On an agent webinar this morning, Windstream is beating the SD-WAN drum. I understand that SD-WAN is a boon to retail, restaurants, branch offices and rural locations. Not every business wants to pay over $500 for a pipe. They want to pay what they were paying for T1s. SD-WAN will be a boon for broadband providers - satellite, 4G/LTE, fixed wireless, DSL and cable modem. It swings the WAN back to IP-VPN. Is that a great idea in the age of Hacking?
There are other benefits for SD-WAN: ease of management; faster deployment; analytics; transparency; failover/redundancy; but the bell that most CIOs rang at the WAN Summit in NYC was cost savings.
We are going to see a bunch of locations move from dedicated Internet (DIA or MIS) to broadband. From a commission standpoint that will suck. From a vendor standpoint that will be a pain. However, if partners layer on SD-WAN from a provider plus two broadband providers, we might be able to keep the MRR close. This will become the standard configuration for many business locations.
That is the drum that is beating.
As an RLEC (rural ILEC), revenue streams heavily favored consumer services. The RLECs had USF and TDM transitions occur to shake up their business models. Also, cable starting eating their lunch. DSL didn't cut it. The RLECs had to spend to beef up the network for both better broadband and Telco TV. They just did it too late. Now they have to chase the business markets with HPBX, SD-WAN, cloud services and anything else to bring revenue in and margin back.
CLEC margins on resold network are thin. UC isn't killing it, for anyone. Managed services is where the margin is. SD-WAN is just another technology that needs to be deployed for the customer and managed (like managed router or a monitored Internet pipe).
That is why the drum is beating.
Viptela puts it nicely, "In today's fiercely competitive digital-driven marketplace, enterprises must remove complexity from the WAN. WANs need to be easier to manage, cost-efficient, more agile and available, and better aligned with an organization's computer and business needs. The SD-WAN is quickly becoming an essential component of enterprise digital transformation."
This makes it sound like WAN is complex. It isn't really. MPLS is not that hard or complicated. It is easier than IP-VPN and more secure. (Or at least it is for me.) With many network operators connected to cloud platforms (like AWS, Rackspace and Azure), adding a direct connection to a WAN is simple. (Or if the customer has a data center presence,he can tap into the cloud via a peering fabric.) There are ways to architect a secure, manageable WAN.
Partners will be selling SD-WAN, the flavor of the year. I just wish they had not all been calling it SD-WAN and had actually incorporated it into a branded service offering. That could have led to differentiation and some targeting so it doesn't become a commodity so fast. (Oops! Too late.)
]]>RAD: What does LEOSAT do?
Ronald van der Breggen: LEOSAT is launching an MPLS network in space at 1440 km altitude. Once accessing this constellation of MPLS routers (mounted on satellites), we can carry traffic from anywhere to everywhere with lower latency than fiber and with capacities in the Gigabit range. Whether one wants to go from an Oil rig in the Gulf of Mexico to a mountain top in the Himalayas or from the middle of NYC to Abu Dhabi, this constellation will allow you to setup the connection almost instantly with a performance and security that exceeds fiber.
Interesting that they would setup an MPLS network now when everyone says MPLS is dead.
RAD: What did LEOSAT expect to get out of WAN Summit?
Ronald van der Breggen: Satellites are traditionally perceived as slow and expensive. So first and foremost we wanted to change that perception to one of satellites 'providing real solutions for global data-networking'. LeoSat can e.g. help Telecom operators to connect their global customers faster, help them in providing ultra-secure networking (LeoSat carries traffic physically separated from terrestrial networks), help them with connecting mobile sites, off-shore sites and sites in harsh environments. All of this can be done either as a last mile solution or as a more secure end-to-end solution. The list of options goes on and on and working with resellers and customers in Maritime, Enterprise, Media, Government, Oil&Gas and Mobile, we're enthused by hearing so many new application areas on an almost daily basis.
Ronald van der Breggen: At the WAN Summit, we enjoyed a lot of enthusiastic responses that lead to quite a few follow up meetings.
RAD: How is latency faster on a satellite than on a terrestrial network?
