This piece was co-authored with Andrea Rebora, a research assistant at the Hudson Institute.
One of the major questions facing US security and competitiveness policy is whether US and allied equipment manufacturers can compete successfully with Huawei. The Chinese giant offers firms around the world an integrated package of equipment, software, network design and construction, and financing. No US companies offer such a package and European and Japanese suppliers that do cannot match the costs and rapid development offered by Huawei under the current trajectory of 5G deployment, which is a major reason allies in Europe and elsewhere are reluctant to join the US in banning Huawei from their networks. There is, however, a fast-moving alternative now being tested which offers a real alternative and deserves closer scrutiny from policymakers: Network Function Virtualization (NFV).
Current networks (Figure 1) are composed of a variety of connected hardware devices, and to launch a new service requires new equipment across the network and for users. Power consumption, space, and cost are significant issues. Therefore, integrating and deploying new devices is increasingly complex. This is especially the case for 5G networks, which will require hundreds of thousands of new cell towers in addition to replacing much of the existing 4G equipment and software. Hardware-based appliances reach the end of life quickly: technology lifecycles are becoming shorter as innovation accelerates, reducing the benefits of using new services. The hardware offered by network vendors has limited options for its computing, storage, memory, and networking capacities, and modifications lead to an expensive hardware upgrade.
Another issue is that existing network configurations lock in the vendors for wireless providers into proprietary systems which are largely not interoperable for either hardware or software. Upgrading from 4G to 5G is very expensive in any case but more so if the incumbent vendors are not used in the transition. Additionally, on the current trajectory, providers such as AT&T and Verizon are hoping to maintain separate networks, multiplying the rollout costs. Some estimates of capital costs for US 5G are in the hundreds of billions of dollars per year over many years. And this assumes they continue to use existing vendors such as Ericsson, Nokia, and Huawei in some rural areas.
For wireless network providers, installing and operating network equipment involves multiple devices, including servers, routers, and firewalls. In addition to being complex, these hardware-based devices lack flexibility, are expensive to maintain (in terms of not only money, but time and labor), and consume a large amount of power. These devices have custom firmware, binding the company to the vendor for updates, maintenance, expansion, and upgrade. One of the most significant security concerns is that it is difficult to know with precision what kind of software runs inside these devices.
Network Functions Virtualization (NFV) is meant to replace traditional network equipment with an open architecture and flexible options (Figure 2). Such systems replace much of the switching and other hardware in core networks with cloud computing and advanced software, at much lower costs. From a security point of view, a significant advantage is its openness: the vendor does not control both hardware and software. On the contrary, a company adopting this technology has access to a broad, independent, and even open-source software community. Furthermore, as noted by RCRWireless News, encryption software can be launched within the network rather than on a hardware device. US vendors are competitive for both the servers and software for these systems.
Network World explains that the standard architecture of NFV consists of three layers: Network Functions Virtualization infrastructure (NFVi, the hardware and software platform required to run network applications); Virtual Network Functions (VNFs, software applications that deliver network functions such as security and routing); Management, Automation, and Network Orchestration (MANO, the framework for management and orchestration of NFVi and VNFs). NFV is meant to be secure, scalable, flexible, and cost-effective. NFV would allow service providers to move network functions from dedicated appliances to generic servers. Using virtualization technology, NFV aims to consolidate several network equipment types to servers, making the networks more agile and efficient.
The first major commercial test of this new architecture is being built and deployed by Rakuten and Cisco in Japan. Rakuten, a Japanese electronic commerce and Internet company, is set to build the first end-to-end cloud-native mobile network. Tareq Amin, Rakuten Mobile Network CTO explained that the company’s engineers mastered virtualization and compartmentalization technologies to provide customers a fully automated and virtualized network running as VNF on a horizontal private cloud. Cisco Systems joined forces with Red Hat Software, a U.S. multinational software company, and Intel to create a thoroughly open platform with carrier-grade high availability, performance, and reliability. Other key players for NFV systems include Fujitsu, a Japanese multinational information technology equipment and services company, Juniper Networks, a U.S. multinational corporation, and Hewlett Packard Enterprise, a U.S. multinational enterprise information technology company. Qualcomm is the leader in much of the foundational technology behind 5G, as Apple found when it tried to avoid using this provider. AT&T, Verizon, Vodafone, and others are also developing tests for virtual networks.
With this technology, enterprises can streamline network functions and maximize efficiencies, leading to a faster introduction of new services. 5G infrastructure will rely on NFV to virtualize the devices in the network and create multiple virtual networks upon a joint physical infrastructure. This both helps reduce costs of deployment and makes more efficient use of limited bandwidth available for 5G applications.
Virtual networks can be tailored to meet the specialized needs of customers, operators, services, devices, and applications. NFV will enable the creation of a distributed cloud and flexible networks. According to SDxCentral, a U.S. technology data research company, NFV will allow the partition of a physical network into multiple virtual networks that can support several radio access networks (RANs) and numerous types of services (Figure 3). Portions of the network will be detached from one another to guarantee the same user experience of a physically separate network. This will result in more powerful mobile broadband with lower latency, leading to significant benefits in resiliency, bandwidth, availability, security, and mobility. 5G networks will provide the necessary flexibility to assign coverage, speed, and capacity, depending on the demands of each use case. In contrast to existing hardware-based systems, introducing new service applications or security features will not require upgrades to multiple layers of end-users, to network hardware, and to proprietary software.
NFV offers the promise of lower costs, more flexibility, faster rollout, and better security. U.S. and allied country suppliers are highly competitive in the technologies required for the new system. It is well worth exploring and encouraging broader testing in the U.S. as well as Japan. Presuming President Trump does not backtrack on the Huawei ban, and the U.S. Federal Trade Commission and the courts do not succeed in destroying Qualcomm, the U.S. is well positioned to be a world leader in the new technology and offer an effective alternative to Huawei in the rest of the world.