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March 2018

Why Hybrid Access Networks and SD-WAN will Drive Wireline Telecom’s Future

Why Hybrid Access Networks and SD-WAN will Drive Wireline Telecom’s Future

Despite his mud-slinging at wireless operator rivals, John Legere, the CEO of T-Mobile, is teaching us lessons about succeeding in today’s telecom business.

In 2017 Legere led T-Mobile to impressive growth: its revenues climbed 8% to $40.6 billion and the firm posted a solid profit of $4.5 billion.

So what gives?  How do you explain this fine growth in a “mature” U.S. mobile market?  Well, studying Legere’s strategy, I see three principles driving T-Mobile’s success:

  • Master Complexity — A lot of dirty roads lead to the digital highway, and in the comms business, somebody has to guarantee a quality customer experience amid the ugliness of physical plant, network hardware, and complex systems.  T-Mobile embraced its ugliness, in part, by investing heavily in customer care — even making each care team responsible for improving the retention/satisfaction metrics of its own set of 100,000 customers.
  • Be Sensitive to Things that Annoy Customers — For decades, mobile customers have complained about being locked into long-term service contracts and roaming fees.  But T-Mobile killed both those hated practices. 
  • Deliver Cost Effective Solutions — Another reason T-Mobile grew profitably and stole thunder from Verizon and AT&T was its efficiency: it allowed them to offer service at a lower price.  Sure, customers want the service, but not at any cost: they are keen on saving money, too.

So I have a theory: the same principles that drove T-Mobile’s success also apply to the wireline business of serving enterprises and wholesale customers.

And here to weigh that theory and analyze the wireline telco scene is Mary Stanhope, founder and principal consultant at iMarket2 in Boston.  Mary has lived and breathed wireline, wholesale, and hybrid networks for many years.  Most recently she was head of marketing at Global Capacity who was acquired last year by GTT.

In this interview Mary sorts through several timely issues: how edge connectivity delivers value to enterprises, data centers, cloud players, and carriers; and how combining SD-WAN visibility/control with wholesale access is revolutionizing the enterprise WAN.

Dan Baker, Editor, Top Operator: Mary, we are rapidly approaching the point where the term “metro” is no longer as descriptive of WAN networks as it once was.

Mary Stanhope: Yes, Dan, the cloud changed everything, hasn’t it?  Companies are increasingly virtualizing their data away from private in-house data centers to public ones.

And that means your data center is often no longer in the metro — that big glass building where most of the people work.  In fact, the data often moves to rural or suburban areas, which creates two headquarters: a “people headquarters” and a “data headquarters”.

What’s more, the big applications that enterprises rely on — SAP, Oracle, VoIP, Office 365, Salesforce — operate out of a data center somewhere.  And if you’re a decent-sized company, you’ll need to connect to multiple data centers as there are many cloud and business applications to support.

The other big trend is distributed work forces.  People who used to work, live, and eat at mega-campuses, are working virtually, from homes in different cities, states, hotels — wherever they may be today.  Greater connectivity and cloud has enabled all that.

Greater reliance on cloud apps, in turn, puts a premium on flexible connectivity.  Take a salesperson on the West Coast who needs high availability to his daily schedule in a Salesforce cloud.  So which Salesforce on ramp is best? 

Well, it may depend on the time of day.  In the early morning, the West Coast on ramp is lighter with heavier loads on the East Coast.  But at 9 AM PT, the traffic load on the West Coast cloud congests as commuters arrive at work, so maybe it’s time to shift some of the load back to the East Coast.

As we know, MPLS is the incumbent WAN solution.  What factors do you feel will push enterprises to replace MPLS with hybrid networks?

Yes, MPLS has dominated the enterprise wide area network world for decades.

MPLS works by assigning a priority level to a packet, which is like throwing grains of sand into the ocean if there is a bottleneck.  The routes are all determined by the carrier, so if there’s a major congestion between Arizona and Chicago, the traffic might re-route from Arizona to Miami to Chicago.  And you have no visibility into that.

And when congestion occurs and there’s no alternate route, because even if you have Platinum service, you’re essentially on a best effort network because the tagging doesn’t help you when the route is completely overloaded.

So what does the enterprise end up doing?  It throws extra bandwidth at its problems and buys more special services, which adds expense.

Boil it down, MPLS today is hampered by two major shortfalls: 1)MPLS lacks visibility and control into network performance needed to right size connectivity to remote locations; and 2) MLS lacks sensitivity to application performance at a time when enterprises are increasingly going to cloud apps.

Mary, from your experience, what is the alternative to MPLS look like?

I think the answer is to turn to alternative options coming from managed network service providers (MSPs).  I see the successful MSP strategies consisting of three key elements:

  1. Build a Hybrid Access Network of Wholesale Partners — Networks of great value can be assembled using off-net (wholesale) facilities to create a network that is identical or better than an on-net experience.  And that includes the full customer support and SLA over the top of all those off-net facilities you use to connect. 

