Broadband Communities

NOV-DEC 2018

BROADBAND COMMUNITIES is the leading source of information on digital and broadband technologies for buildings and communities. Our editorial aims to accelerate the deployment of Fiber-To-The-Home and Fiber-To-The-Premises.

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N O V E M B E R / D E C E M B E R 2 0 1 8 | w w w. b r o a d b a n d c o m m u n i t i e s . c o m | B R O A D B A N D C O M M U N I T I E S | 6 3 United Kingdom span three camps: 38 percent of respondents wanted MPLS, 22 percent required public internet and another 20 percent desired a hybrid internet and MPLS solution. Additionally, business customers have different preferences for suppliers of SD-WAN services. Sapio said 39 percent were considering SD-WAN vendors such as Cisco or Nuage Networks, 24 percent preferred telecom providers and another 24 percent preferred to buy services from management consultants. Only 8 percent expressed interest in using a specialized SD-WAN vendor. Charlie Reed, a partner with Atlantic-ACM, a strategic consulting firm, says service providers are taking flexible approaches to connectivity. "Service providers are happy to use their SD-WAN offerings and help connect businesses with broadband or dedicated internet access," Reed says. "I think most service providers with large MPLS bases will talk about the benefits of keeping some MPLS in place." Regardless of the circuit deployment strategy, SD-WAN is an opportunity too big to pass up. By 2021, research firm IDC estimates, worldwide SD- WAN infrastructure and services revenues will experience a compound annual growth rate (CAGR) of 69.6 percent and reach $8.05 billion. MPLS CANNIBALIZATION: FACT OR MYTH? As businesses turn to broadband or wireless connectivity for SD-WAN, will this trend cannibalize the incumbents' MPLS revenue base? Competitive providers and cable operators that lack large-scale legacy bases can either replace or complement MPLS with broadband-based SD-WAN, but traditional telcos risk taking a hit to a major revenue stream. MPLS accelerates and shapes traffic flows across enterprise WANs and service provider networks. What makes MPLS attractive to businesses is that it guarantees real-time traffic performance. As a virtual private network (VPN), MPLS can separate traffic from the public internet. However, the drawback is that it is expensive. Alternatively, SD-WAN can route traffic along the most efficient path over low-cost internet links, but it can't offer performance guarantees once the IP packets reach the public internet. Industry forecasts make clear that MPLS has plenty of teeth. A Research and Markets forecast estimated that global MPLS revenues will reach a CAGR of 4.1 percent between 2016 to 2021. As in the migration from ATM to Ethernet, Reed says, MPLS will fade slowly, declining slightly this year. "Everyone pendulums back and forth, [saying] 'SD-WAN is replacing MPLS' or 'No it's not,' and I think the answer is both," Reed says. "We think that 1 to 4 percentage points a year will be pulled out of MPLS." CenturyLink continues to win large-scale customers that request a mix of MPLS and broadband. In the third quarter of 2018, CenturyLink secured the primary provider hybrid SD- WAN network status for an unnamed customer. is customer will use CenturyLink's MPLS, broadband, SD- WAN and managed enterprise services at several hundred locations. Jeff Storey, CEO of CenturyLink, told investors during its third quarter earnings call that MPLS is still growing. "I don't know the exact rate, but it's low single digits," Storey said, according to a Seeking Alpha transcript. "And yes, it is still growing." AT&T sees a similar scenario and is accommodating customers in two ways. For customers setting up a new SD- WAN configuration, AT&T deploys one MPLS link, DIA and broadband. Additionally, AT&T equips existing MPLS customers with its network-based SD-WAN solution, which provides a phased path while maintaining the existing VPN connections. Rupesh Chokshi, associate vice president of product marketing management for AT&T Business, says customers are using both methods. "We don't see SD-WAN as a killer of MPLS," Chokshi says. "If you think about what's happened – and that's why hybrid networks for SD-WAN are important – MPLS provided the reach, predictability, performance and the experience in what is a highly secure network." However, Cogent, which is just starting to offer SD-WAN, believes customers will eventually ditch MPLS. "Ultimately, some customers will move directly to an SD-WAN solution, while others will do it in a stepped approach," says Dave Schaeffer, CEO of Cogent. "In the stepped approach, I think SD-WAN will be deployed at some of the more difficult-to-serve sites or those sites that have lower bandwidth requirements. As customers get comfortable with the stability and cost advantages of SD-WAN, the hybrid approach is a temporary approach." GOING ALL BROADBAND MPLS may be a dominant connection method, but interest in broadband-based SD-WAN is rising. With a broadband- only approach, service providers procure broadband circuits and install SD-WAN devices or software at each site. Using only broadband for SD-WAN is hardly a slam dunk because these circuits are best effort. Although managed services provider TPx continues to sell MPLS, one of its retail customers recently adopted an all-broadband solution. "We had one 300-site customer, which had an extensive MPLS network, complete [its] migration to broadband earlier this year," says Jared Martin, VP of MSx managed services for TPx Communications. "ey replaced all the MPLS circuits with internet and got more bandwidth for less money, and we put SD-WAN in to connect everything." An additional factor for TPx is wireless. In 2017, TPx equipped a major winery in Napa, California, with LTE-based SD-WAN. The SD-WAN market is expected to reach $8 billion by 2021.

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