Ronald van der Breggen: Latency is indeed a lot lower, NYC-Tokyo is under 100ms, whereas terrestrial is 150-170ms. Even if a straight cable were built, we'd still be 20ms faster. As light traveling in a fiber optic cable travels at 2/3 of the speed of light, we start showing latency advantages when cable length starts exceeding 5000 km. Every satellites adds roughly 2ms in latency (conservative estimate). For extra proof read the Leosat FAQ
A press release that he sent to me: LeoSat Enterprises Contracts First Customer: Faster than fiber: Leosat's lowest-latency solution expected to revolutionize data connectivity in financial trading sector.
]]>What do you do when a $60K MPLS network is replaced with a $40K SD-WAN network? And when some of those Internet links are not even on the carrier's network?
What do you do when 10GB trans-continental private lines are so ridiculously low?
Well, the management has to re-adjust their reality for the sales team. It isn't the salespeople's fault that price is eroding fast. That is an industry wide executive decision. There are no safe havens for high margin. Even SD-WAN which was hyped just a year ago has fallen under the I Will Save You Money banner (already).
Much of the merger mania is based on synergies - or that at scale the same amount of people can take care of more revenue, which adds margin. A few of the mergers are due to a debt burden that becomes due. That was Intermedia's problem in 2001. No one learned that lesson. Avaya faces that problem today with a debt load that cannot be serviced by its revenue.
But direct sales, channel managers and partners face declining revenues across the board. This means less commissions, less margins, less profitable quarters.
When cablecos stop paying commissions on modems sales (like ILECs did with anything TDM or DSL), what will the channel do? I ask because all the SD-WAN hype is about a branch office utilizing broadband - DSL, cable modem, fixed wireless, 4G, satellite or a combination - for lowered costs but improved performance via that special little white box of SD-WAN.
Also with the shackles off at the FCC, we will see bigger mergers and most likely port blocking will become a thing again. OTT VoIP providers will have to figure out how to circumnavigate the waters pf port blocking on broadband circuits at SOHO, branches and rural locations. It will be interesting.
But that is all down the road. Right now we face consolidation of vendors but price erosion, which may be accelerated by the MPLS to SD-WAN transition. Oh, Goody!
I say this a lot but we have to sell a lot more, faster to maintain.
We need to Land and Expand. Get the pipe but start taking apps and voice, backup, DR, security. It will become imperative to take a chunk of the whole customer IT/telecom budget to survive.
Carriers can help by stopping pushing product and going to a holistic package approach of bundling products into a turn key solution like UC + 4G + Internet + POS + Compliance + backup.
Or savvy partners will start bundling multi-vendor solutions themselves to get more of the pie. The carrier will be stuck being a component.
Co-Selling will be a see-saw. The carriers will like it to protect their own offerings and sales numbers but will hate paying twice one the sales.
We are in for a ride about as smooth as dealing with the airlines! Happy Travels! Back to CP Expo 17 now.
]]>If you can't see the podcast player above, you can download the mp3 or listen over at Soundcloud.
]]>Do business consider this? Not often enough. As a telecom consultant, it is my job to point it out to the business decision maker. How much is an hour of down time worth?
Last week, Comcast suffered a massive voice outage nationally. Windstream, CenturyLink and others have all had widely reported outages this year. Outages happen more often now because of a best effort mentality. No more five-nines.
Hacks happen every day. Unprotected computers are infected almost immediately. No one thinks it will happen to them. It is the hurdle in selling security (and insurance). Why worry? It won't happen here.
Ramsonware is scary. It is occurring more often. A smart backup can alleviate some of the hardship.
Business Continuity (BC/DR) is becoming more important for businesses every day if they recognize it. One indicator: do they utilize battery backups everywhere? Then start the conversation there.
SD-WAN will solve some security, fail-over and BC issues. It might be time to learn about how.
On the carrier side, AT&T is going deep into SDN and NFV. AT&T is releasing their SDN software, ECOMP, to open source. They are talking about being able to use white box CPE globally. Via 4G that CPE will download the necessary software to be a router or firewall or what-have-you.
TelePacific Rolls Out Advanced SD-WAN Connectivity in Nationwide Pilot.
SD-WAN is fueling 150% growth at Aryaka.
Verizon is partnering with Viptela to offer a hosted SD-WAN service.
Masergy, XO, CenturyLink and Mettel - even Vonage - have all added SD-WAN overlay services. Don't you think you should know what they are when your mid-market clients ask?
