Opex savings from SDN and NFV will occur when network functions are controlled through software, replacing today’s approach that relies more heavily on manual operations, Prabhu said.

“Opex savings will materialize when [functions] are fully automated,” said Prabhu.

AT&T has established a goal of virtualizing 75% of its network by 2020 and by that point, the company expects to see margins increase – apparently because of opex savings – Prabhu noted.

Opex Savings from SDN and NFV Will Exceed Capex Savings
The results that AT&T expects from SDN and NFV on the capex side are not as ambitious as what the company forecasts for opex.

Krish Prabhu President and CEO, AT&T Labs, Inc.

Krish Prabhu

Prabhu doesn’t expect to see any capex savings from SDN and NFV, but that statement only tells part of the story. AT&T is expecting to handle four to eight times more traffic on its network within a few years than it handles today – and the company expects to accommodate that growth without increasing capex as a result of implementing SDN and NFV, Prabhu said.

Prabhu’s comments are quite similar to those made by Verizon CFO Fran Shammo recently. Shammo told investors that Verizon’s  capex also would remain flat despite the implementation of SDN because of additional investment required to add small cells to the company’s wireless network.

AT&T also expects to invest substantially in small cells moving forward. Prabhu noted, for example, that while the company has built 90% of the macrocells it expects to need, it has only built 5% to 10% of the small cells it anticipates deploying.

A key contributor to AT&T’s increasing bandwidth needs could be the company’s planned linear OTT video offering dubbed DIRECTV Now, which customers will be able to stream to a variety of wired and wireless devices.

According to Prabhu the company will be ready to meet bandwidth demand when the service launches later this year. On the wireless side, he noted that the company has 40 MHz of spectrum in the AWS-3 and WCS bands that will be available to support the new service.