Verizon says SD-WAN dawn does not mark the end of MPLS services

Verizon may be an advocate of offering SD-WAN to its business customers, but the service provider is not worried about the new service eroding its well-established MPLS (multiprotocol label switching) revenue base anytime soon.

Shawn Hakl, vice president of networking and innovation for Verizon, told FierceTelecom that while MPLS circuit use may be declining a bit, the bigger issue is that enterprise customers are using various access methods.

“It does change people’s MPLS utilization, which is absolutely true,” Hakl said. “Almost every sale we have had for SD-WAN has actually added MPLS to the mix.”

RELATED: Verizon enhances SD-WAN management capabilities via SevOne partnership

Mike Fratto, research director of global data enterprise networking and data center technology, agreed. 

“SD-WAN is NOT a MPLS killer and I think any potential reduction in MPLS circuits is a side-effect of SD-WAN,” Fratto said. “You still need a network for SD-WAN to run over and there are other options to dedicated network access (MPLS is just one type of dedicated network access) such as broadband and wireless.”

Fratto added that “while business broadband and the internet is fairly reliable, there is no way to either enforce or guarantee performance requirements like you can with dedicated network access.”

Enterprises adopt multimode access

While Verizon adds more SD-WAN customers, the telco is seeing business sites that use multiple connection types rising at a rate of 50% year-over-year.

“Whereas before they would do MPLS or they would do internet, they are doing both and are adding wireless backup,” Hakl said. “You still have a protected corporate network, still want to go the internet, but you still can’t change the performance and security elements of MPLS.”

Hakl said that what’s changing is that MPLS growth has not stopped, but it is not at the same rate the telco saw in previous years.

MPLS bandwidth consumption is now growing at historical norms of 20-25%) versus the 45-50% Verizon saw when internet service was first introduced. Meanwhile, private wireless connections to MPLS are growing 50% year-over-year.

“MPLS is still relevant, but MPLS utilization is not growing in line with its historical norms which is 20-25% year-over-year bandwidth increase versus the 50% we were seeing when people were backhauling cleaning traffic to a data center.”

Interestingly, Verizon is seeing the interest in private networking delivered by MPLS circuits is up 50%.

SD-WAN ramping

Since launching the service in early 2016, Verizon has continued to ramp up its SD-WAN customer base.  

The service provider currently has 90 active SD-WAN implementations and 16 full-scale deployments. It also has 30 participants taking part in a universal CPE program trial.

Virtual CPE services will soon be available in over 30 global markets, allowing business customers to take advantage of software-based services that reside in the telco's cloud network.

Verizon recently added SevOne to its vendor lineup, giving it new network monitoring capabilities.

“What we did is added the intelligence that comes off of the existing SD-WAN software from Viptel and Cisco and feed it into the SevOne engine,” Hakl said. “That gives you that analytics layer optimized for your SD-WAN functionality and looking specifically at how you manage your policies around application-aware routing.”