Join us for another Blab! about SD-WAN on 8/3 at Noon ET.
]]>In 2003, a business would have ACT! CRM installed on one computer. They probably ran Hosted Exchange from an MSP, but had MS Office with Outlook on most computers. They probably had a website and used ADP for payroll. And maybe they had a file server running either Novell or Windows NT.
ADP at one time said they were the first cloud application. Email was probably the first public cloud application that most people used. (There were others before that.) The website is on a public cloud. So there are 3 apps running in the public cloud arena.
The file server and ACT! are running in the local LAN - or what we call today servers in the data center, even if that data center is a closet. That is the private cloud. The MSP is running MS Exchange in his data center on his private cloud, sotospeak.
Today, SAAS like Salesforce and Microsoft Office365 are public cloud apps. The data center is now a colocation in a data center. The company might use AWS or S3 for file storage. Azure or Google Compute for storage or apps. The Hybrid Cloud scenario is more defined today and a little more complicated,e specially if you throw in some VPS or IAAS platform too. But the WAN today has to connect all of these parts and pieces into an efficient network. That is where you, the telecom expert, come in.
Where is the Upsell?
Just asking the questions will put you in a different light. But asking the questions let's you see the whole picture, not just the Internet pipe at 2 locations. You can add value (and upsell) if you see the whole picture.
Hybrid Cloud has been around for a while. The concept is not complicated. And after you map it out, it isn't that complex. Make it simple. That is where the money is.
]]>At a master agency, Microcorp One-on-One, the Cable 3 Sisters gave a presentation together. They have been sharing booth space for a couple of years - and presenting together for a while. This was my first view of it.
The push is on to fiber. "Screw MPLS! If you need Class of Service, just get a bigger pipe from us." The Dave Schaeffer (CEO of Cogent) answer to networks. Buy a bigger pipe and you won't need COS. Class of Service is only needed on a congested network.
Cable is all about Ethernet and Fiber now. No mention of SDN or other fancy network buzz words. Maybe in 3-5 years.
On SLA (service level agreement), I agree with the presenter from TWCBS, customers would love an end to end SLA that pays out credits. [Not available.] However, when Spectrum Business states that 1GB pipes can be as low as $1200 per month, the daily credit would be just $40!!! Who is going to fight for $40?
As one agent mentioned, AT&T is just as aggressive price-wise in region. And using ACC Business is easier than any cable process. (Who wants to wait weeks for an inquiry for pricing?!) However, the aggressive pricing - from my standpoint as an Agent - is crazy! How do you make money on $1200 Gigabit loops???
Comcast threw up a slide about 10GB will be passing 25 homes. No idea went they meant by that but all 3 of the collusion mention Fiber to the Home. FTTH is coming. Coax is retiring. We'll see.
Windstream is getting out of the $300 T1 business according to their channel people. They have set the bar to chase multi-location deals and to aim for $1200 in average deal size.
When you have cable biting off your market share, you move up market. However, then you are running into the rest of the LECs - ILEC and CLEC - AT&T, VZ, C-Link, XO, Level3. And soon Comcast Enterprise.
The one thing that many CLECs have not figured out: You need an exclusive offering - much like the Integrated T1 of yesteryear. A bundle that you can call your own, like Cbeyond tried to put together - or the Managed Office bundle that CenturyLink has. Without that, what is your Value Proposition?
I didn't mention EarthLink because in my book they are out of the nationwide CLEC game - and just doing the Retail vertical. And Birch, we'll see.
NOTE:
A cable channel manager asked me to clarify my post. I wrongly contributed the pricing toTWC. Well, the 3 cable sisters act like one entity. You present together. You booth together. Same products. So I paint you with the same brush. And I still don't know how this is NOT collusion.
]]>The East coast show is all cloud with many booths of with unknown logos. Granite, Bullseye, AT&T, Verizon, Windstream and, ooh, Sprint were the only telcos boothing it. I think that the agents may not care that much for the topics and the constant lectures from the stage of how they have to sell cloud or die. (I know I am.) For example, the topic sponsored by Broadsoft: The Death of PSTN.
