As network technologies evolve, communications service providers (CSPs) are exposed to multibillion-dollar opportunities and challenges in the evolving managed business services market.
New technologies such as software-defined wide-area network (SD-WAN) enable new competitors and enhance the ability of commodity internet services to displace traditional business services such as multiprotocol label switching (MPLS). Leading CSPs are evaluating vCPE and SD-WAN technologies to deliver new, improved business services.
Customer premises equipment (CPE)—typically a router—has long been a popular service delivery method for CSPs. A leading use case for network functions virtualization (NFV), CSPs are evaluating deployment of virtual CPE (vCPE) or universal CPE as a more flexible way of delivering virtualized services to business customers including SD-WAN, routing, WAN optimization, network address translation, virtual private networks, and firewall functionality.
SD-WAN is a software-based network overlay technology that provides abstraction for WAN services. It enables CSPs to rapidly deploy new hybrid WAN services—for example, internet plus MPLS—with significant improvements in ease of deployment, centralized management, application prioritization, and security. SD-WAN is a highly competitive market with dozens of suppliers that are rapidly improving the breadth and depth of their functionality as well as their supplier ecosystem.
Impact of SD-WAN on managed business services
According to Doyle Research, the $40 billion market for managed business services is being disrupted by the increased adoption of high-speed, low-cost internet services from traditional and competitive, including cable and mobile, providers. SD-WAN technology enables service providers to deliver internet services with the reliability and security of MPLS. The increased performance and cost structure of 4G+ (migrating to 5G) wireless data services is also starting to challenge the market for business services. Many leading CSPs have introduced SD-WAN-based services to improve their competitive position. These services are typically based on SD-WAN technology from suppliers such as Cisco, VMware, Versa, Citrix, Silver Peak, Talari, Cradlepoint and Riverbed.
The promise of vCPE (and NFV)
The power of vCPE is the combination of flexible, low-cost hardware at the customer location that can power a wide range of NFV software, including SD-WAN, routing, and security functions. Thus, CSPs can easily deploy new business services via software updates without changing the physical platform at customer locations. NFV provides improved remote management capabilities that should allow CSPs to reduce operation costs. It allows CSPs to divide the network functionality and run workloads at various network locations from the edge to the core of the network. With vCPE, CSPs can rapidly enhance their business offerings by deploying new software-based functionality from a wide range of suppliers or via open source development. Verizon is a leading proponent of Intel white box servers for its vCPE solutions.
vCPE requirements and challenges
CSPs face significant challenges and trade-offs when selecting vCPE platforms. Ideally, vCPE will be deployed at the customer location for more than three years, so it must be highly reliable and powerful enough to run the full gamut of WAN applications. The vCPE platform must support a wide range of WAN applications and suppliers including SD-WAN and security suppliers.
No one compute platform is currently available at the price points and network capabilities required by CSPs. Intel x86 platforms have the advantage of supporting a large array of network ISVs (independent software vendors), including almost all of the leading SD-WAN software and network security options. However, Intel processors are “expensive” for the packet processing—such as routing—capabilities and can be cost prohibitive for some vCPE deployments. The leading alternatives to Intel, which include ARM, have virtually no support in the network ISV community. CSPs do have the option of developing their own vCPE applications, which includes leveraging open source, but it is likely to be time-consuming and will lack competitive SD-WAN functionality.
NFV vCPE advantages are based on the assumption that multiple network functions (VNFs) can be easily service-chained to deliver a comprehensive business service. Multivendor VNF service-chaining is difficult due to the challenges of interoperability and management. Many WAN applications will need to be streamlined and adapted to containerized platforms to improve their performance efficiency for vCPE deployments.
Recommendations for service providers
SD-WAN, with its ease of deployment, application prioritization, and improved internet security, is a game changer for managed business services. CSPs must respond to the new opportunities and threats by delivering secure, managed services to any customer via internet (or 4G) enhanced by SD-WAN technology. vCPE offers CSPs new options for delivering managed business services by deploying inexpensive server platforms that can support new functionality via software updates.
CSPs face a plethora of choices for their future platform(s) for managed business services. Each choice will have trade-offs including time to market, cost, and flexibility. SD-WAN, with its competitive ecosystem and rapidly improving technology, provides CSPs with proven solutions and immediate deployment. vCPE provides an open, powerful platform that can host a wide range of network and security services. CSPs should leverage both SD-WAN and vCPE to rapidly innovate their business services offerings.
Lee Doyle is principal analyst at Doyle Research, providing client-focused targeted analysis on the Evolution of Intelligent Networks. He has over 25 years’ experience analyzing the IT, network, and telecom markets. Lee has written extensively on such topics as SDN, NFV, enterprise adoption of networking technologies, and IT-Telecom convergence. Before founding Doyle Research, Lee was group VP for network, telecom, and security research at IDC. Lee holds a BA in economics from Williams College. He can be reached at [email protected]; follow him @leedoyle_dc.
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