In the past, wireless carriers built and operated their own networks. Now, vital components of those networks are being virtualized--their functions are being provided as services over the Internet. Wireless network virtualization isn't just a more cost-effective way of doing things, however. Virtualization creates exciting new business opportunities for operators, resellers, and users.

Introducing new features and services on traditional mobile networks is time consuming and expensive because traditional mobile networks consist largely of proprietary hardware and software. Virtualizing the mobile network dramatically reduces the time required to develop and deliver new services. Services that catch on with consumers can be quickly scaled to meet demand. And virtualization makes it easier for third parties to create and sell packaged solutions for markets such as health care.

The wireless industry is not a complete stranger to virtualization. Today's mobile phones are also personal organizers, digital cameras, portable music players, wristwatches, and GPS receivers. While some additional hardware is involved (such as camera lenses), most of the functions are provided as software or network services. You never have to adjust the time displayed on your mobile phone because your phone gets the exact time for your current location over the network. And that GPS receiver in your phone uses a technology called assisted GPS for faster, more accurate locating. Soon, NFC-equipped phones will serve as virtual credit cards.

Catch The Wave

The wave of wireless network virtualization comes at a propitious time. In the current economic environment, businesses must focus on reducing costs and boosting productivity. Network virtualization will allow mobile operators to limit capital investment and keep monthly expenses in line with current business activity. The virtualization of credit cards (using NFC) will enable retail merchants to offer customers faster service and greater convenience. Cutting costs while delivering a better customer experience is exactly what's needed during tough times.

It would be hard to exaggerate the importance of wireless network virtualization. A mobile phone network is similar to an electric power plant in at least two key respects. Both must be designed to ensure that demand never exceeds capacity. Yet both operate most efficiently when consumption is steady and just shy of capacity. Unfortunately, real-world demand fluctuates greatly and is hard to control. Not many people are willing to make phone calls or download songs at 3:00 AM just because rates are lower.

If operators can't control demand, then maybe it's time to look at controlling supply. With network virtualization supply is much more elastic. Mobile operators can purchase network resources as they need them. There are cloud-based solutions available or on the way for the radio network (example: Devicescape Software, Inc.), the core network (Connectem Inc.), and the provisioning and billing functions (Itson, Inc.).

After all, no one got into the mobile phone business for the purpose of limiting demand. It should be good news that booming smartphone, tablet, and e-reader sales are causing data traffic to skyrocket. But many operators are nervous. While 4G wireless offers higher speeds, it is expensive to build and operate (requiring backhaul and core network upgrades), and operators worry that they will run out of capacity. The biggest mobile operators are imposing usage caps on their basic data plans.

Flexibility and New Uses

As subscribers continue to snap up multimedia gadgets, mobile operators are expected to offload their heaviest traffic to Wi-Fi networks. Standards (known variously as Hotspot 2.0, 802.11u, and Passpoint) have been developed to enable seamless roaming between cellular and Wi-Fi. Once the standards are widely implemented local hotspot owners will be able to serve mobile operators' subscribers, and mobile operators will be able to purchase Wi-Fi capacity as needed from hotspot owners. Adding thousands or even millions of Wi-Fi hotspots to mobile operators' networks is just one example of radio network virtualization.

Mobile phone operators also need new and more flexible ways of packaging and selling their services. The traditional one-phone-per-subscriber model will be replaced by a multiple-devices-per-subscriber model. However, subscribers with multiple devices will want more control over their spending. Virtualizing the provisioning and billing systems will lead to more choices and greater flexibility. It will also create new business opportunities. Today, you can buy a health app for your smartphone. Tomorrow, your doctor will sell you a package consisting of wearable sensors, a smartphone pre-loaded with specific mobile health apps, and services such as 24-hour per day monitoring.

Another form of virtualization is occurring with the help of wireless in the home. Believing that home entertainment systems would inevitably be connected to the Internet, entrepreneurs searched for an application that would get things moving. Now, a compelling application has presented itself. Customers have discovered that they can reduce or eliminate their monthly cable TV bills by connecting their televisions to the Internet. Devices such as the (wireless) Roku streaming player let users access the vast free, pay-per-view, and subscription-based content available on the Web.

Wired networks have benefited from virtualization for years. The opportunities for wireless network virtualization are even bigger because wireless extends the Internet directly to people and things. Features and services will be applied where they are likely to have the greatest impact. Don't be surprised if virtual solutions prove to be better than the solutions that they replace.

Ira Brodsky is a St. Louis, Missouri-based consultant and the author of The History of Wireless: How Creative Minds Produced Technology for the Masses.