CenturyLink is keen on getting a piece of the burgeoning SD-WAN market segment, but the service provider's CEO indicated it is being realistic that customers aren't going to rip out and replace existing services like MPLS anytime soon.
Instead, the service provider envisions business customers deploying SD-WAN in tandem with other existing services like MPLS and Ethernet.
Glen Post, CEO of CenturyLink, told investors during the company's first-quarter earnings call that it can grow over time to address its soon-to-be-even-larger business customer base when it completes its acquisition of Level 3 Communications later this year.
“When we sell a product, it's not going 100% from MPLS to SD-WAN,” Post said during the earnings call, according to a Seeking Alpha earnings transcript. “It's usually a hybrid network solution.”
CenturyLink has plenty of SD-WAN experience under its belt already.
In June 2016, the service provider introduced an SD-WAN service that bundles all of the necessary elements including site connectivity, equipment, software licensing, configuration, performance tuning and monitoring with a management and analytics portal. A business customer can manage its own policies or have CenturyLink manage them.
What makes Post confident that it can compete in the SD-WAN space is the fact that it has already incorporated SDN and NFV technology into 60% of its major points of presence (POPs) as of the end of 2016. The telco has set a high bar to expand virtualization to all of its POPs.
“We have more coverage than most—as far as 60% of our major IP POPs are virtualized now and are capable of SDN and virtualized services,” Post said.
The benefits of its virtualization efforts will also create internal benefits.
“We believe when we complete the full build-out of [SDN and NFV] in 2019, we could see significant impact, positive impacts from capital expenditures,” Post said. “We already saw at least $200 million reduction in our annual capex from the build-out of these virtualized networks.”