The great transition from constrained certainty to good-enough risk

For much of the past 150 years of telecoms history, customers have had little influence on the evolution of the Wide Area Network (WAN). Corporate WAN strategies centered on adapting to what was available.

There were certain bedrocks of stability and authority that you did not question – the only question was: how much of it could you afford? The upside has been global availability, the downside has been high cost and sub-optimal utilisation. With the enormous expansion of available bandwidth and the shift from proprietary hardware and software to software defined network, this is about to change – giving enterprise users the chance to simultaneously lower telecom costs and expand available capacity.

The PTT monopolies

When it came to WAN service providers, choices emerged in the early 1980s. Until then the national telco infrastructure was built and operated by the national Post, Telegraph & Telephone (PTT) monopoly, and its pricing was not cost based, but rather determined by how much revenue it, as a public service wanted to charge. International services relied on bilateral service and tariff agreements between individual PTTs. For the business executives it meant predictability. Telecoms was a purely technical and engineering issue. Communications was a punitive cost item on the company books – like it or lump it!

The 1980s changed all that. The first challenge came from MCI Communications in the US. The company built a privately owned microwave link between Chicago and New York in 1982. This led to the break-up of the American Telegraph & Telephone (AT&T) monopoly, the emergence of regional Bell companies and the rapid decentralisation of telco infrastructure ownership. This event forced European governments to gradually open their markets to competition in the mid-1980’s, with the final competitive push coming from international mobile telephony in the early 1990s!

With the emergence of Global Service Mobility (GSM) technology and standards, European governments decided that each country should have at least three contending mobile service providers – the leading one was invariably the national telco, the second one was most often a neighbouring PTT, but the next ones were the real challengers! Vodafone, Orange and Virgin in the UK, Bouygues and Vivendi in France, Comcast, Century Link, Level 3 in the US, PCCW in Hong Kong, KDDI in Japan to name a few front-runners.

Choice changing business thinking

Executives now weight the business value of expensive, guaranteed quality connectivity versus cheaper and more flexible best-effort connectivity. With the 1000-fold increase of available bandwidth, connectivity not only becomes very price competitive, it also shifts from being a cost item to becoming a possible revenue generator for the enterprise.

The CTO is no longer in the dog house being responsible for ‘major costs to the company balance sheet’, but an entrepreneur able to create new opportunities for the lines of business. As corporate data users, we have become more comfortable in the 2000s with good-enough connectivity, and less concerned by scare stories about the dire consequences of business comms disruptions, such as:

  • Banks going out of business, if their systems go off line for a few hours or days,
  • ERP systems unable to work in less than five-nines uptime environments
  • Hackers threatening company survival when trade secrets and customer details are stolen,
  • Professional communications could not rely on Skype or other consumer video conferencing services due to lack of any quality of service (QoS) guarantees.

These scares are all being disproved by everyday company resilience, and user acceptance of minor service disruptions.

Fundamental voice telephony has taken us on the same technical journey from clear uninterrupted, echo free analog QoS telephony in the 1970’ies to mobile calls today that vary significantly in call quality, come with frequent call degradations, interruptions and cut-offs. There is simply more upside in today’s digital communication scene! We have achieved mobility, lower cost, greater bandwidth, media diversity and much higher levels of video, voice and data integration.

So our perception of risk has changed – we are less risk averse, having experienced the advantages of digital integration.

The rise of SDN and SD-WAN

However, the infrastructure telcos are still here, and the the telco equipment vendors Ericsson, Huawei, Nokia and Cisco still sell networking equipment with proprietary software that doesn’t easily communicate with competitor’s equipment. This is what the shift to Software Defined Networking (SDN) aims to address, by defining network functions in software that can be installed on multi-functioning hardware.

Essentially, by separating software from a specific hardware platform, it becomes much easier, quicker and cheaper for telcos and service providers to renew and improve their network infrastructure. The vendors that are slow to adapt risk becoming low margin commodity vendors if they do not own the software or worse, going out of business if commodity x86 hardware or cloud platforms can be used instead.

However, enterprise users must still subscribe to a wide range of distinct infrastructure services encompassing mobile and fixed-line voice, video and data services, using a limited subset of equipment to maintain compatibility, and does not allow them to pool all their network capacity into a single virtual connection.

This is what the Software Defined Wide Area Networking (SD-WAN) from a wider range of new vendors like Cradle Point VeloCloud, Silver Peak and Peplink address by bonding all the network access channels and managing them as a single virtual channel for any kind of WAN traffic. SD-WAN components like encryption, path control, overlay networks and subscription-based pricing are well known, but now with orchestrated delivery and unified management capabilities driving the SD-WAN momentum.

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