As a major provider of MPLS, AT&T would seem to have more to lose in the shift to less expensive SD-WAN services. But as this week's announcement shows, the carrier is betting enterprises will want a combination of MPLS and SD-WANs, and will like the idea of letting applications determine which network they use. (See AT&T Launches SD-WAN With VeloCloud and AT&T Joins SD-WAN Fray.)

AT&T Inc. (NYSE: T)'s software-defined WAN strategy builds on a partnership with VeloCloud Networks Inc. , and it tightly integrates the ability to do SD-WANs into its MPLS network, its AT&T Integrated Cloud and its Flexware network functions virtualization platform. The goal is to give enterprise customers a range of options that lets them take advantage of broadband access economics but keep their traffic on AT&T's MPLS core network.

And AT&T is offering to deliver services over any kind of broadband network, including a wireless network, and will set up and manage connectivity delivered over other companies' broadband, so enterprises in essence have a single provider.

"Our belief is that there is an ecosystem surrounding the MPLS network, and our customers are deciding where they are on that journey and how they want to migrate from it," says Rick Hubbard, senior vice president of networking product management for AT&T Business Solutions. "We wanted to differentiate by recognizing MPLS is at the core with everything tied to it, but if you want to go completely over the top we can do that as well. We believe many customers will want a migration that will be easier for them."

What AT&T has done is integrate VeloCloud's SD-WAN software as a VNF on AT&T Flexware devices that sit on the customer premises, and also integrate VeloCloud's cloud control of dynamic policy routing into the AT&T Integrated Cloud. SD-WAN traffic can run completely over-the-top via the Internet, or, when the broadband link hits the AIC gateway, it can be routed through the MPLS network to its destination. That gives enterprises options, Hubbard says.

"If you want to drain the Internet locally, you can do that, if you want Internet access for access economics but you want to drive traffic over your MPLS network to your data center, you can do that as well," he comments.

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AT&T is seeing "a major migration for speed" that is driving enterprise off T-1 networks and onto Ethernet, Hubbard says. But that doesn't mean businesses are abandoning MPLS. Moving to SD-WANs can help enterprises get more bang for their buck in terms of bandwidth by using broadband Internet access, but most still have corporate offices or data centers or regional hubs that aren't moving off MPLS anytime soon, he says. AT&T is trying to give them a range of options for connections to whatever sites they need to connect.

VeloCloud has worked with a number of service providers including NTT, DT and EarthLink, and finds there is a range of approaches, says Mike Wood, vice president of marketing. AT&T is at the far end of that range where integration is concerned, he adds. (See Cisco Joins $27M Round for SD-WAN Startup VeloCloud.)

"AT&T is taking a pretty deep integration approach," Wood comments to Light Reading. "A number of other carriers are doing something similar but they are definitely going the farthest in terms of integrating our software into their MPLS network."

VeloCloud is the first SD-WAN vendor with which AT&T will work, but there will be others, also deployed as VNFs on Flexware, Hubbard notes. One reason for selecting VeloCloud, based on evaluations done several months back, was its dynamic policy routing, he says. "They were also way ahead of the others on multi-tenancy, which is very important to service providers."

Hubbard notes SD-WAN solutions are generally proprietary and says that poses problems for deployment. AT&T will be adding other vendors as they step up with VNF-based solutions that allow for the integration in the MPLS network that AT&T is seeking.

The CPE-based option, using broadband all the way, will be available this year and the more integrated range of options becomes available in 2017, AT&T said.

There is a growing use of fixed LTE broadband links for backup services, particularly in areas of the country where multiple wireline broadband providers aren't easily found, to deliver redundancy, Hubbard says. One advantage to the shift to SD-WAN is allowing businesses to use available broadband as it's needed and not just reserve that bandwidth for backup purposes, knowing that dynamic policy controls will prioritize their applications in the event of outages or congestion, he adds.

— Carol Wilson, Editor-at-Large, Light Reading