There was a small invasion from global players with Telstra and Colt at the show, along with Portugal's IPBrick (pitching an open source Office365 product). Interesting to note that Cardi Prezzi and Carl Grivner were at PacNet when Telstra bought. Prezzi is still at Telstra Enterprise. Grivner is the next CEO of Colt.
The CLECs were talking (to me) about Managed MPLS with fail-over to broadband. Both Level3 and AireSpring spent some time telling me about this option being available now. While several people think MPLS is on the way out, both carriers said that MPLS is stil a hot seller.
Considering that a utility in CT still runs a frame relay network, I am guessing that all those pronouncements of things dying are just hopeful wishes.
]]>Question 1: The Channel saw tw telecom delivering Dynamic Bandwidth prior to the Level3 acquisition. Is that the first case of SDN-WAN? If not, how is it different?
Mike Siegler, VP Development & Technical Support, answers, "Yes, you could say this is an early demonstration of how a Software Defined Network, or Software controlled network, can add value to a business. We see any technology that intelligently monitors, adapts, controls, improves, or manages a WAN link as SDN, SD-WAN, or other acronym we want to select. If we can control the performance of your WAN via Software, you are benefiting from this technology. Today, the options are far greater and the technology more powerful than basic Dynamic Bandwidth options provided in the past."
Question 2: For telecom agents, what one thing should they keep in mind to identify an SDN-WAN opportunity?
Ken LaMere replied, "I think of 3 potential benefits SD- WAN as being broken into three primary elements. Below I will list some common scenarios that lead to companies to consider SD-WAN:"
Network Performance is one.
Network Resiliency is two.
Network Visibility and Alerting is the third element.
Question 3: Why are people saying that MPLS is going away?
Ken LaMere writes, "The most provocative way to get someone's attention in technology is to say that something is obsolete. MPLS still plays a part in many SD-WAN deployments because it still adds value to the WAN. What is changing is the limitations in the past that we faced in building a WAN. SD-WAN is about blending additional transport options to achieve incredible results that cannot be achieved by MPLS by itself. Do we have SD-WAN deployments that have replaced MPLS? Yes We also have deployed SD- WAN into networks with Primary and Secondary MPLS networks. < br/> The transport that SD-WAN runs on depends on several factors such as: network goals/needs, budget, and availability of services. We feel that SD-WAN does not replace MPLS but it just flat out makes it better just like we make broadband based WANS better than by itself. It is also very common to blend MPLS and broadband as they are very complimentary to each other."
Question 4: How does SDN-WAN replace a private network system like MPLS?
Mike Siegler, VP Development & Technical Support , writes, "The straight forward answer is that SD-WAN provides a greater level of WAN performance and resiliency using any transport type that might be available whether it is copper, fiber, coax or wireless." "SD-WAN will change the way WAN's are thought of and deployed. Telecom consultants and engineers will now have options to solve WAN challenges that were previously unavailable or unacceptable. Carriers will continue to adopt SD-WAN capabilities and provide them as a product as they do MPLS today. Until it is adopted and mastered by the masses it represents a big opportunity for agents, carriers and SD-WAN companies that are willing to understand it and thoughtfully engineer and deploy it."
Fast on the heels of cloud services comes even more technology for channel partners to learn about. SDN-WAN is new, but set to explode in some areas (like NFL cities), because companies are migrating to cloud services without taking into account how much bandwidth that will consume, especially for real time apps like voice, video and virtual desktop.
There will be WAN (and LAN) congestion due to excessive traffic. SDN-WAN may help in some situations. With a channel show or four (CPExpo, Tampa Channel Direction, CVX Expo, ITEXPO, Microcorp One-on-One) in the next 6 weeks, take the opportunity to invest in some education about the new technology. Find a vendor who can explain it as easily as Ecessa did here. If they can't explain it so you understand, then they don't know what they are doing yet.
]]>Over the last seven years, I have watched many network admins try to wrestle with MPLS. Virtual pathways on a private network have been around since the days of frame relay. PVCs and SVCs were just traffic pathways in the frame relay cloud. ATM was more complicated to explain. "Frame relay won in the WAN over ATM, which proved too expensive despite its good points, such as five levels of QoS." The same will be said of Ethernet over MPLS - too expensive and complex despite its good points, such as security and QoS.
