Network Function Virtualization: The business case for virtual CPE

Sharath Kumar
New Update

Network Function Virtualization or NFV is set to revolutionize the networking industry in many ways. To start with, NFV helps network operators by enabling them to use general purpose IT hardware in place of proprietary vendor-locked network devices thereby reducing the operator's CAPEX and OPEX requirements by as much as 80pc.


Secondly, and arguably the most important feature of NFV is that it brings tremendous agility and flexibility to the operator's network making it easy to introduce new (revenue generating) services, and making service provisioning/de-provisioning much faster compared to traditional "fixed" networks.

Introduction of new services has always been a long and painful process for service providers. Therefore, from a service provider perspective, NFV presents an opportunity to differentiate themselves from competition, increase service velocity, and generate new revenue streams to enhance profitability.

The Business Case for Virtual CPE (vCPE)

Customer premise equipment or CPE is used by any enterprise or residential broadband subscriber to connect to the public IP network. Service Providers provide, configure and manage CPEs from different hardware vendors for enterprise customers (for business services) and residential subscribers (for multi-play services).


Today, services that can be offered to any subscriber are limited by the features supported by the CPE installed at the subscriber's home/office. Rolling out new services such as Layer-3 VPN, Content-aware Firewall, HD video streaming or VOD service, often entail a replacement of the installed equipment (+CAPEX) and truck rolls (+OPEX).

In addition, CPEs from different hardware vendors may have been installed at subscriber premises at different points in time. Therefore, any new service launch or a service upgrade requires the operator to conduct extensive lab trials to verify functionality and performance of CPE devices from different vendors before the service can be rolled out (=delay in service introduction and lost revenue). Add to this the service and support complexities associated with configuration, monitoring and troubleshooting various CPE devices having different hardware-firmware combinations (+OPEX).

Virtual CPE is an alternative way of delivering broadband services to subscribers where most of the CPE functions are pulled in to the operator's network and located near the service edge, as shown in the figure above.

In the new network architecture, the CPE acts as a simple Layer-2 forwarding device that helps a business or residential subscriber to connect to the service provider network. Services such as DHCP, Firewall, NAT, Routing, VPN, etc. are delivered by Virtual Network Functions (VNFs) running at the Telco datacenter as a Virtual Machine (VM) instance configured for each broadband subscriber. Provisioning and de-provisioning of services is easy as the process of instance creation, deletion, configuration, remediation, etc. are automated. Users and services can be provisioned using the existing OSS, or through CLI /web-based admin portal.


High availability is ensured by the NFV orchestration engine (instance/service remediation) and N:1 hardware redundancy (active standby), so the vCPE infrastructure is carrier-grade like other systems running in a Telco datacenter. Recent advances in fast-path processing with Intel® DPDK, availability of high-speed NICs with 10G/40G ports, and advances in virtualization techniques have made it possible to deploy network functions that can handle up to 80Gbps throughput in standard x86 servers with auto-scaling and management features commonly found in virtualized IT infrastructure.

vCPE projects executed by Calsoft Labs reveal that a single 2RU server with Intel Xeon E5-2680 processors can support 2000 vCPEs serving a bouquet of services including Firewall, NAT, VLAN, SSL/IPSec VPN, Antivirus, IDS/IPS, etc. with 30Mbps average bandwidth usage per broadband subscriber. Since vCPE is an orchestrated bundle of VNFs running on standard x86 servers, it is easy to add other services to this platform such as Streaming video (multicast/unicast), application-aware QoS function for VoIP, OTT video/gaming, etc.

Here is a quick look at the financial argument for vCPE:

A typical residential broadband subscriber may buy a Home Gateway for $50, a HD Set-top Box for $100, a Home NAS for $300, Antivirus software for $50, and often another Set-top Box (for the second TV) for $100. Total digital home infrastructure set up cost can vary anywhere from $200 to $600.



In case of vCPE the total cost of customer premise hardware is reduced to less than $50. Estimated cost to set up the vCPE server farm (hardware + software) is of the order of $1.5 million per 100K subscribers, which translates to a CAPEX of $15 per customer. This represents a total upfront cost reduction of 70 to 90% for subscribers that can be translated to recurring service revenues by the service provider.

With vCPE infrastructure, the service provider now has the ability to deliver additional subscription-based services e.g. Storage-as-a-Service, Firewall-as-a-Service, etc.; or pay-per-use services like online gaming, video conferencing, etc. vCPE also gives the service provider better visibility and control over devices and applications used in the home network that can be used to enhance customer experience, and offer differentiated service packs.


From an OPEX perspective, vCPE lowers operational expenses for service providers in the following ways:

1)Troubleshooting and technical support is easier as it does not require support engineers to understand hardware and software embedded in several different types of CPE devices.

2)Updates and upgrades can be rolled out easily and much faster on the vCPE infrastructure (server farm) with near zero disruption to services being delivered to subscribers.

3)Enterprise network administrators can be provided access to self-service portal for user management and provisioning/de-provisioning of business services.

4)Significant reduction in Truck rolls and CPE hardware replacement requests.

Finally, one other economic benefit from vCPE deployment is the overall power savings that accrue from vCPE service rollout. It greatly reduces the power consumption at customer premises by eliminating the need to have multiple devices. In comparison, the additional power consumed to host vCPE infrastructure at the service provider edge is approximately 1W per subscriber. The total power saving is significant when multiplied by a large broadband subscriber base allowing service providers to demonstrate greater social responsibility and energy savings.


The new, disruptive access network architecture based on CPE virtualization offers several advantages to network operators by helping them to reduce costs, differentiate themselves from competition, and increase ARPU and broadband profitability by introducing new revenue generating services faster while maintaining better control over the customer's LAN.

(The author is vice president of marketing at Calsoft Labs)