Software Defined Networks – an emerging trend in broadband and telecommunications network technology – is getting a big boost from a major player. 

AT&T (NYSE: T), the largest U.S. phone company, plans to shift its spending away from equipment purchases and toward software, aiming to improve network performance and handle more traffic while keeping costs down.

AT&T introduced a supplier overhaul this week called Domain 2.0, a long-term plan designed to trim hardware costs over the next five years and coax vendors into developing broader software capabilities. The shift will create a “downward bias” to capital spending, according to a statement.

In the announcement, AT&T noted: “Domain 2.0 is a transformative initiative. Integrated through AT&T’s Wide Area Network (WAN) and utilizing Network Function Virtualization (NFV) and Software Defined Networks (SDN), as well as modern architectural and operational approaches, AT&T plans to simplify and scale its network by:

  • Separating hardware and software functionality;
  • Separating network control plane and forwarding planes; and
  • Improving management of functionality in the software layer.”

[WRALTechWire explores shift to Software Defind Networking in analysis from an MCNC executive.]

The effort relies on so-called virtualization, which uses software to allow hardware to handle more tasks at once. By extending to AT&T’s entire network, the move represents the most ambitious effort of its kind, said Iain Gillott, an analyst at IGR Inc. in Austin, Texas. Until now, carriers have only dabbled in virtualization, he said.

“The difference is like if Mercedes said they were building a hybrid car versus Mercedes saying all their cars will be hybrids in five years,” Gillott said.

AT&T forewarned suppliers: “Delivering this will require some of AT&T’s current providers, but also will require some new providers with different skills and capabilities.”

“Our goal is to ensure that each investment accelerates our move towards an advanced all-IP broadband, all-wireless, and all-cloud infrastructure, delivers on the full promise of game-changing technologies, provides an industry leading customer experience, and maintains focus on a capital-efficient network,” said Tim Harden, president of AT&T Supply Chain.

“The Supplier Domain program has a proven track record of delivering cost performance and modern technologies, while dramatically reducing the time to market with our products and services. We fully expect Domain 2.0 to hasten our pivot.”

AT&T, one of the biggest U.S. companies in terms of equipment expenditures, is on track to spend $21 billion on capital improvements this year. The carrier has been reassessing its spending in an effort to better manage burgeoning traffic, said AT&T Senior Executive Vice President John Donovan. Sales of smartphones and tablets have led to a flood of data and video over AT&T’s pipes.

In streamlining its purchasing, AT&T also has pared down its list of suppliers, which include Alcatel-Lucent and Cisco Systems Inc. The first phase of supplier restructuring, Domain 1.0, reduced the field of suppliers from more than 100 to about 20, Gillott said.

While no vendors will be excluded from this next stage of purchasing, some will fare better than others, Donavan said.

“Readiness varies across our suppliers, and there will be awards for those that are further ahead,” he said.