For telecommunication service providers, bandwidth demand continues to grow exponentially, while subscribers and revenue grow at a far more modest pace. Investments in new services and additional network capacity are necessary to stay competitive, but the cost per bit has not been falling as quickly as traffic has been growing. Over time, the gap widens. What can be done to reduce costs, both CapEx and OpEx? And how to efficiently create new revenue streams? Virtualization of network functions is a key enabler to reducing costs and new service development.