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Wholesalers see limited use for SDN
SDN promises to deliver two major benefits to the network owners that deploy it:
SDN therefore appears to be a natural fit for international wholesalers.
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However, while the price-sensitive nature and tight margins associated with the majority of international wholesale services suggest that the primary drivers of SDN deployment are efficiency gains and cost savings, this is not proving to be the case.
Use case 1: Enhanced transport efficiency
The transport efficiency use case for SDN is at best ahead of its time. The international wholesalers we spoke to believe that the gains that can be made are at present unproven and the risks too great. For example, Interoute outlined its overriding network requirements as scale, stability, and low cost per bit. Although enhanced transport efficiency promises lower cost per bit, the risk to network stability is considered too high.
There is also a widespread belief in the international wholesale market that existing infrastructures, particularly G-MPLS, are adaptable enough. Optical vendors already offer software control of their dedicated optical equipment and this infrastructure is supporting well-provisioned networks. Furthermore, for many of the large-scale wholesale customer segments, over-provisioning remains a credible and affordable approach to ensuring capacity growth requirements are met.
Use case 2: Bandwidth-on-demand data center
Connectivity into and between data centers is where the majority of international SDN developments are taking place, although most are enterprise-focused rather than wholesale at this stage.
SDN was born in the data center, and international carriers are keen to build on the growth of connectivity demands into and out of the data center. Telstra Global, Tata Communications, Colt, and Telefonica have all targeted this as the initial point where SDN will be used to enhance service portfolios. There are generally two approaches being taken by international players:
However, there are issues. Firstly, the majority of international wholesalers do not own a significant number of their own data centers. According to Ovum’s Global Data Center Analyzer 3Q15, 51% of all data centers were carrier-neutral, and 33% were operated by communications service providers (although not necessarily by the same service provider). Secondly, the largest webscale companies driving data center growth on the back of cloud services, such as Amazon, Facebook, Google, and Microsoft, are building or buying fiber and operating their own services. Therefore wholesalers can at best only provide one link in the chain.
With interoperability limited, it becomes even more difficult to connect data centers with each other via pure-play on-demand bandwidth. As a result, international carriers are instead looking at bundling on-demand connectivity with the cloud.
Extending cloud-like on-demand, pay-as-you-grow, and pay-for-what-you use models into other high-capacity service environments is a natural next step.
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