Light Reading
Challenges include adapting to pay-as-you-go pricing, educating customers, and loss of control of the network, according to an Interxion executive.

SDN Raises Business Challenges

Mitch Wagner
7/8/2014
50%
50%

SDN demands carriers change their business models, creating challenges that go beyond the technical, says Jeff Smith, strategy and marketing director for the connectivity segment at Interxion.

Challenges include adapting to customers on a pay-as-you-go plan, educating customers about changing networking model, and loss of control of the network, Smith says.

Interxion is a carrier-neutral datacenter operator with €307 million revenue last year, operating 37 data centers in 11 countries across Europe. Smith's connectivity business unit connects 500 carriers, 20 peering points across Europe, as well as CDN operators and mobile backbones. The connectivity segment is one of five main business units for Interxion; the other four are finance; digital media, which includes gaming and advertising; systems integrators and enterprise; and cloud providers.

Interxion doesn't provide SDN services and operations itself -- its business ends at the rack. But Interxion's role as an infrastructure provider allows it to see how SDN plays out in each of those segments, including the carriers who serve all the segments, Smith says. Interxion sees the challenges in multiple market segments.

Pay-as-you-go
The pay-as-you go model is a chief challenge. Cloud providers have introduced enterprises to a new payment model for services and enterprises now demand that kind of payment model from carriers, Smith says. Instead of enterprises making a large, upfront payment to carriers for fixed services, enterprises now want to subscribe to services only when they need them. Carriers saw a similar transition with unified communications, and cloud is accelerating that trend.

That kind of change to the revenue stream presents steep challenges to carriers' existing business model, Smith says. Some carriers are succeeding with the transition by offering service bundles.

Lost control
In the pre-SDN networking model, carriers controlled the end-to-end experience for the customer. Customers and carriers agreed in advance on how the network would be used, bandwidth requirements, SLAs, and other parameters. "You'd know what the network looks like now, and you know what it will look like in six months, based on demand," Smith says.

"As soon as you turn that on its head and give the customer control -- which is what SDN promises because of APIs and portals -- it throws a big curve ball into capacity management," Smith says. SDN allows customers to configure their own virtual networks using self-service portals. "Infrastructure teams have to be sure that capacity is in place," Smith says.

Connecting to other companies' networks is another avenue to lost control. SDN is relatively straightforward to implement inside a single company's data center, more difficult on a metro and regional level, and more difficult still on a national and international level. "The bigger you get, the less control you have over what partners and their equipment are doing," Smith says. SDN and NFV offer centralized control as a benefit. "That's great when you control the environment," but problematic when you don't.

Education
Carriers need to educate enterprise customers on the new world of virtualized networks. Change often worries businesses, who are used to the current way of doing things. "Not all customers have the scale and tech-savvy departments that know how to use this to their advantage," Smith says. "There's education to be done, and that's where telcos can gain an advantage." Carriers can gain particular advantage in the small and medium enterprise market through education.

— Mitch Wagner, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profileFollow me on Facebook, West Coast Bureau Chief, Light Reading. Got a tip about SDN or NFV? Send it to wagner@lightreading.com.

(3)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
DHagar
50%
50%
DHagar,
User Rank: Light Sabre
7/8/2014 | 8:03:44 PM
SDN Raises Business Challenges
@mbushong, I like your point about the moving up the supply chain with the next wave being analytics.  The changing models drive the focus to where you can add the most value (new controls).

It also seems that the ecosystem you refer to will be the result of what you need to survive these challenges, size and unique adaptability.
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
7/8/2014 | 7:46:55 PM
Re: Control is interesting
@mbushong - Indeed, as we've seen on Wall Street, when you control networks programmatically the results can be unfortunate. 
@mbushong
50%
50%
@mbushong,
User Rank: Moderator
7/8/2014 | 10:04:34 AM
Control is interesting
The point on control is an interesting one. It is likely made worse because not only are we sharing control, but we are moving from a model where control is complete and absolute. When you rely on explicit configuration to make things work, it is a big leap to move to anything that is state driven, using APIs as the intermediary. It changes the entire provisioning model in profound ways, and it will absolutely disrupt troubleshooting processes in a lot of cases. 

You would think that this will open the door to broader integration. Analytics should be the next wave of things we talk about. And integration with things like capacity planning systems will be critical. The ecosystem of infrastructure starts to mean more, which should make the competitive landscape a whole lot more exciting in years to come.

