CenturyLink is making continual progress with virtualizing its network, incorporating SDN and NFV technology into 60% of its major points of presence (POPs) as of the end of 2016, but it has set a high bar to expand virtualization to all of its POPs.
Glen Post, CEO and chairman of CenturyLink, told investors during the fourth-quarter earnings call that the service provider will nearly double the amount of POPs it will have virtualized in the next two years.
“We plan to have 100% of those [POPs] virtualized by the end of 2019,” Post said during the earnings call, according to a Seeking Alpha transcript. “We also have almost 50% of our network capabilities currently controlled through our SDN network.”
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Post said that CenturyLink has “virtualized WAN service availability, virtualized interconnect between VPN customers, just a number of virtualization steps we've taken.”
Reducing capex, improving customer interfaces
By virtualizing more of its POPs, CenturyLink says it will be able to achieve capex savings while enhancing the customer experience.
“Once we complete those, we expect to save over $200 million a year in capex,” Post said. “By about 2019, we expect those to complete, and we expect significant savings there.”
Post added, “we expect major opex cost savings as a result of this virtualization of the SDN, NFV network builds.”
But reducing capex and opex are just two benefits that CenturyLink will gain from virtualizing its network.
Implementing SDN and NFV will enable CenturyLink to gain new revenue opportunities by offering new capabilities like network on demand and the ability to reach a broader array of business customers, including those that aren’t in its serving area.
“The customers can control their own destiny to a certain degree in how they distribute their bandwidth, for instance,” Post said. “It enables us to cover a lot more businesses. When you virtualize, you can go outside your current territories to many more businesses than you otherwise could reach.”
By achieving virtualization across 60% of its POPs, CenturyLink can reach 4.8 million businesses.
Post said that “a large amount of those were business we could not previously sell to.”
SD-WAN acceptance growing
One of the service capabilities that is being enabled by CenturyLink’s virtualization efforts is SD-WAN.
CenturyLink previously launched its multi-tenant SD-WAN offering in June 2016 that bundles all of the necessary elements including site connectivity, equipment, software licensing, configuration, performance tuning and monitoring with a management and analytics portal.
Customers can build standalone SD-WAN networks or pursue hybrid approaches that seamlessly integrate MPLS and SD-WAN connected sites. Businesses can also engage in a proof-of-concept program to see how SD-WAN can benefit them.
Dean Douglas, president of enterprise markets at CenturyLink, said that the service provider is seeing continual customer interest in SD-WAN.
“The SD-WAN product has started to enjoy some market acceptance in terms of POCs and trials that are going on in the marketplace and we'll see that really grow in terms of interest in the product as well as in actual conversions to an SDN platform,” Douglas said.
Douglas said that CenturyLink, which offers SD-WAN in many of its POPs, expects the proof of concept “will become real revenue-generating business opportunities in the second half of 2017.”