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New Study Reveals: SDN Could Save Operators $9 Billion Globally in Operating Expenses by 2017

NAPERVILLE, Ill., Feb. 11, 2014 /PRNewswire/ -- A new study from Tellabs calculates the value of Software Defined Networking (SDN) in reducing mobile backhaul network expenses by dynamically managing traffic and backhaul bandwidth. Research conducted by Strategy Analytics projects that by 2017, total operating expense (OpEx) savings from SDN in mobile backhaul networks could reach $9 billion globally.

An earlier Strategy Analytics' report, "SDN Could Save Operators $4 Billion in Capital Expense by 2017," revealed the value of SDN in reducing capital expense (CapEx) in backhaul deployments. It highlighted the contribution SDN could make in helping to close the previously identified "backhaul gap." These CapEx savings derive from 5 key SDN applications for mobile backhaul networks.

In the new study, Tellabs reveals that OpEx savings from the same 5 applications are more than twice as much as the CapEx savings.

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In fact, today's report reveals that OpEx savings are forecast to be far greater than CapEx savings every single year between now and 2017, across all 5 applications. According to the August 2013 study, CapEx savings could potentially reach $4.2 billion by 2017. Overall OpEx savings are forecast to reach almost $9 billion, or more than twice the CapEx savings, over the same timeframe.

5 Top SDN Applications Save 25% to 70% of Operating Expense

As in the previous report, Strategy prioritized the top SDN applications, based on where SDN will have the most impact on mobile backhaul. The 5 applications are Metro Aggregation/Load Redistribution, Local Breakout/Internet IXP, Small Cells, Cloud RAN and Wi-Fi Offload/Video Redirect.

Although overall OpEx savings are significant, the contributions from each application vary greatly with savings varying between 25% and 70% identified across the board. The largest single saving in OpEx will come from Wi-Fi Offload/Video Redirect. According to the research, this application could contribute a 70% saving by 2017 – increasing from $222 million in 2013 to more than $3.1 billion by 2017.

The value of OpEx savings across the 5 applications by 2017 is forecast to be:

  • Wi-Fi Offload/Video Redirect - $3,144 million
  • Cloud RAN - $2,173 million
  • Local Breakout/Internet IXP - $1,832 million
  • Metro Aggregation/Load Redistribution - $1,219 million
  • Small Cells - $591 million.

Potential OpEx savings for each application differ greatly from CapEx savings. For instance, in the CapEx report, Metro Aggregation/Load Redistribution ranked first in CapEx savings with a $1,116 million savings by 2017. Yet it ranks only fourth in OpEx savings.

Asia Pacific Will Witness the Biggest Impact

As identified in the report, the amount of OpEx saved through SDN will vary greatly by region. Asia Pacific, the region expected to adopt all-IP networks very aggressively, is predicted to gain the greatest OpEx savings from SDN – reaching 37% by 2017.

Estimated OpEx savings by region in 2017 are forecast to be:

  • Asia-Pacific - $5,619 million
  • North America - $1,263 million
  • Western Europe - $1,253 million
  • Middle East & Africa - $368 million
  • Central & Eastern Europe - $255 million
  • Caribbean & Latin America - $201 million.

The earlier report demonstrated that CapEx savings from SDN for backhaul were significant. However, the value of SDN in helping operators to save on the ongoing provisioning and management of backhaul capacity is far larger.

"Earlier, we highlighted the key role of SDN in closing the mobile backhaul gap," said Stu Benington, Tellabs director, technology and strategy. "Now we can show that on top of the CapEx savings, SDN can cut OpEx dramatically and preserve operator margins in backhaul networks."

At Mobile World Congress 2014, Tellabs will demonstrate a new dynamic SDN application that enables backhaul networks with microwave links to adapt automatically to changing weather conditions.

About Tellabs, Coriant and Marlin Equity Partners — Marlin Equity Partners, a global investment firm with over $2.6 billion in capital under management, has announced the formation of a single leadership and organizational structure for its Coriant and Tellabs portfolio companies. With a focus on customer value creation, this move represents the first step in a plan to merge the industry-leading networking suppliers under the Coriant brand.

Tellabs innovations advance smart networks and help our customers succeed. That's why 80% of the world's top communications service providers choose our mobile backhaul, packet optical, business and services solutions and applications. We help them get ahead by adding revenue, reducing expenses and optimizing networks. www.tellabs.com

SOURCE Tellabs

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