SD-WAN for telcos in the digital economy

30 Jul 2018

Epsilon Telecommunications provides connectivity to carriers, specifically software-defined networking services, accounting for 70% of its revenue. According to the company, it has around 350-400 service providers around the world using its services to interconnect between each other – facilitating traffic exchange.

The company also acts as a connectivity platform for data center operators, even offering white label models for those that want to resell connectivity solutions to other data center operators worldwide.

More recently the company has started taking in cloud-native startups that don’t own their own network but rely on the cloud for their business model.

Telecom Asia spoke to Jerzy (George) Szlosarek (pictured), co-founder and chief executive officer, Epsilon Telecommunications, to talk about the company’s operations in Asia including the launch of its Infiny platform.

Disruption is everywhere

“There is a lot happening in the market, there is a lot of change in the market. Disruption coming from cloud, OTT, different sectors – especially for us – what’s exciting is the whole growth with channel partners. We’ve been very much about providing a very simple, agile, innovative connectivity product through to various sectors,” said Szlosarek.

Introducing Infiny

Infiny is the result of 3 years of work where we have a complete environment in a portal where Epsilon customers can spin up network, cloud computing resources, deliver global connectivity and access last-mile and communications services.

“Going forward, our vision is very much about putting the network into the cloud, remaining lean and agile while providing very powerful solutions to help our customers scale. I think that’s one of the reasons our customers like to partner with us, they know we always put our customers at the core of the business.

“We are simply providing simple and effective connectivity, very much like an exchange. For example customers in Singapore, they can subscribe to a bunch of ports in one of the data centers where we are present and use our platform to spin up private network into Hong Kong, Japan, Seattle, Dallas, London, Marseille, Frankfurt, all simultaneously,” said Szlosarek.

He explained that through Infiny, customers can activate that service instantly, they can do it on-demand, they can use as much network – or as little network – as they want. They find that kind of agility and service reach very powerful today. It takes the risk out of the business model and allows company to go global with large network solutions very easily.

Open interconnection and making it easy to connect to various parts of the ecosystem is a defining characteristic of Infiny and Epsilon itself.

Networking as a utility

Szlosarek believes that connectivity is becoming a utility, and like other utilities, like water and power, we are taking it for granted. It is assumed to be there and available.

He explained that managing network as a utility is interesting because in our context, it becomes a service. We depend on the connectivity, we need it to be always there – high quality, available with ubiquity – connecting to as many devices and following us around wherever we go.

So the utility had to be dynamic, flexible, accessible, on-demand.

“I suppose it becomes a service itself – the network is now a service – providing network connectivity both as a utility and a service. Right now I’m still not quite sure we’re quite ready to see network as a utility, we would still call it a service because there are still so much complexity in building the right type of connectivity and network product,” he added.

According to Szlosarek we are now seeing the network as a utility and that’s where the challenge lies, not to perceive it to be a utility because it’s very complex as there’s a lot of technology and science involved in the whole process.

A future where no one single company dominates

“I think that’s already happening. If you look at what a SDN actually becomes overtime, it starts off as a more efficient way of delivering network and as more users start to login to the platform, and they start to interconnect through API or various offerings, the SDN do become a marketplace. The marketplace is actually quite interesting,” explained Szlosarek.

He cited effort by the Metro Ethernet Forum (MEF) to develop standardized APIs – between service providers, between vendors – to enable the activation of services regardless of who owns the network.

“We can activate functions in the vendor cloud – so the vendors are going into the cloud and the service providers are interconnecting – there will be this digital experience. The marketplace will be digital,” he opined.

He argued that the marketplace has been there for the last 20 years – a marketplace of network providers, hosting companies, cloud companies and managed service providers who would feed through the vendor’s equipment. The difference now is that the marketplace is being transformed from a static, slow moving component to a digitalized, on-demand infrastructure.

He believed this is the direction of the industry as well as the vision of what a true SDN will become, a digitalized marketplace.

He uses the analogy of a marriage to describe the vendor-carrier or the carrier-carrier relationship.

