Zayo sets its SD-WAN market position

Zayo
Zayo has introduced its new SD-WAN service for enterprise customers. (Zayo Group)

Zayo has officially debuted its SD-WAN solution, making good on a promise it touted late in 2017 to enhance enterprise WAN offerings for business customers.

The service provider’s SD-WAN service extends the integrated capabilities of its fiber-based IP/MPLS backbone to enterprise customers with a set of new access and network management options.

A key focus of Zayo’s offering is network management.

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Enterprises will have the option to purchase two packages: basic and advanced, including managed and unmanaged options. Incorporating MPLS, internet and LTE into primary and multipath configurations, Zayo said its SD-WAN solution enables flexible location integration and service provisioning.

To ensure network performance, Zayo has implemented dynamic traffic steering to prioritize traffic at the application level to the paths available. Zayo’s SD-WAN integrates with both internet and IP-VPN connections to provide greater capacity and resiliency.

Barclays said in a research note that Zayo’s SD-WAN offering could become an incremental means to further leverage its infrastructure assets.

“While the service will likely to take time to scale (and could potentially displace existing MPLS service revenues), the company expects SD-WAN to be additive to revenue over time,” Barclays said. “Given its relatively low share in the US MPLS/IP VPN Services Market, we are less concerned about potential MPLS revenue displacement at Zayo.”

News of Zayo introducing SD-WAN should not be of a great surprise since the service provider told investors during its fiscal first-quarter earnings call it would launch the service sometime early this year.

While Zayo is going to face plenty of SD-WAN competition from traditional ILECs like Verizon, CLECs and cable operator Comcast, the service provider’s wide array of last-mile fiber options should position it to effectively respond.

Today, the service provider has a total of 126,000-fiber miles and over 24,000 on-net buildings connected to its network. These assets will enable Zayo to readily deliver an SD-WAN solution that can accommodate a large or medium enterprise with multiple sites.

One of the key points for Zayo going forward is how it will use SD-WAN as a new growth engine inside its enterprise services business. During its first quarter, Zayo noted that data center and cloud connectivity are driving Ethernet growth, for example, and SD-WAN could be another source to help customers transition from legacy services to IP.

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