As enterprises require high network transmission quality and security, they have to use leased lines even though leased lines are more expensive than home broadband. Enterprise leased lines generally cost 8 to 10 times that of home broadband at the same bandwidth. In today's world where new services are emerging every day, time to market is more crucial. Traditional leased line service provisioning requires collaboration between multi-layer network resources, and therefore it takes one or more months from service application to service provisioning. High costs and long service provisioning have now become the biggest obstacles on the road to digital transformation of modern enterprises. As cloud-based enterprise services are increasingly in need, enterprises are looking for leased line solutions that are more easy to use and cost-effective.

To meet this demand, a variety of Internet companies have introduced on-demand software-defined wide area network (SD-WAN) over Internet connections, which are well-received among SMEs. SD-WAN allows traffic to be encrypted during data transmission and network slicing to be leveraged to enhance security, protecting enterprise data from being embezzled or tampered with on the Internet. As an SD-WAN is built over the Internet, it costs less than 50% of common leased lines at most. In addition to low costs, SD-WAN features flexible service scheduling and on-demand bandwidth allocation, which are absent on traditional leased lines. Owing to these advantages, an increasing number of large multinational corporations are using SD-WAN for data transmission between the HQ and branches. SD-WAN is even expected to account for 30% of global leased line market by 2022.

As the entire society is undergoing digital transformation and enterprise services are going to cloud, bandwidth demands explode for enterprise data exchanges. Due to high costs and long provisioning time of traditional leased lines, a large amount of data is still carried over common Internet connections or SD-WAN provided by Internet companies. As such, carriers' revenue on traditional leased line services is not increasing, even slightly decreasing. This renders carriers to gradually realize that bundled leased line services with SD-WAN and traditional leased lines able to suit enterprises' demands are the best means to retain traditional leased line users and attract enterprises that are now using common Internet connections or SD-WAN provided by Internet companies. This helps carriers increase their market size and total revenue, preventing SD-WAN from being a threat like social media applications (such as WeChat), which affect traditional voice and SMS services.

Competition in SD-WAN is almost inevitable. Then what are the strengths for carriers to develop SD-WAN?

Leveraging existing network resources to build differentiated SD-WAN
Carriers have ubiquitous network resources, making them advantageous in integrating and scheduling leased line network resources. When SD-WAN is employed on a single carrier's network, SD-WAN can be used together with IP network slices or DC optical networks to provide high-quality, differentiated services, making full use of redundant network resources while guaranteeing high bandwidth and low delay. When long-distance SD-WAN is employed spanning multiple carriers' networks, carriers can quickly integrate cost-effective network resources that Internet companies are unable to provide, allowing quick provisioning of multinational and intercontinental SD-WAN services for enterprises.

Exploring valued leased line customers and building a new business model with SD-WAN and MPLS complementary to each other
Traditional leased lines services, such as MPLS, still dominate the leased line market, and carriers still hold the most market share. To retain existing leased line customers, it is crucial to explore their demands and offer customized hybrid leased line services based on path selection.

Building networks to drive cloudification and sharing digital dividend brought by enterprise service cloudification
The cloud platform is one of the most important growth poles for enterprise services of IoT companies. Carriers can leverage SD-WAN to drive enterprise service cloudification, which in turn inspires more demands on leased lines and cloud platforms. Apart from providing cost-effective leased line services for enterprises, carriers can also strengthen their public and private clouds, maximizing enterprise customer values through cloud-and-network synergy.

SD-WAN features on-demand bandwidth allocation, service-specific path selection, and network resource collaboration for fast leased line provisioning, allowing leased lines to be deployed anywhere needed. As such, SD-WAN is gaining more attention from carriers and enterprises around the globe. Currently, over 20 carriers, including SoftBank in Japan, have proposed or are about to propose enterprise-oriented leased line services; thousands of enterprises are using or about to use SD-WAN.

Although it seems that carriers are developing SD-WAN at the cost of their traditional leased line market, they are actually protecting the leased line market against threat from SD-WAN provided by Internet companies. Carriers can use SD-WAN to fully cloudify enterprise services to make a new leased line market, helping boost carriers' leased line and cloud services.

SD-WAN: short for software-defined wide area network, uses software that provides intelligent routing, data optimization, and TCP/IP optimization to improve network performance and lower costs, while ensuring security and stability. It is easy to deploy. SD-WAN provides WAN services to enterprises, transmitting key service data. From the usage perspective, an SD-WAN is actually a high-performance VPN that is originally used for enterprises.

Huawei SD-WAN solution is a sub-solution of Huawei Cloud Enterprise Private Network (CloudEPN) solution. The SD-WAN solution is intended to solve the issues of high costs, slow response, and difficult O&M of traditional enterprise leased lines. The solution helps carriers provide on-demand and cost-effective enterprise leased line services with cloud-based visualized O&M, achieving service experiences of entire processes.

Huawei Technologies Co. Ltd.