The Changing Landscape of Global Network Services

The landscape for World-wide network connectivity has been dominated by traditional carriers. Names like AT&T, Verizon, and BT. Although some of of the names may be relatively new (e.g., TATA, Orange) based on mergers, acquisitions, and business model expansions (e.g., moving from a regional to global model), the approach to providing services has generally followed a similar pattern. These are the traditional “telecoms”.

Driven initially by voice communications, the World was slowly, and then more rapidly connected by a series of every more capable Submarine Cable systems. The next phase was driven by multinational companies’ (including so called Enterprise customers) demand for data transport to meet their corporate needs and connect to their supply chain. With more demand, carriers responded by expanding their Points of Presence (PoPs) to new cities and creating consortia to build new Cable systems to increase network capacity and diversity.

The penultimate stage (at last from the perspective of where we are today), is the incredible impact of the Internet. With corporate data centers holding the family jewels located at private and commercial colocation facilities around the World, Internet traffic increased at unprecedented rates of growth driving facilities investment for colocation and hosting space as well as new consortium cable systems (as well as system upgrades based on advancements such as coherent optical technology). These networks, were (and are) provided by the appropriately named “Internet Service Providers” or ISPs.

The underlying business of the typical ISPs can been roughly seen by putting them into two groups. The first are relative “pure play” ISPs. These are companies that derive the majority of their revenue based on terrestrial communications, and therefore global expansion is part of their revenue expansion plans. The second group has more complicated revenue models, where the vast percentage of their revenue is based on their mobile wireless services in their home country (or region of countries). The reason this is important is the emphasis that these companies place on different aspects of their business.

The first group must expand their network services to attract commercial customers to their network. They have to show value and provide the customer expected high-touch support. The second group is at a crossroads. A large multi-country network may provide several millions of dollars a year in revenue, however it comes with associated high-cost to provide service. On the other hand, generating another 50,000 wireless customers (or wireless Internet of Things - IoT devices) will have the same effect, without the high-touch customer required, and it provides additional revenue for wireless services evolution (e.g., 5G upgrades).

While the scenario between ISPs plays out, a new set of companies with unprecedented growth is changing the landscape - these are the Cloud Service Providers (CSPs) - Amazon, Google, Microsoft, etc. It is now time for large global network consumers to evaluate new options for enterprise network services.

The typical customer understanding and use of CSPs is for their processing, storage, value added services, and Internet access. Thousands of companies have either moved part or all of their processing and storage (a.k.a., hosting) needs to CSPs. The major CSPs are seeing 40% revenue growth per quarter and revenue now runs billions of dollars a month. This vastly outstrips the growth of traditional corporate enterprise network growth and total revenue of the ISPs. This reality has created two effects:

• CSPs have created their own network infrastructure, building nationwide networks, consuming huge amounts of existing, and now building their own, Submarine Cable systems (more on this later) - all of this to handle something on the order of 50-70% of all Internet traffic with extraordinary network diversity and robustness
• World-wide and regional ISPs have responded to their Enterprise customer’s need to use CSP resources by extending their ISP networks, bringing Internet peering and MPLS/VPN services directly into CSP facilities

The result of this is that CSPs are becoming the most capable global network infrastructures by far. As they expand in scale (more capabilities at existing CSP locations) and scope (more CSP locations), this capability will only increase. Feeding this monster, that is getting customer access into place, will be an ever expanding set of capabilities from local, regional, and national wireline and wireless networks.

So, what does this mean to the large global company that needs robust and cost effective communications around the World? It means that there are new technical and business approach options that need to be considered.

On the technical side, these companies need to:

• Map their geographic network requirements against the major CSP data centers (regions)
• Understand the CSPs inter-region services and their cost structure
• Understand the global and regional network providers that have a PoP in the CSP regions
• Develop and approach to leverage the CSP’s virtual services to develop an Enterprise network backbone that can use the network services at the CSP’s location (including Internet access)
• Develop an approach to securely leverage multiple local access providers by using Software Defined Wide Area Networking - SD-WAN. This includes regional MPLS/VPN providers (e.g., MPLS/VPN), 4G and emerging 5G wireless, Internet services, and satellite services and integrate into the developed Enterprise network backbone
• Understand each Enterprise site’s service needs and cost trades:

1. How much bandwidth?
2. What service resiliency is required?
3. How long a service interruption can be tolerated?
4. Make the trade between expensive MPLS/VPN and cheaper Internet bandwidth (see Yikes, Internet for Enterprise Services)

• Map out the regional networks that could support each site’s service needs

On the business side:

• Understand the opportunity of leveraging the CSP for the Enterprise network backbone combined with the traditional Cloud services to meet the Enterprise’s needs
• Understand the complexity of performing as your own multi-vendor integrator, buying network services from multiple carriers to provide Internet and MPLS/VPN services needed to connect to the CSP-based Enterprise backbone

In summary, this is a time of significant change all every level of the Information Technology “Stack”. From how to operate and build a network (using Software Defined Network - SDN orchestration and SD-WAN), virtualization of devices (using Network Function Virtualization - NFV), and network resources, to how to balance Enterprise on-premises hosting with CSP-based services.

Understanding these new capabilities and navigating the complexity to create the high-performance and cost-effective network services for an Enterprise to be globally competitive is the challenge.