Report: EPC is pushing network functions virtualization to new heights

Based on first-quarter results, cloud-native NFV for evolved packet core accounts for 19% of the revenue in this sector, according to a report by Dell'Oro Group. (Monica Alleven / Fierce Wireless)

The drive to 5G is fueling the growth of the evolved packet core (EPC) market, which in turn is increasing the adoption of NFV, according to a report.

Based on this year's first-quarter results, the evolved packet core market is poised for a year-to-year growth rate of 142%, according to a report by Dell'Oro Group.

While most of the telecom industry has long believed in the virtues of implementing NFV, it has proven to be a difficult road to deployments. With EPC, NFV has both short-term and long-term benefits for wireless carriers.  Wireless service providers are currently prepping their EPCs to carry 5G traffic over their 4G infrastructures. 

"NFV has been promoted for many years now and it appears 5G is the impetus to get the market moving for wireless service providers," according to David Bolan, senior analyst at Dell'Oro Group, in a prepared statement. "NFV cloud-native architecture is required by 5G for the core to deliver microservices and mobile edge computing for low-latency services. Leading edge service providers are preparing their EPCs for 5G, especially since the 5G non-standalone networks will rely on them."

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Cloud-native NFV for EPC accounted for 19% of the first-quarter revenues. It's projected to grow to 37% in the first quarter of 2019, which would represent a growth rate of 150%, according to the report.

Service providers based in the United States are currently driving the initial EPC growth while carriers in China, South Korea, Japan, Scandinavia and the Middle East will start to ramp up their deployments in the near-term.

The top five EPC vendors in the first quarter were, in order, Ericsson, Huawei, Nokia, Cisco and ZTE, although Huawei and ZTE are shut out from the U.S. marketplace due to security concerns.  The top five EPC vendors accounted for 93% of the market in the most recent first quarter, according to the report.

EPC revenues hit record levels in 2017, according to a fourth-quarter report by Dell'Oro Group. Driven by 5G non-standalone deployments in 2019, among other factors, Bolan predicted EPC would hit another all-time high this year.