I think folks forget when you had to buy CIR (committed information rate) on WAN ports. VLANs are just dedicated bandwidth pathways for selected traffic. You want real-time traffic to have priority over email and web traffic. VLANs create that. The VLAN is not dynamic, so that might be why admins are leaning towards ethernet in the WAN.
Plus network admins are comfortable with ethernet. It has been the default for LANs, since before many of them were born. Not many remember ArcNet and Token Ring -- and the pain of running those LAN protocols.
Personally, IP-VPN is just adding more traffic to the Internet which is congested enough as it is. Over the top video buffers and OTT VoIP is jittery and cuts out like a cellphone call with bad reception.
WAN Optimization companies want to replace MPLS with broadband. That should work out well. The network admins will be happy because it will simplify the WAN. It will add security issues in a time when everyone is being hacked including the federal government and even security firms like Kapersky and LastPass.
The biggest complaint I get about MPLS is the expense. It does cost more than the Internet, but then it is more secure and dedicated bandwidth end to end. The configuration of the network is also complex, but you can outsource that.
"According to analyst firm Gartner, "Most network managers are feeling the pain of an increasingly complicated WAN with costly and time-consuming branch office solutions." This is true, especially for satellite offices of less than 10 people. However, if retail chains can utilize MPLS over DSL for POS, credit card processing, inventory and VoIP, why can't other industries?
The new thing is SD-WAN - the software defined WAN. This is basically on-demand bandwidth. Dial it up, dial it back, pay for usage. The CEO of Cogent used to say, "Just throw more bandwidth at it" as the answer to any problem on the network. This is a way to throw more bandwidth at an immediate problem.
SD-WAN will likely win, because it will put control in the network admin's hands. It is Ethernet. TW Telecom already had this option on some routes (where they owned the fiber). The added cost wasn't that heavy.
Frame Relay died. It was fairly easy. (Certainly easier to explain than ATM.) IP-VPN waned. Networks were segmented; now they are converged - with not just voice and data, but voice, data, Internet and video. IP-VPNs are coming back because Metro Ethernet has made the WAN pipes fairly inexpensive (moreso than DS3's!). WAN optimization and software defined networks will give the IP-VPN a revitalization.
]]>Healthcare is also buying MPLS. Healthcare has a mandate for private networking, encryption and security, all driven by the HITECH Act and Rule-making. Even the cellphones and VoIP have to be secure, which leaves room for MDM (mobile device management) to be sold. Lots of add-ons if you can explain the rules and the value. For example, wi-fi and TV for the waiting room and secure WLAN for the patient areas.
Businesses are buying Ethernet transport from the Duopoly (and fiber players like tw telecom and Zayo). If you call it Ethernet, they will even buy it delivered over fixed wireless service. TDM is so yesterday.
The Entertainment industry is buying really fat pipe (GigE). Those movie files are uncompressed and extremely large (think terabyte).
Retail has its own set of problems to solve including PCI Compliance for credit card processing. With a big enough broadband circuit, retail can get VoIP, video surveillance, credit card processing, CRM, and data backup.
Think about the problems facing the company you are trying to sell to. Compliance issues being just one of the issues facing business owners today. Stop selling Products and start selling the whole solution.
]]>Weaker-Than-Expected Channel Sales Impact CenturyLink
tw telecom Revenue Grows, Profit Dips
Windstream Profit Falls 22%, Business-Service Revenue Up
Revenue is up, profit is down. But for others revenue is down.
AT&T revenue is down 1.4 percent from the 2Q2012. Wireline business fell 10% from last year.
"EarthLink's total company revenue in the second quarter of 2013 was $313.4 million, as compared to $316.8 million in the first quarter of 2013 and $334.5 million in the second quarter of 2012. Business Services revenue, which accounted for 78% of EarthLink's total revenue in the second quarter of 2013, declined just 0.5% versus the prior quarter." [source]
Cbeyond's "Second quarter 2013 total revenue of $118.2 million compared with $123.8 million in the second quarter of 2012 and $119.9 million in the first quarter of 2013."
Part of the reason is that transit and transport (Internet bandwidth and private line) revenue is facing pricing pressure almost every where. That means new customers are paying less and renewals want to reduce their bills. Less revenue all around - even if the number of customers remains the same or increases a little. ARPU is down resulting in profits being down.
