Software Monetization Featured Article

Software Licensing in the NFV World

September 28, 2017

Moving to software-centric networks will provide communication services providers and their customers a wide variety of benefits. The move to network functions virtualization promises to deliver cost savings, more automation, more flexibility, and faster time to market and revenue.

However, analyst Tom Nolle (News - Alert) opined that the widespread adoption of network functions virtualization is not a foregone conclusion. For NFV to work, he said, it needs to make business sense both for CSPs and their suppliers.

At the moment both sides are trying to figure out how to make that happen.

The CSPs appear anxious to move to this new model. But making the necessary changes to their networks, processes, and back office systems is no small task.

Meanwhile, their suppliers are grappling with how best to address the move to software-centric solutions without completely undermining the businesses that they’ve built to date. So they’re trying to figure out how to price and package their virtual network functions. And they need decide what systems will be required to manage those licensing arrangements, and to enable CSPs to place orders and make changes to their licensing arrangements.

Because this is all so new, the move to software-centric networks and all that entails is going to happen gradually over time. Right now, many CSP (News - Alert) network infrastructure suppliers offer their solutions both as boxes and a virtual network functions. But at the moment they typically price and package VNFs the same way they do their legacy, box-based solutions.

That’s probably ok initially, since it’s so early in the game. But as CSPs scale and add more VNFs, it becomes a problem. That’s because it actually makes these virtualized solutions more expensive than the physical ones of the past. It means CSPs have to pay the same price for just software as they would pay for both hardware and software in the old model. And the executives at some of the big CSPs like BT (News - Alert) have been calling for a change on this front.

Part of the challenge is simply that vendors need to figure out how they can survive and thrive in a software-only world. But Michael Heffner of ADVA (News - Alert) Optical Networking said another part of it is that they may lack the know-how and solutions to implement the sale and delivery of software in a world in which:

• different, multiple network functions from various vendors can be run together on a common hardware platform to support a service;

• software components can run anywhere and can be moved around by the CSP or via automated network management; and

• CSPs want to be able to quickly deliver and provision new services, scale and change functions over time, and potentially change out a vendors’ function within a given service with one customer to that of another.

That calls for new, flexible licensing models, said Heffner, vice president of the Ensemble product line management at ADVA, and a speaker during the recent Gemalto-sponsored webinar “Software Licensing in an NFV World”. Two options on this front include perpetual and subscription-based licensing, he said.

Heffner explained that the former provides the irrevocable, non transferrable right to use a software feature at a certain release level. In this case the CSP typically pays its supplier a fee up front. The initial cost is higher for the CSP, he said, but it allows for a fixed cost over the lifetime of the product. And if the CSP exceeds the growth dimension, they need to upgrade to the next feature level and pay the difference. Plus they typically pay for services and support separately as an upfront annual fee.

Subscription licensing, meanwhile, is revocable and non-transferrable. If CSPs  exceed the capacity limit, they simply move to the next tier. Services and support is typically included. CSPs are invoiced monthly or quarterly. The CSPs have a lower entry price, but over the duration of the term it may cost more. And the timeline of the subscription can vary. For example, it may be a one- or two-year subscription, but if it goes long-term there may be an automatic trigger to move to a perpetual license, he said.

There are several options through which a supplier like ADVA could deliver these licensing options to CSPs and automate the ordering, fulfillment, and management of NFV solutions in the process, said Heffner. In some cases suppliers will rely on third-party solutions to allow for this software licensing. That could actually be helpful as CSPs begin to license software from many VNF suppliers, he added, as they won’t want to have to manage multiple software licensing systems and scenarios.

Edited by Maurice Nagle