Monetizing IP MPLS services : Strategic Parameters !!

Presentation1MPLS VPN is a family of methods for harnessing the power of Multiprotocol Label Switching (MPLS) to create Virtual Private Networks (VPNs). MPLS is well suited to the task as it provides traffic isolation and differentiation without substantial overhead. Healthy growth in the market is expected as organizations increasingly look to IP MPLS VPN services to control WAN costs in the face of rising bandwidth needs, to Ethernet for the lowest cost-per-bit, and to managed layer 2 and layer 3 services, where the expertise, knowledge, and tools of service providers can help stabilize WAN costs and prioritize critical applications while increasing capacities

Global Ethernet and MPLS IP VPN service revenue grew a combined 13% in 2011 to just over $50 billion, fueled by surging data traffic, cloud services, and cost-cutting initiatives. Asia Pacific is expected to overtake EMEA as the leading region for IP MPLS VPN services in 2013 and already leads in Ethernet services; Asia will remain the leader for the combined IP MPLS VPN and Ethernet services market going forward, led by China and India. IPsec VPN services accounted for the remaining share of 32.5%. In Middle East and Africa, MPLS VPN services accounted for largest share (67.5%) within IP VPN market in 2012.

Concurrently carrier Ethernet Exchanges are a significant new development that facilitate Ethernet connections and accelerate the move to Ethernet transport and services. In these exchanges service providers pay small fees to a Carrier Ethernet Exchange to make it easy for them to locate, buy, and provision Ethernet connections from each other. This in turn jumpstarts more Ethernet services and more of the IP VPN services that ride on Ethernet transport. The net effect of these new Ethernet exchanges, combined with fast-rising mobile backhaul connections, is a quickening of the Ethernet and IP VPN services markets

To capitalise on this growth opportunity BT Global Services invested in the rollout of new IP MPLS infrastructure, services, and expertise into Turkey, the Middle East, and Africa. On the face of it, the Middle East and Africa is a sprawling super-region, with as diverse a range of markets as could be found on the rest of the planet. The startups and traders of the narrow streets of Nairobi are a world away from the huge family-owned conglomerates of Turkey or the state-owned petrochemical giants of Saudi Arabia. Yet these enterprises have important things in common: they are part of the same global supply chains in manufacturing, transport, and logistics, and they need high-security broadband access and hosted applications. That makes the MEA a perfect target for network operators with the capability to combine their own UC platforms with those of vendors, and to provide both remote access and IT support

MPLS VPNs offer the ability to prioritize applications such as VoIP by class of service (CoS), create and improve disaster recovery infrastructures, utilize a fully meshed infrastructure that replaces outdated hub and spoke architecture, and reduce complexity to simplify network management in an increasingly complex landscape. The desire to move toward a more cost-effective network that supports voice, video and data is among the primary drivers behind the move to MPLS VPN services, with a number of other technological and financial drivers drawing enterprises in that direction as well.

All businesses need communications networks which accurately mirror their own changing data flows and their own transactions with customers. Enterprise clients need to connect site to site and function to function: the network infrastructure must enable multiple departments including sales, marketing, production, logistics and distribution to work together as a single business machine. And they want to do so in a way which minimizes cost and maximizes reliability.Among these are:

• Class of Service (CoS): provides ability to prioritize applications, such as VoIP
• Automatic redundancy/disaster recovery: create and improve disaster recovery infrastructures
• Fully meshed infrastructure: replace outdated hub-and-spoke architectures
• Reduced complexity: one network platform supports all application traffic—including VoIP and data applications

IP VPNs are typically utilized by organizations operating out of multiple office locations that require a secure, flexible and cost effective means for their employees to communicate and share information across a central computer network. MPLS networks form a proper foundation for a number of business critical applications including: VoIP phone service + Centralized merchant transactions + Remote application access (Citrix) + Remote user access + File transfer/sharing + Video delivery + Secure access to internal software applications + Outsourced network management + Compliance requirements + Central data storage & backup etc.

Any business operating across multiple locations can benefit from a MPLS wide area network. With the emergence of VoIP phone service, private wide area networks are serving a very important role in ensuring call quality, performance and security across the enterprise in several verticals such as :• Retail Businesses • Restaurant Chains • Hospitals and Clinics • Doctor and Dentist Offices • Call Centers w/ Remote Staff • International Corporations • Financial Institutions • Government Entities • Hotels • Franchises

Internet Protocol/Multi-Protocol Label Switching (IP/MPLS) has grown to become a foundation for many mobile, fixed, and converged networks. In mobile networks, IP/MPLS consolidates disparate transport networks for different radio technologies, reduces operating expenditures (OPEX), and converges networks on a resilient and reliable infrastructure, while supporting evolution to Long Term Evolution (LTE) and Fourth-Generation Mobile Network (4G) technologies.

BT seems to be taking the right approach by promising Enterprises with an extended infrastructure based on subsea cables in the region, new fiber connections into South Africa, and greater domestic connectivity. New MPLS nodes in Oman will extend the global reach of MPLS, while new NNIs ( network-to-network interface ) will take services out of South Africa into 12 other countries. In addition Ethernet managed services will be offered in four countries and a center of excellence for satellite established in Turkey. MPLS-based IP VPN and IPsec VPNs will be standard, accelerating Ethernet into 20 cities. This will be supported by portfolio expansion, with 10 launches in each center combining regional and global products with some local integration. A key example of this is global inbound services.

BT managed security services will be available in all countries.Being able to deliver on-net access in close proximity to a customer’s local offices, subsidiaries and partners all contribute to an eff ective international IP/MPLS strategy and can result in a carrier being more competitive with regard to faster local provisioning and troubleshooting, and more cost-eff ective circuit fees.

According to Current Analysis GNT the ability of an operator to provide a geographically comprehensive on-net IP/MPLS footprint that can support a customer’s key sites is critical for customers when procuring global network services.Unlocking the various revenue streams out of a carrier grade IP MPLS network requires a highly tuned understanding of enterprise needs and PoP location. Being able to deliver on-net access in close proximity to a customer’s local offices, subsidiaries and partners all contribute to an effective international IP/MPLS strategy and can result in a carrier being more competitive with regard to faster local provisioning and troubleshooting, and more cost-effective circuit fees.

Carriers with strong in-region MPLS PoP ownership should certainly present to customers the advantages of working with a provider that can more effectively monitor and manage its own network for better performance and rapid response and troubleshooting. Ongoing efforts to expand networks and invest in PoPs in new regions, Ethernet VPLS expansions, new Ethernet and DSL capabilities and new NNI agreements will no doubt bolster the image and credibility of the MPLS provider.Naturally, having the highest MPLS PoP count is not enough and the service wrap, pricing and SLAs are equally important; carriers must recall that Vanco, as a VNO, managed to win customers fairly effectively until it was bought by Reliance Globalcom in 2008.

The main point here is that operators must be competitive on price and provisioning times and reassure customers that they are skilled in managing and selecting local network partners and that the partners they have chosen are reliable, financially stable and can deliver the target SLAs and required resiliency for a customer’s sites

Sadiq Malik ( Telco Strategist )

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