    One caveat: to stay cost competitive and meet the SLAs required, you need enough partners in your network to make smart trade-offs in how traffic is routed.  This includes different services and transport, even wireless. 

    To enable this hybrid network, the MSP must gather intelligence about the enterprise: Who’s where?  What are the price points?  What are the regional issues?  If you’re going to Atlanta vs.  San Jose, how does that affect the latency, performance, and the price you get? 

    Now here is where technology will be a differentiator.  Whether you build your own or find a partner, an intelligent platform for network connectivity is critical to success.

  2. End-to-End Connect Cloud to Distributed Employees — As we discussed, “location” in today workplace means more than an enterprise’s main office buildings.  Employees are working in scattered offices, so spending big money for a direct fiber connect to a headquarters building alone doesn’t solve the larger problem. 

    And here’s where an MSP provides a valuable service stringing together hybrid connections and affordable cloud access to all these remote employees.

    Interestingly, as we move forward, new competition to the MSP comes from cloud providers who seek to deliver their own access services either competing or partnering with NSPs.

  3. Real-Time Visibility & Control over Bandwidth -Throwing up more bandwidth to avoid congestion is a costly way to boost performance.  So how, then, does an enterprise make sure, say, that a webinar doesn’t get blown away by the guy doing a data download at the same time? 

    Well, fiber is often the answer if you’re trying to reach buildings with lots of employees, but fiber is too costly to deploy in small or home offices.  Yet everywhere you look there are internet and cable connections available.  Even copper DSL is interesting for access services. 

    So the answer is to use these widely available connections and have real-time visibility over the performance of applications on these networks.  With visibility, the enterprise can make intelligent decisions to either prioritize some applications over others, or figure out how much bandwidth must be added. 

    This is where the rise of SD-WAN nicely complements the wide availability of hybrid networks.  Across one dashboard, enterprises and service providers can use SD-WAN to get a handle on access issues like never before.  Add software defined control of those assets on top and you’ve got a powerful solution.

OK, great.  Now that we see the value hybrid networks bring, how about a practical example?  When an MSP goes up against a big carrier like CenturyLink, Verizon or AT&T, how do they win in the real world?  How do they position their hybrid network against an MPLS network?

Well, we know the big advantage large carriers have is their brand and wide reach.  The problem is, the service they sell is often not the best solution for the money nor the right one for every customer location.  So there are great opportunities for MSPs to compete with the big carriers in the enterprise-serving game.

Here’s an anonymous, but live case showing how a creative MSP solution won:

  1. Entertainment Firm Needed to Serve Content to Malls & Other Sites — DigitalCo is the fictitious name for a real entertainment firm serving content to hundreds of sites across the US.  The sites were malls; rural/suburban sites, and some large office buildings that already had great connectivity.  Seeking a better network solution, DigitalCo sought bids from a large Telco and competitive MSPs.
  2. The Large Telco’s Proposal was Rejected — The large telco recommended DigitalCo buy a single service all-MPLS solution to connect all 800 sites with voice and data, but DigitalCo rejected this solution primarily due to its higher cost.
  3. Features of the Winning MSP Challenger’s Proposal — The competing MSP consulted deeply with DigitalCo to learn their requirements by location and design a solution based on: the applications used on-site, local access available, and data center locations.  Their winning proposal included the following elements:
    • Lower-priced third party access services were the cornerstone of the solution.  Virtual circuit routes over the access circuits provided varying performance levels depending on a location’s application needs.  For some business applications, an internet best effort service was adequate, but if the application was SAP Financials, a highly reliable, available, and secure connectivity service was delivered.
    • A Managed Hybrid Solution was Delivered — The final solution included asynchronous broadband access — copper and cable combined — with guaranteed bandwidth across the backbone to interconnect all 800 of DigitalCo’s sites with datacenters, internet and cloud providers.

      The final hybrid solution married the networks of 8 ISPs/operators, 2 data centers, and 2 direct connect cloud providers.  The provisioned services by site were as follows:

      ► 45% were provisioned with a second active broadband service.
      ► 55% were active wireless broadband.
      ► 10% had 100 Mbps Ethernet private line services; and, 
      ► 1% had 1 Gig fiber service. 
    • VoIP Quality Issue Solved — VoIP quality was insufficient at certain times of day.  The MSP solved the issue by doing something unusual: rather than add more expensive private line services, it took the traffic off of MPLS and used a dedicated local broadband access line with a wireless backup to connect from offices to the core network. 

      Voice traffic was routed over a guaranteed-bandwidth Layer 2 Ethernet Virtual Private Line service all the way to a central voice server in a distant city.  Then, using intelligent software-defined monitoring; bottleneck issues could be easily narrowed down and traffic rerouted within the SLA, all with full visibility to the enterprise and MSP.

  4. The Resulting Network Provided Better Performance at Reduced Cost — The hybrid solution ultimately delivered a 22% savings over what the large telco proposed, improved QoS compared to the MPLS design.  Follow-on benefits included a 30% reduction in service complaints to IT.
OK, Mary.  So now, how does SD-WAN specifically play into the hybrid network scene?

