According to ABI Research, virtual customer premises equipment (vCPE) will become the future of smart home solutions for pay TV and broadband operators.
“The implementation of vCPE solutions utilizing network functions virtualization (NFV) and software-defined networking (SDN) allows service providers to shift some of the functions of CPE onto the edge or cloud, enabling service providers to save on hardware costs by deploying low-cost CPE at the customers’ site. Better visibility of home networks, device level management, and the rapid deployment of new services are also enabled by a vCPE platform,” said Khin Sandi Lynn, industry analyst at ABI.
Such features are important for residential broadband network management as smart home penetration grows. ABI forecasts that the installed base of smart homes will exceed 360 million in 2023, representing nearly 35% of worldwide WiFi households.
Service providers have already experienced success in vCPE deployments in the enterprise segment. Enterprise vCPE deployments have resulted in hardware and operational cost savings, as well as opening additional revenue-generating services such as better security services. As a result, service providers are now investigating how best to leverage vCPE deployment in the residential market. For example, Etisalat partnered with NEC/Netcracker to deploy a vCPE solution for residential services in early 2018. Several service providers including CenturyLink, China Mobile, and Orange are developing vCPE deployments for the residential market as well.
“vCPE offers a competitive advantage with capex and opex savings to service providers. To get the full benefits of vCPE, service providers will need to create a monetizing strategy to augment the cost savings from their investment in vCPE,” said Lynn. “In markets with high smart home and connected device penetration, there is a higher chance to provide revenue-generating services in home network optimization and device level management. As associated markets continue to scale, the potential ROI for vCPE grows in turn.”