Cost efficiency of SDN-enabled service function chaining

Purpose This paper models the cost efficiency of service function chaining (SFC) in software-defined LTE networks and compares it with traditional LTE networks. Design/methodology/approach Both the capital expenditure (CAPEX) and operational expenditure (OPEX) of the SFC are quantified using an average Finnish mobile network in 2015 as a reference. The modeling inputs are gathered through semi-structured interviews with Finnish mobile network operators (MNO) and network infrastructure vendors operating in the Finnish market. Findings The modeling shows that software-defined networking (SDN) can reduce SFC-related CAPEX and OPEX significantly for an average Finnish MNO in 2015. The analysis on different types of MNOs implies that a MNO without deep packet inspection sees the biggest cost savings compared to other MNO types. Practical implications Service function investments typically amount to 5-20 per cent of the overall MNO network investments, and savings in SFC may impact highly on the cost structure of a MNO. In addition, SFC acts as both a business interface, which connects the local MNOs with global internet service providers, and as a technical interface, where the 3GPP and IETF standards meet. Thus, the cost efficient operation of SFC may bring competitive advantages to the MNO. Originality/value The results show solid basis of network-related cost savings in SFC and contributes to MNOs making cost conscious investment decisions. In addition, the results act as a baseline scenario for further studies that combine SDN with virtualization to re-optimize network service functions.