Techno-economic Analysis of Software Defined Networking as Architecture for the Virtualization of a Mobile Network

Worldwide mobile network operators have to spend billions to upgrade their own network to the latest standards for wireless communication of high-speed data for mobile phones (e.g. Long Term Evolution, LTE). This is in contrast with the decline in average revenue per user and threatens: (1) their profitability and (2) the fast adaptation of new standards. Investigating new mechanisms that can decrease the capital expenditures (capex) and operational expenditures (opex) of a mobile network is therefore essential. Enabling multiple mobile network operators on a common infrastructure is one such mechanism. Software defined networks can overcome this problem and a solution based on exploring OpenFlow (OF) as architecture for mobile network virtualization has been proposed. We investigate two network scenarios based on this OF solution in a techno-economic analysis: (scenario 1) software-defined, non-shared networks and (scenario 2) virtualized, shared networks and compare it against the current situation. By doing so, this paper provides insights on the relative cost savings that a mobile network operator can reach through Software Defined Networking (SDN) and network sharing. The techno-economic analysis indicates that SDN and virtualization of the first aggregation stage and second aggregation stage network infrastructure leads to substantial capex cost reductions for the mobile network operator. As a consequence, mobile network infrastructure virtualization through the use of OpenFlow could be one of the problem solvers to tackle the issue of rising costs and decreasing profitability. Still, we did not take into account the direct effect on operational expenditures and the indirect effect that network sharing can adversely affect the ability of the operators to differentiate themselves.