ethernet executive council state-of-the-industry survey report,...
TRANSCRIPT
Ethernet & SDN Executive Council
State-of-the-Industry Survey Report, 2Q13
July 2013
Stan Hubbard
Senior Analyst, Heavy Reading
Ethernet & SDN Executive Council Program Coordinator
Ethernet & SDN Expo Americas & Ethernet Europe Chair
www.heavyreading.com
Table of Contents
Ethernet & SDN Executive Council Overview
Survey Background & Demographics
Council Member Companies Participating in Survey
Survey Key Findings & Results
• Service trends & issues – including the impact of SDN
• Service revenue growth expectations
• Plans & opinions related to network technologies
Ethernet & SDN Executive Council Overview Who’s Who of the Carrier Ethernet & SDN Service Provider Community
• Launched in September 2011 to honor individuals driving Ethernet and Ethernet-enabled cloud
services market growth.
• In 2013, we expanded the Council’s scope to include software defined networking (SDN), network
functions virtualization (NFV) and software-driven services.
• Provides unique avenues for shaping the debate and direction of the industry – events, LRTV
interviews, columns, survey-based reports, networking dinners, etc.
• Now consists of 140+ service and technology experts from 73+ service providers worldwide – with
particularly strong representation from North America and Europe.
Platinum Sponsors
CTO/VP Technologist
16%
Senior Technologist
11%
Corporate/ Marketing/
Product Mgmt. Executive
32%
Marketing/ Product Mgmt.
Senior Director or
Director 26% Marketing/
Product Mgmt. Senior
Manager or Manager
15%
Survey Participants: 47+ Service Providers Who Employ 95+ Council Members
Survey Background & Demographics
• The survey ran from 22 April to 25 May 2013.
• We received responses from 47+ service providers,
whose companies employ 95+ Council members.
• 71% of respondents are involved in corporate
management, marketing or product management.
• 29 % of respondents are CTOs, VPs of Technology
or Engineering or other senior technologists.
• 74% of respondents work for companies with an
annual revenue that is at least $500 million.
Executive – Technology
22%
Senior Technologist
7%
Executive – Corporate, Marketing,
Product Management,
or Sales 27%
Senior Director/
Director – Marketing,
Product Management
or Sales 22%
Senior Manager/
Manager – Marketing,
Product Management
or Sales 20%
Other 2%
Survey Participants: 47+ Service Providers Who Employ 95+ Council Members
14%
12%
14%
60%
0% 10% 20% 30% 40% 50% 60% 70%
Less than $200 million
$200 million to $500 million
$500 million and $1 billion
More than $1 billion
Approximate Annual Revenue of Respondents' Employers ($US)
Council Member Companies Participating in Survey
Allied Fiber
Broadnet
CenturyLink
COLT
Comcast
CoreSite
Cox Business Services
Deutsche Telekom
Deutsche Telekom ICSS
Equinix
euNetworks
Expereo
Fibertech Networks
Frontier Communications
Global Capacity
GTS CE
Indosat
Integra Telecom
KPN International
Level 3
Lightpath
Lightower Fiber Networks
Lumos Networks
MegaPath
NTT America
Orange Business Services
PCCW Global
P&T Luxembourg
SSE Telecoms
Tata Communications
Telecom Italia
TeliaSonera
TeliaSonera International
Carrier
Telenor
Telus
Telx
Time Warner Cable
Transbeam
tw telecom
Verizon
Verizon Wholesale
XO Communications
Zayo
Others*
* Several respondents did not identify their company, so a few service provider names may be missing from this list.
Survey Key Findings
We are entering an exciting new phase in the development of service and technology markets. The
convergence of Carrier Ethernet 2.0 & Carrier SDN technologies promises to accelerate the ability of
operators to develop and deliver more scalable, dynamic and customized services & applications over
much more efficient networks. But survey feedback indicates that – despite all of the current hype
around SDN – it will take considerable time for SDN technologies (1) to reshape how most networks
are built and operated and (2) to significantly impact the competitive services landscape.
The vast majority of Council members participating in the survey agreed to at least some extent that
competition in the Ethernet services market generally has expanded beyond a focus on service types
and technical details to also include a greater emphasis on service performance and quality of
experience.
Respondents identified (1) end-to-end performance SLAs, (2) rapid service turn-up and (3) extensive
on-network service coverage within metro markets as the most important of 13 service features
affecting customer buying decisions in the past 12 months.
• Performance SLAs, in particular, have grown increasingly important in the past year. While 87% of
respondents identified them as important, very important or critically important in 2Q12, that
number rose to 100% in 2Q13.
Survey data suggests performance SLAs, rapid service turn-up and strong metro coverage are very
likely to remain the top 3 service differentiators other than price through the end of 2014.
• Many operators also appear to consider MEF CE 2.0 services certification as an important way to
help distinguish their offerings in the market. 80% of respondents said that they expect one or
more of their Ethernet services to be CE 2.0-certified within the next 2 years.
Survey Key Findings
Over time, we expect service providers increasingly will differentiate by emphasizing real-time
performance visibility via web service portals, 100G transport services, 100GE UNI services, dynamic
bandwidth and network-based application awareness that enable robust cloud service offerings.
• 35% of survey participants said that they currently offer real-time performance monitoring on all or
most of their retail and/or wholesale services, and nearly 90% plan to provide real-time reporting
for at least some services within the next 2 years.
• Survey feedback indicates that Council members generally regard (1) web service portals with
service performance statistics and (2) 100G optical transport technology as the two most
important technology innovations delivering the greatest value to their companies.
• 100G optical transport and 100GE interfaces on switches/routers are the new technologies that
have generated the most deployment, test/trial or evaluation activity in the past year. More than
50% of respondents said that their companies have deployed or are starting to deploy 100G
optical transport. Many of these companies are offering 100G wavelength services today or
positioning to introduce them soon.