“You choose your partners and you live with those partners for the longest term. I don’t think it’s a question of, yes there’s more competitiveness, but ultimately people will make their selection of a partner based on a number of parameters – I really like the service, I really like the roadmap, the future and vision they have, or I just like the price or for a number of reasons, political or whatever reasons. I think that will always be the key of an ecosystems where like-minded partners working together,” he mused.

But in terms of the marketplace, there will be more choice. For sure, it will be a crowded landscape. Everyone will be battling to become the digital leader. There will be consolidation definitely, the smaller guys will give way – they won’t be able to keep up, they won’t have the scale to grow.

Ultimately he believed the relationships will be driven by the business needs and the priorities and objectives, and the different uniqueness to each company when it comes to their own purchasing arrangement.

“We can really execute differently, not just being differently, but we have a range of options today to execute differently,” conclude Szlosarek.

SDN: complicated story

He believed that it is the advent of the application programmable interface (API) that has really allowed SDN to proliferate because now, we can activate services in other companies’ network and have real-time activation.

He conceded that SD-WAN is a complicated topic because the carriers have invested a lot of funds in building expensive MPLS networks and managing MPLS networks. The whole procurement chain, carrier relations chain, all the commercials associated with managing MPLS network as well as its cost. It’s an investment that they made.

He noted that the market has started to see the proliferation of SD-WAN companies in the last couple of years. He recommends looking under the hood.

“It’s like all the shiny cars parked on the lot but you will only really know if they are really good by having a look at what machinery is pushing it forward. And they come in all shape and sizes. We have experience in this and we absolutely believe in SD-WAN, because we leaped from that MPLS generation, we never had a global MPLS nor do we have any aspirations to build one. So we’re moving straight forward, straight along the lines of the SD-WAN,” he explained.

For carriers, this is a very difficult question because this is cannibalization of what is the last remanence of the major revenue stream. Since voice is evaporated, data is evaporating in a similar way, transit is erased to zero, on-net traffic is very hard to monetize today.

The one last place where carriers still dominate is in the enterprise. If they do well in the MPLS – then that may be ok. But how does a carrier build a business on a thinning margin structure using the public internet and SD-WAN? That’s not something that not every one of them [operator] is e-comfortable with.

“I think that’s why you’re seeing carriers slow to adopt SD-WAN because they are protecting their investments. You will see a lot of rise in new providers, new disruptors who embrace SD-WAN because they are providing that agility and customer-centricity that’s very much need,” he predicts.

Agile and customer-centric

Agile: The big carriers are trying to become lean organizations. “I think they are going to be employing organizational restructuring, transformation and deploying tools to achieve that in terms of unlocking the infrastructure to make it more scalable and agile but also operating in a leaner model,” Szlosarek observed.

He believed this will open all kinds of opportunities for collaboration. There is a lot of talk to be agile and scalable to deal with the growing demand for connectivity.

Customer centricity: People have a high level of expectation when it comes to service experience. And that’s going to be paramount concluded Szlosarek.

“You will see more responsiveness from the telcos in term of being more aggressive in their new product offering, new SDN, portals, the move to automation, talk about federating, talk about APIs – how do I use my API so we can federate our network, so that we can expand our ecosystem and partner together.

“I think you will start to see those terms coming through into the industry – partnering, collaborating, federating – using technology to support those frameworks. That’s going to kickstart a whole bunch of new ventures, new partnerships. We’ve started to see that,” he added.

This is already evident with messaging and SMS companies, they are now federating and working together with OTT companies to create more integrated OTP authentication services.

“There’s a resurgence of that mobile market – how we integrate voice into software platforms, how telcos are into working through APIs – and working through software so that they can have more effective, exclusive reach, putting the power of innovation at play.

Szlosarek summed up the interview saying “Ultimately, you will see those two themes. Agility – how do we become nimble, more agile, more responsive to the market demands, and how do we become more customer-centric in terms of improving that whole experience on how we work together.”

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