can’t track the usage and bill it accordingly?
  • What incentives do VNF providers have to invest in a non-core business, when they’re not the vendor of choice for the CSPs?

We will continue exploring these questions, and the NFV space in general, in future blog posts.

Will you be at the NFV World Congress? Join us on October 9th at 17:15, for a special technology panel featuring Michael “MiZu” Zunke, Gemalto’s VP, CTO Software Monetization!

Subscribe to Updates