Mike Bushong (@mbushong)

Plexxi
Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Huawei Video Resource Center
Dr. Dong Sun Talks About Carriers' Digital Transformation & Huawei’s Telco OS

1|29|15   |   6:28   |   (0) comments


Dr. Dong Sun, Chief Architect of Digital Transformation Solutions at Huawei, discusses how telecom operators can become digital ecosystem enablers and deliver optimal user experiences that are in real-time, on-demand, all-online, DIY and social (ROADS).
LRTV Huawei Video Resource Center
Huawei's Chief Network Architect Talks about Network Experience & Operators’ Strategies

1|29|15   |   3:39   |   (0) comments


In the digital age, network experience has become the primary productivity especially for telecom operators. In this video, Wenshuan Dang, Huawei’s Chief Network Architect, discusses how carriers can tackle the challenge of infrastructure complexity in order to enhance business agility and improve user experience.
LRTV Documentaries
The Rise of Virtual CPE

1|27|15   |   01:38   |   (4) comments


As NFV strategies evolve from tests and trials to production telco networks, expect to hear a lot about virtual CPE (customer premises equipment) rollouts during 2015.
LRTV Documentaries
Optical Is Hot in 2015

1|23|15   |   01:56   |   (2) comments


Optical comms technology underpins the whole communications sector and there are some really hot trends set for 2015.
LRTV Custom TV
Policy Control in the Fast Lane

1|22|15   |   2:57   |   (0) comments


What's making policy control strategic in 2015 and beyond? Amdocs talks with Heavy Reading's Graham Finnie about the key factors driving change in the data services landscape. Find out what his policy management research reveals about the road ahead for policy control – and sign up for
LRTV Documentaries
Highlights From the 2020 Vision Executive Summit

1|21|15   |   4:33   |   (2) comments


In December 2014, Light Reading brought together telecom executives in Reykjavik, Iceland to discuss their vision for high-capacity networks through the end of the decade. The intimate, interactive meeting was set against the backdrop of Iceland's spectacular natural beauty. As one of the event's founding sponsors, Cisco's Doug Webster shared his company's ...
LRTV Huawei Video Resource Center
Huawei Pay-TV Partner Harmonic, Helping Carriers Accelerate 4K Video Deployment with Huawei

1|20|15   |   5:42   |   (1) comment


At IBC, Peter Alexander, Senior Vice President & CMO at Harmonic, speaks about the growing interest in pay-TV service and its branching into multiple devices.
LRTV Huawei Video Resource Center
Sony Marketing Director Olivier Bovis Discusses the Outlook for 4K and Cooperation With Huawei at IBC 2014

1|20|15   |   6:50   |   (0) comments


At IBC, Olivier Bovis, Marketing Director of Sony, speaks about the coming of the 4K era.
LRTV Huawei Video Resource Center
Huawei Pay-TV Partner Envivio, Helping Carriers Accelerate 4K Video Deployment

1|20|15   |   2:57   |   (0) comments


At IBC, Olivier Bovis, Marketing Director of Sony, speaks about the coming of the 4K era.
LRTV Huawei Video Resource Center
Pay-TV's Networked Future

1|20|15   |   6:29   |   (0) comments


At IBC, Jeff Heynen, Principal Analyst at Infonetics, speaks about the future of the pay-TV industry and its transition.
LRTV Huawei Video Resource Center
Jeff Heynen: Distributed Access Will Help MSOs Compete in the Future

1|20|15   |   2:26   |   (0) comments


At IBC, Jeff Heynen, Principal Analyst at Infonetics, speaks about moving to distributed access and the future trend of cable business.
LRTV Interviews
Cisco Talks Transformation

1|20|15   |   13:02   |   (0) comments


In December 2014, Steve Saunders sat down with Cisco VP of Products & Solutions Marketing Doug Webster at Light Reading's 2020 Vision executive summit in Reykjavik, Iceland. They spoke about Cisco's approach to network virtualization as well as how service providers can begin to monetize high-capacity networks through the end of the decade.
Upcoming Live Events
February 5, 2015, Washington, DC
February 19, 2015, The Fairmont San Jose, San Jose, CA
March 17, 2015, The Cable Center, Denver, CO
April 14, 2015, The Westin Times Square, New York City, NY
May 12, 2015, Grand Hyatt, Denver, CO
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 8, 2015, Chicago, IL
June 9-10, 2015, Chicago, IL
June 9, 2015, Chicago, IL
September 9-10, 2015, The Westin Galleria Dallas, Dallas, TX
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
November 11-12, 2015, The Westin Peachtree Plaza, Atlanta, GA
December 1, 2015, The Westin Times Square, New York City
December 2-3, 2015, The Westin Times Square, New York City
Infographics
Hot Topics
Google Continues Gigabit Expansion
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 1/27/2015
Cablevision's New WiFi Try – Freewheeling Enough?
Mari Silbey, Independent Technology Editor, 1/26/2015
Overture Builds on NFV Foundation
Mitch Wagner, West Coast Bureau Chief, Light Reading, 1/27/2015
LightSpeed Looks to Plug the Gigabit Gap
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 1/23/2015
Parks Predicts HBO OTT Success
Mari Silbey, Independent Technology Editor, 1/23/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Weekly Executive Interview
Join us live for Light Reading's interview with Jay Samit, the newly appointed CEO of publicly traded SeaChange International Inc. With a resume that includes Sony, EMI, Universal, Intel and Microsoft, Samit brings a reputation as an entrepreneur and a disruptor to his new role at the video solutions company. Hear what he has to say about the opportunities in video, as well as the outlook for cable, telco, OTT and mobile service providers.