The ILECs are betting on Global 5000 business and cellular. CLEC's are betting on the cloud, IT services and MPLS. EarthLink saw a 22% increase year over year in these business segments. This means that it is all about the User Experience (UX baby!)
Here's the dilemma: with revenue dipping, companies cut costs. Sure automation has helped reduce head count over the last 7 years, but automation doesn't means UX! (In fact, in my experience, it is the exact opposite!) So how do you balance head count and costs with dipping revenue and increasing UX?
Isn't this kind of the same problem other industries face like book retailers, newspapers, etc.? You can't replace customer experience.
XO's CMO discussed customer experience (CX or UX), metrics and customer intimacy in this interview. (I have no idea what customer intimacy is.)
BTW, 2 studies show that the MSP model is working. Managed Services but that means UX.
]]>As Josh Anderson describes here, VARs and MSPs are now competing directly with ILECs and CLECs for IT services to all businesses - from SMB to Enterprise, Government, Education and Healthcare. The worlds collided.
One thing for the VARs is that Agents are really selling IT services yet, so they have a little while longer to wrap their heads around selling network services. However, once agents get comfortable selling network with LAN management and other IT solutions, VARs will be in trouble. Why? For the most part, Agents are salespeople and VARs are tech people who really don't want to be selling. Who do you think wins the sale? The Agent.
Here's the other kicker: once IT services are up for grabs, it will become a whore's market.
The winner (if you can call them that) will be either the cheapest or the one paying the biggest commission. In 2008 we had a problem in Florida with RMM (remote monitoring) being sold by anyone who could install software on a PC, for any amount that they could get - just generate some income. It put some legitimate IT shops out of business.
Convergence is here. We are in the mud now.
]]>Funny thing, the UC providers with the most growth - RingCentral and 8x8 - don't worry about QoS. They worry about sales & marketing.
It isn't a coincidence that the Cloud Comm Alliance released an ebook on selling Hosted UC. They know that the tires meet the pavement in sales - and that many UC providers have yet to figure out (1) that they are a sales and marketing company, not a tech company; and (2) that if the sales machine isn't in place, they can't cash out.
Personally, I would have outsourced the MPLS network to any number of players (Netwolves, Global Capacity to name two) and focused exclusively on marketing and sales.
If you think that the hurdle to sales is the network, you aren't selling to the pain points or to outcomes.
Do you know why people switch to VoIP? Infographic.
]]>In 2012, UNSi acquired IPNetzone, a nationwide MPLS network provider, adding an advanced backbone network to capabilities. They partnered up with their Derby Capital teammate RapidScale. Yesterday, they decided to acquire Airband in an all stock merger. The combined entity will be named UNSI and generate about $60M in revenue. This will add fixed wireless and Hosted PBX to the service offerings. The biggest competitors UNSI faces are EarthLink, MegaPath, Masergy and AireSpring which all play the same game - MPLS and HPBX.
The bullhorn is the re-emerging noise around tw telecom being acquired. A few months ago CenturyLink's stock took a hit when their bankers floated the balloon that C-Link would buy twt. C-Link is sitting on a boatload of debt - $20.6 Billion. To buy twt would only add to the debt. It would hamper C-Link from its integration of Savvis-Qwest-Embarq and its plans to "leverage those synergies".
Now the bankers are floating the Level3 will buy twt balloon AGAIN - for like the 3rd time. How??? I get why - take a fiber player off the table and add revenue. But how?
Level3 is NOT the sum of its parts - parts which include, most recently, Global Crossing. Level3 is horrible at integration. Maybe all telcos are because the Ma Bell umbrella is still a bunch of silos, but come on, integration is not what they do well. And synergies have never been realized from this - or quite frankly most any telecom merger.
I have an idea for Level3: fire the top guys that have been there since they bought WilTel -- all of them. Hire from OUTSIDE the telecom world for a new CEO and a new President. Level3 has all the assets in place to be doing far better than they are. In baseball terms, they are the Yankees with Bucky Dent or Ralph Houk managing. (Sprint, too , btw).
You know how you get out of debt? You sell stuff!!! Then you deploy stuff. Then you keep it running. POOF!! That thing you see is called revenue which will eventually get you to profit if you stop selling on price alone.
Apparently L3 quietly bought a San Fran based fiber provider.
]]>