North America's second largest carrier, AT&T, like many other cellular network operators, are in a constant state of investment. Each carrier invests millions of dollars into their network infrastructure in order to keep up with the demands placed on it from customers, who want higher performing, more comprehensive coverage wherever they may go. However, this network infrastructure investment does not mean the carrier simply installs a new mast or cell site where there is poor coverage or data speeds. Instead, the carriers are working on building a smarter, more scalable network to be able to better cope with more and more demanding customers. In AT&T's case, the carrier has been upgrading their network by replacing more and more hardware network functions with software alternatives as well as shutting down their old 2G networks.
AT&T are using two technologies: NFV, network function virtualization, and SDN, software defined networking. Network function virtualization is a means of using virtual machines running various networking applications, processes and services, sitting on top of a traditional server infrastructure – or perhaps even using cloud computing. Software defined networking is a technology that performs similar functions to hardware switches and other components, but using computer software. By combining these two technologies, AT&T is building an easily scalable networking system that can relatively quickly and easily be upgraded when necessary. AT&T originally set themselves a target to virtualize 5% of their network in 2015. They reached this target and are now working on controlling some 30% of their network via software rather than hardware technologies.
AT&T's senior vice president of technology planning and engineering, Scott Mair, explained to investors at the Jefferies Communications Conference: "We set a goal last year to have 5 percent of our network virtualized and we hit that. This year we set a goal that 30 percent of our functions are going to be virtualized… the more we get on commodity hardware, the more the cost structure is better for us." In other words, a software-controlled network is cheaper to design, evolve, upgrade and maintain compared with a traditional hardware-controlled network. AT&T, along with other carriers around the world, has seen a massive increase in mobile data traffic – up by 100,000 percent between 2007 and 2014 and set to grow another tenfold by the end of the decade – and sees software controlled networking as the best solution to the need to keep up with demand.
The carrier is on a mission to virtualize 200 network functions, which will allow it to easily roll out new services such as the new Network On Demand Ethernet and NetBond. The Network On Demand Ethernet service was launched early in 2015 as AT&T's first software defined networking service and has been offered to enterprise customers across many of AT&T's markets. One key advantage of the technology is how easily automated it can be: in an AT&T case study, a school is able to control their use of the technology depending on term times. Businesses can enable and disable the connections using their self-service portal. AT&T's NetBond provides customers with a secure, integrated connection via the AT&T network and has appeal to cloud computing operators. NetBond allows businesses to establish a secure connection right to the server(s) required.