3.5.2 SOFTWARE COSTS The costs for software needs to include the cost of the actual VNF software plus the recurring licens- ing fees for each function. Most VNF vendors will look to recoup their revenue loses (attributed to commodity hardware replacing custom hardware) with higher costs for software and licenses. The move to software also drives more competition among vendors and allows new entrants to emerge. This competition will drive down software costs. Lastly, this paradigm shift to software has caused the creation of new open-source communities focused on different functional areas (covered in more detail in Chapter 17). 3.5.3 OPERATIONAL COSTS The transition to a cloud architecture probably has the highest cost benefit when it comes to network operations. Service delivery and assurance can now be done through centralized software. This creates more agility in managing operations procedures, and also reduces the time to market for Building the Network of the Future Services Appliances IMS, SDM, Hosted Mgd Gateways Services Wireless Access Control Plane C-RAN Elements CPE Home & Control Forwarding EMS, NMS Edge Rtr Core Rtr Media Wireline Access Processing DSLAM Effort FIGURE 3.14 VNF zones of advantage. introduction of new services. It also enables services to be delivered globally or targeted at specific locations, without the need to ship and deploy new hardware. This lowers the risk for deploying new services at scale, because the cost to shut down service, once it is deployed, is de minimis since the deployed hardware can be repurposed for other services. Figure 3.14 answers the question as to which VNFs to deploy on the cloud. At a high level, core network elements that require very high data plane support and see low churn in the network, are likely to initially remain on dedicated hardware platforms. There is little value in virtualizing these elements and meeting the high data plane requirements is difficult on an x86 server platform. There is great value in virtualizing elements that are closer to