CenturyLink, Level 3 need to sharpen combined SDN-related service vision, says Barclays

CenturyLink
As CenturyLink wraps its acquisition Level 3—a process it says will be completed later this month—the service provider will need to craft a unified strategy around its network virtualization path and the services that will stem from that transition.

As CenturyLink wraps its acquisition of Level 3—a process it says will be completed later this month—the service provider will need to craft a unified strategy around its network virtualization path and the services that will stem from that transition.

A recent Barclays research report noted that having a common strategy will enable the investment community to obtain a clearer picture on how to evaluate broader services growth.

“While we recognize the transition to more "on-demand" services such as SD-WAN are likely gradual, competitors such as AT&T and now Comcast are continuing to move the ball forward,” Barclays said in a research note. “Thus, we believe improved clarity on how the company plan to navigate what seems to be an evolving product landscape would prove incremental in assessing longer-term demand trends.”

Out of the two, CenturyLink has been vocal about its transition to virtualized services. The company has said that it has virtualized fully 60% of its POPs. CenturyLink has continued to enhance its product set with SDN-based services such as SD-WAN and Wi-Fi monitoring, for example.

Evolving its network towards a more virtualized environment isn’t going to be easy.

Bill Walker, director of network architecture for CenturyLink recognizes told attendees during the NFV & Carrier SDN event that SDN and NFV technologies will “change how people use the network.”

RELATED: CenturyLink’s Walker sums up SDN and NFV in one word: disruptive

Likewise, Level 3 through its “One Network” initiative has been making progress with its SDN transition.

The service provider has continued to make its SDN and NFV investments. These investments have been reflected in the service providers introduction of new services such as SD-WAN and its Adaptive Network Control platform.

Level 3 offers enterprise customers even greater promise for dynamically adjusting bandwidth in real-time. Level 3 SD-WAN provides direct internet connectivity for access to public clouds and SaaS applications to improve the local user experience.

No less compelling is Level 3’s Adaptive Network Security service. The service provider recently expanded the footprint of this service to new regions and adding additional gateways, enabling more of its customers to free themselves from managing on-premises network security platforms.

But the transition to SDN is only one challenge that the combined CenturyLink/Level 3 company will face as they come together.

Barclays said that the two companies will need to develop a common mission around service and network priorities.

“CTL and LVLT differ in their historical operating strategies / priorities,” Barclays said. “Given pending management changes, improved clarity on which strategy will be the predominant influencer of the joint entity's long-term strategic direction would be welcomed. The largest factor to consider is the historical difference in how capital was allocated between strategic investments and shareholder returns.”