Dan, first of all we must concede that various technical solutions are vying today in the SD-WAN marketplace.  Several players are in the market (some of them being bought up).  And each player approaches the SDN problem a bit differently.  Some are coming from the optimization side; others from the router side.  Some are offering very new and innovative approaches.

In the early days of SD-WAN, the providers hyped the value proposition pretty heavily claiming, “Exponential savings over MPLS using just best effort broadband connections.”

But SD-WAN is no silver bullet.  You still need to build the right network and find the right connectivity for the application to your location.  And frankly, you’re still going to need some high bandwidth dedicated access locations.

The exciting thing, though, is that SD-WAN allows you to visualize and manage multi-carrier (hybrid) connections like no other technology.  You can use SD-WAN to very creatively build and maintain a high performance network using the access circuits available to you.  You can even add wireless to the mix: wireless not just as your backup, but as an active service.

The real power is its application performance focus.  You can designate a primary circuit for a certain type of application.  For instance, you set it up to support voice, but deprioritize Facebook connections.  Best of all, you’re routing applications and not guessing on bandwidth requirements or what impact your decisions will make on performance — you see that impact visually.

Of course, when you see that red blinking light on your console, you still need to do something: reroute, program a router, or find a new provider.

Sounds like this visibility over access networks is what’s exciting SD-WAN customers.

Very true.  Visibility is the “ah ha” moment for the enterprise.  Before with a multi-carrier network, we really didn’t have visibility at the edge: we were reacting.  You could tag traffic, but you couldn’t really see which application or time frame had the Green/Yellow/Red lights.  You could feel the lousy performance on your computer, but you lacked the intelligence to identify the root causes of trouble.

Now when people see their network for the first time, that really gets them engaged!  This visibility and the ability to take real-time action from the application point of reference — not the bits and bytes — is what’s winning converts to SD-WAN.  By contrast, with MPLS, even with the Platinum service, you will not know where or why the congestion is happening — or be able to act on it.

When you plug in SD-WAN and optimize performance, it will balance traffic between two or more access services so you get straight Green.  Using SD-WAN, you simply prioritize or de-prioritize applications.  And the traffic will prioritize given the capacity that’s available.

I’d just love to have this capability affordable for my home office.  Imagine, instead of calling my ISP, I could prioritize applications so a phone conference gets priority over a backup.  And I could prioritize backup to fill in the traffic holes throughout the day if I wanted to.  It’s all coming!

Can the enterprise go it alone with SD-WAN?  And should they?

Technically they can.  There are companies like VeloCloud who sell solutions to both operators and enterprises.

But who wants to manage eight providers?  There are too many moving parts.  So as you move into multiple network providers, that really tees up the need for managed WAN service from a service provider.  Finding a provider who can work with you to manage it is ideal.  And this is the opportunity that large telcos, MSPs, wireless, cloud, and solution providers are all aggressively going after.

Network service providers have an opportunity to build hybrid networks to connect the distributed people and distributed data cost effectively.  Making it even easier — once again — is SD-WAN’s single pane of glass to see and manage the on-going performance at all your access points.

Mary, thank you these great explanations.  You’ve cleared much of the fog in front of my eyes.  We’re definitely entering an exciting new era in enterprise WAN capabilities.

Sure, Dan.  SD-WAN is putting best effort access circuits back on the table.

With visibility and control, you can now combine three mediocre circuits together and end up with something quite good.  But we still need to look at the locations: how many people? where are they going?  And what are the application priorities?

You’re still going to need private line, even MPLS.  Not every site is going to be served by one internet location with a wireless secondary.  A lot of them will, and they’ll perform much better than they ever did.

In short, SD-WAN is an amazing enabler of the hybrid network including even wireless access.  Whatever is available at the edge becomes a valuable solution option: fiber, copper, wire, wireless.  It’s all part of the mix for solving the problem.

So the future is achieved in two steps: 1) Get the best value network connections for your locations and applications, and 2) Use SD-WAN technology to make sure you’re monitoring and optimizing that network for the best performance and availability.

Taken together, those two steps will push MPLS off of the top as the go-to enterprise WAN solution.

Copyright 2018 Top Operator Journal


About the Experts

Mary Stanhope

Mary Stanhope

Mary Stanhope is the founder and principal consultant at iMarket2, specializing in go-to-market strategy, ecosystem development and M&A due diligence.  Mary brings over 20 years of channel and market strategy, business development and customer experience to the industry working with organizations that include Connected2Fiber, ARMdcs, CloudScale365, NEDAS, Global Capacity, RCN Metro, Sema Group, Atos Origin and Schlumberger.

Mary is recognized by CRN’s Top Women in the Channel, Global Telecom Business’s 50 Women to Watch in Communication and Fierce Telecom’s Top 10 Wired Women.  She holds a BA from Syracuse University and professional graduate certificate from Harvard.   Contact Mary via

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