Sponsored By

Will SD-WANs Buck Past Trends?

Service providers are jumping on the SD-WAN bandwagon but are they ready to put MPLS revenues as risk?

September 30, 2016

7 Min Read
Will SD-WANs Buck Past Trends?

Why are telecom service providers racing to get software-defined WAN offers into the market? Verizon's Victoria Lonker provided the clearest answer in a virtual press conference this week on NFV and SDN: because enterprises want those services now.

"Many customers are moving to production and they are typically starting with SD-WAN solutions," she said in what Verizon Enterprise Solutions had billed as a virtual fireside chat on virtualization and its plans. "That is the low-hanging fruit because it is available now, it is proven to work and an enterprise can really achieve immediate and real business outcomes."

The speed with which SD-WAN services are now hitting the market may be a sign that network operators have learned from the mistakes of the past, and are now willing to cannibalize an existing pool of revenue -- namely their higher-cost MPLS connections -- in order to retain enterprise customers and deliver something else of value. Among the companies announcing SD-WAN services in recent months are Verizon, CenturyLink Inc. (NYSE: CTL), Masergy Communications Inc. , EarthLink Inc. (Nasdaq: ELNK), TelePacific Communications , MetTel , BT and RCN Corp.

SD-WANs separate physical network from the features that are delivered over it. They allow wide-area network connections to be created as virtual overlays, using either public Internet or private dedicated networks, and can be used to deliver connectivity that is tailored to specific applications. Today, the popular deployment -- and what Lonker references -- is use of SD-WANs to connect remote offices, in place of dedicated MPLS connections that are more expensive, much less flexible and more time-consuming to deploy.

Speed and flexibility are increasingly important to businesses as they digitize their operations and find they need much more bandwidth but don't have a bigger budget with which to acquire it, or the time to wait around for traditional service deployment, noted Andrew Dugan, group VP and interim lead for technology and IT at Level 3 Communications Inc. (NYSE: LVLT), at Light Reading's NFV & Carrier SDN Event earlier this month. (See Level 3: Focus SDN/NFV on Enterprise Issues and Level 3 VP: Enterprises Need More for Less.)

That's why SD-WANs are becoming popular as a means of securely connecting remote offices: They ride over Internet connections, don't require the expense or provisioning time of MPLS links, and can be delivered flexibly to account for peaks in traffic usage, such as for monthly accounting or regular software patches.

Next page: Managed services approach

Managed services approach
Initially SD-WANs hit the market via on-premises gear that enterprises could buy and deploy themselves, as over-the-top services on their broadband Internet connections. That kind of deployment posed a major threat to carrier revenues, but also created potential management complexities for enterprises with multiple locations, since it meant managing multiple broadband ISPs and service types, notes Prayson Pate, CTO, Ensemble Division, ADVA Optical Networking .

"With multiple companies and multiple continents involved, who do they call when something goes wrong?" Pate notes in an interview with Light Reading. "That's why we've seen some companies, like Verizon and CenturyLink, come out with managed SD-WAN services, where they do all of that on behalf of their customers."

In the managed services realm, the SD-WAN offer includes handling those access connections, inside and outside the service provider's footprint, as well as remote management of the SD-WAN gear itself, and the opportunity for advanced services such as additional security, hybrid networking across both public and private links and WAN optimization.

Want to know more about carrier SDN strategies? Check out our dedicated SDN content channel here on Light Reading.

Where operators may differentiate is in how they do all that and the control they give to their customers through service portals.

And that looks more like the future of SD-WAN for service providers, comments Kiran Ghodgaonkar, Cisco Systems Inc. (Nasdaq: CSCO)'s senior marketing manager. Otherwise, what they face is the swapping of lower-cost broadband connections for the higher revenue that MPLS links once delivered.

"I think obviously they are going to see a drop in that MPLS revenue," he tells Light Reading. "I think there is an opportunity there as service providers are able to sell more services on top of SD-WAN offering. We are seeing that on our side -- they are able to sell WAN optimization, additional security, plus application visibility and control services."

So the question becomes how aggressively telecom operators are willing to cannibalize an existing MPLS service base in order to retain customers, with the hopes of selling them something more down the line?

Speaking at the recent NFV & Carrier SDN event, CenturyLink's Eric Nowak, group manager of Internet, MPLS and SD-WAN, said he sees customers wanting to get more for what they are paying, rather than pushing to pay less. They need more bandwidth, which they can get in an SD-WAN solution, but they also like the improved performance that comes from accessing content locally -- something that can happen on an Internet-based connection.

"It's not just about cost-savings, it's a better experience all the way through," he tells Light Reading in this video: CenturyLink: SD-WAN Customers Looking for Value Not Cost Savings.

What's next?
As ADVA's Pate notes, however, the first round of SD-WAN services are based largely on packaged solutions, not virtualized components that the service providers are assembling themselves. Vendors such as Viptela and Versa Networks , among others, are reaping the rewards of being ready to capitalize on the SD-WAN trend at the right time. (See Versa Details New SD-WAN Ecosystem and Verizon's Next With VNFs.)

At least one vendor, 128 Technology , is trying to buck that trend. (See 128T Aims to Displace SD-WANs.)

So where do SD-WANs evolve from here? Pate suggests they become part of the composable telco trend and a microservices model that would enable end-users to pick and choose the components they want at any given location from among the common functions such as different types of security, WAN optimization, virtual CPE types, etc.

Cisco's Ghodgaonkar says the tools exist today for service providers to give their enterprise customers the ability, through a portal, to choose the range of services they want, on a per-location basis, and to turn services up and down as needed. That includes letting customers mix and match their connections, since some companies will want to retain MPLS-based connectivity for some mission-critical or highly sensitive applications.

"This isn't a one-size-fits-all thing from the enterprise perspective, from what we are seeing," he comments. Enterprises are creating "tiers" of remote sites based on priorities, and that means different requirements at different locations.

That gives service providers, who insist they are now talking to customers and focusing on their needs, a lot of options for how all this happens going forward and the chance to differentiate themselves as well in what is clearly a hot space.

Related posts:

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

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like