How Optical Transport Networking Private Lines Create Revenue Growth Opportunities for CSPs

on Posted on Reading Time: 5 minutes

On Wednesday, 14 April, I’m looking forward to my discussion with David Strauss of Broadband Success Partners in the MEF Infinite Edge Series, Episode 4: Edge Computing – Bringing the Cloud Down to Earth. This episode builds on the theme of digital transformation within the enterprise that’s requiring service providers to “step up their game” to support mission-critical and emerging digital applications. Our session discusses some of the market trends and opportunities for service providers in their support of bandwidth, performance, orchestration, and security requirements for the digital economy. We’ll discuss how low latency enables the big prize—a larger slice of revenue of the digital economy as enterprises with large compute sites demand tremendous amounts of bandwidth.

On the topic of bandwidth needs, I recently wrote a blog that discusses OTN private lines as a revenue opportunity for service providers. Omdia surveyed enterprises on their bandwidth needs and some key themes emerged. I am pleased to share the blog in its entirety below (reprinted with  permission). The blog post highlights the Omdia white paper, Transforming Private Lines for Business Growth, which, in turn, supports MEF’s work of establishing service standards for Optical Transport, and the MEF Optical Transport white paper, Orchestrated MEF 3.0 Optical Transport Services

For more market insights, tune in to my session with David, Pushing the Edge–Analyst’s Corner, this Wednesday 14 April at 10:45am EDT of MEF Infinite Edge: Episode 4!

Omdia View: OTN Private Line Creating Revenue Growth Opportunities for CSPs

(Reprinted with permission.)

Summary

The pandemic sharpened the message of the value of cloud based services. The unprecedented ramp of collaboration tool usage “At Home” could only be accomplished with the “burstability” of a cloud platform. Covid heightened the focus on site diversity and supporting a more distributed workforce. More than ever, enterprises are running the mission critical applications over networks, placing greater demands on premium network performance. Enterprises have heightened demands for a high bandwidth premium service experience. “Best effort” for mission critical enterprise functions is fading while enterprises now demand committed high bandwidth, high availability, low latency services- rapidly provisioned. The enhanced enterprise needs and requirements are the communications service providers opportunity. Premium services and high bandwidths needs can command premium revenues.  The CSPs have an opportunity to step up to garner their fair share of the growing digital economy.

Key Market Tends

Omdia is tracking three major cloud and bandwidth market shaping industry trends that are impacting the enterprise and consumer markets.

  1. The digital economy continues to drive a massive cloud infrastructure roadmap. 
  2. The pandemic accelerated and cemented the value of cloud services and we witnessed an unprecedented adoption of collaboration tools by enterprises and consumers. Additionally, enterprises have developed a heightened appreciation for the value of digitizing and having a very robust distributed IT strategy.
  3. And the 3rd key trend is tied to the preceding two trends. The new applications need to be served by high bandwidth, robust connectivity. Large enterprises are increasing their consumption of premium private line services and connecting their key sites.

Key Findings from Enterprise Bandwidth Survey

Omdia recently conducted a major survey of 175 governments and enterprises representing the financial services, manufacturing, cloud, energy-utility, media, transport-logistics and healthcare verticals. The survey yielded a number of major themes: 

  • Enterprises are reevaluating their networks to meet heightened performance expectations.
    • There is increased vigilance on security and data privacy.
    • Optical private lines are in demand for secure connectivity between critical sites.
  • Bandwidth needs are increasing with stricter demands on network performance and availability.
    • 63% of enterprises expect to more than double network bandwidth in two years.
  • Enterprises have diverse bandwidth needs for private lines from 50Mbps up to 100GE speeds.
    • Private optical networks are in demand for bandwidth from 1Gbps to over 10Gbps
    • 100Gbps optical private lines are most in demand by the cloud and SaaS companies.

More than 90% of organizations surveyed plan to replace legacy TDM lines in the next two years.

When enterprises need high performance, guaranteed bandwidth, high availability and security, Optical and Ethernet private lines are among the top choices.

The full survey results are available (see Further Reading in the Appendix below). Two of the survey’s  highlight questions and responses are provided below.

Most important factors in driving the private line purchase decision

What are the most important factors driving the private line decision for enterprises, see Figure 1.

Figure 1:  Survey Highlights:  Important factors in driving the private line purchase decision

Source: Omdia

Enterprises have a heightened desire for committed, highly available, low latency bandwidth that can be provisioned very rapidly.

Critical business applications

Across all verticals, the leading use cases for optical private lines include:

  • Connecting large sites and private data centers to public clouds

And the major applications are:

  • Data replication, real-time business continuity and disaster recovery
  • Storage area networking and big data/large file transfers
  • Low-latency applications required guaranteed bandwidth (e.g., financial trading networks, videoconferencing, e-learning, and other applications).

See Figure 2 for Enterprise responses to the survey question on “which business applications are the most critical in driving the private line decision?”

Figure 2:  Survey Highlights:  The WAN supports business critical applications

Source:  Omdia

Many enterprises that do not currently use optical private lines would consider deploying them in the future but they:

  • require optical bandwidth in smaller increments
  • together with a wider choice of pricing and SLA options.

All of these trends and applications lead to opportunities for carriers for service at the full wavelength rate and subrate services.

The high speed forecast is up

Omdia is positive on the optical network enabled, high speed private line forecast. Enterprises will consume higher bandwidth 1Gbps, 10Gbps and higher services. And the Cloud and SaaS companies will continue to deploy more and more 100Gbps and beyond services.  See Figure 3 for the Omdia CSP Ethernet service high speed forecast.

Figure 3:  The high speed service forecast

Source:  Omdia

Learn More 

This post was reprinted with permission from Omdia. Read the Omdia white paper, Transforming Private Lines for Business Growth, 22 October 2020, Sandra O’Boyle and Mark Oliver. 

Read the MEF white paper, Orchestrated MEF 3.0 Optical Transport Services, March 2020. 

Learn more about MEF’s work in Optical Transport

Join Ian Redpath on Pushing the Edge–Analyst’s Corner: Market Insights From David Strauss, Broadband Success Partners & Ian Redpath, Practice Leader – Components, Transport, Routing, Omdia, this Wednesday 14 April at 10:45am EDT on MEF Infinite Edge: Episode 4

About MEF’s Infinite Edge Series

Our free digital series brings together ICT industry luminaries, executives and subject-matter experts to share their vision, experience and expertise on networking, automation, and digital services—over the course of 9 episodes in an immersive, fully interactive digital environment.  

Get the edge on your digital transformation journey with insights and expertise. Get more details and register for all 9 episodes: MEF Infinite Edge Series 

Ian Redpath

Ian Redpath

Practice Leader, Transport Networks and Components | Omdia

Ian is the Practice Leader for Omdia’s components, transport and routing practice and is responsible for strategy, client, product, and team development. He manages a team of communications technology professionals that oversees communications service providers, internet content providers, enterprises utilize and deploy leading-edge optical networks, components, and routing technologies.

Ian oversees the data center interconnect, optical components, and optical networks systems markets. He also conducts custom research and consulting for clients. His team tracks market share for terrestrial and subsea optical networks, mobile xHaul, optical components, service provider switching and routing vendors. Their latest research initiative is sorting out how optical and routed networks will evolve for 5G. Ian is the 2019 winner of the NGON & DCI World People’s Choice Award and is a regular speaker at industry events. Ian received his MBA from Queen’s University at Kingston in Canada and a degree in electrical engineering from the University of Manitoba.

Stay Connected with MEF

We’ll send you a selection of the latest MEF news coverage, MEF-issued press releases, upcoming events, and/or our Edge VIEW Blog posts, right to your in-box, based on your preferences. You may unsubscribe at any time.

Subscribe to MEF Updates