• About 40% of respondents expect their companies to offer 100GE intercity Ethernet services for
retail and wholesale customers by the end of 2013. While we suspect that a number of these
operators are likely to sell 100GE UNI services on just a limited basis in the near term, this is still
a noteworthy development for 2013. Moreover, nearly 80% of respondents expect their companies
to provide 100GE intercity and metro wholesale Ethernet services by the end of 2015.
Survey Key Findings
While Council members appear largely in agreement that we will see the emergence of more dynamic
service capabilities – including real-time capacity management and API-driven performance-on-
demand – a large portion of survey participants do not expect SDN to affect the services market any
time soon.
• Only 13% of respondents believe SDN will begin to significantly impact the landscape for
Ethernet, IP or wavelength services before the end of 2014. The vast majority of respondents
indicated that they do not expect more than 10% of their revenue to come from Ethernet, IP, cloud
or wavelength services delivered over an SDN architecture in the next 18 months.
• 2015 appears to be regarded as an important transition year in terms of a revenue shift as well as
the anticipated impact on the competitive landscape.
Survey feedback illustrates that we are still very much in the early days of any potential industry-wide
transition to SDN. Nearly two-thirds of respondents said that their companies are learning about SDN,
planning their SDN strategy or evaluating SDN solutions, while only 9% indicated they currently are
using or starting to use SDN technologies.
• The two most important factors driving the decision of Council members to embrace SDN
currently are (1) the desire to lower network operational costs through automation & other
efficiencies and (2) the desire to increase network agility.
• Respondents identified service orchestration & network functions virtualization (NFV) as the most
important areas of SDN-related development for their company.
• Despite all the buzz, SDN ranked 12 out of 14 in terms of the new technologies delivering the
greatest value to service providers.
Ethernet Service Market Evolution
86% of Council members strongly agree or agree to some extent that competition in the
Ethernet services market generally is centered on service performance & quality of experience,
and over time we’ll see increased differentiation around dynamic service capabilities. But many
respondents commented that extensive coverage and price remain key differentiators.
Question: To what extent do you agree with the following statement? Competition in the Ethernet services market
has expanded beyond a focus on service types, technical details and coverage, and is now primarily centered on
service performance and quality of experience. Going forward, service providers increasingly will differentiate by
emphasizing not only real-time performance visibility via web service portals but also dynamic bandwidth and network-
based application awareness that enable robust cloud service offerings. Real-time capacity management will evolve
beyond manual controls and threshold triggers to become API-driven. In addition, we are likely to see the emergence of
API-driven performance-on-demand, in which the network dynamically ensures not only that the appropriate capacity is
available for a given application but also that a guaranteed level of performance is delivered for a specific application.
2Q13 Question 1
33%
53%
7%
5%
2%
0% 10% 20% 30% 40% 50% 60%
Strongly agree
Agree to some extent
Neither agree nor disagree
Disagree to some extent
Strongly disagree
Ethernet Service Market Evolution – Service Provider
Comments (1 of 3)
2Q13 Question 1
I agree with the statement in its entirety.
I agree; it’s a question of timing and how extensive the portfolio of applications will be.
I agree with the concept described. Adoption may be hampered by regulatory constraints around application awareness, as well
as nascent business models around tailoring user experience.
Agree, but still see strong differentiation at higher bandwidths and coverage.
I agree with fact that the market is expanding beyond service types, what is yet to be seen is when. All of the items above are in
heavy discussion, but operationally there is still a focus on the basics of service types and coverage. So, while discussion and
research is expanding beyond, day-to-day business is still in the basics as the challenges of ubiquity and off net continue to grow.
The next steps of service evolution is focused on service wrap and higher flexibility in self configuring the service parameters. In
the longer term the technical aspect of Ethernet will move to the background as connectivity will be part of a wider maybe cloud-
based IT solution.
It appears that there are a number of providers focused on service performance and automation. The majority of providers (with
smaller market share) are still focused primarily on basic connectivity requirements. Over time, we agree that winning
business/share will require those service characteristics and abilities described above. API-driven strategies are still a ways off for
the vast majority of providers given their fragmented back office strategies.
Dynamic bandwidth and network-based application awareness are mid-term trends for B2B and retail segments only. On the other
hand, for the Wholesale segment production and operation excellence for carrier Ethernet services are more important trends.
Although we have seen requests for add-ons like bandwidth-on-demand, APIs, etc. we still see much focus given to reach, price,
speed and technical features.
Bandwidth on demand from a carriers perspective solves a commodity problem; however, I see this more happening from a cloud
provider – example is AWS/Amazon
Service performance and visibility is of greater importance to Ethernet customers than dynamic capacity capability.
Ethernet by its nature is a scalable solution with natural foundations for programmability to support dynamic networks. This makes
it easy to integrate with cloud/applications for a single application driven control end-to-end through the OSI layer
Ethernet Service Market Evolution – Service Provider
Comments (2 of 3)
2Q13 Question 1
There remains a large gap between customer expectations and willingness to pay for visibility/portals. There is a direct cost to
providing these, but I think it continues to become table stakes to win new business. SLAs will need to radically change as we
move from aggregate to circuit specific metrics with tangible credits.
Everything will be Ethernet and Ethernet will be everywhere, especially for enterprise cloud connectivity. With that said, while I
agree with the statement above, we still have a long way to go as an industry before for execution of CE 2.0 principles on a global
basis and do not see this moving as quickly as I would like.
API = SDN.
Will merge with IT.
Network must become flexible to accommodate the requirements of storage and compute services.
Saying that the focus is now "primarily centered" on service performance and quality of experience is an overstatement. Service
types, coverage and price are still the main focus.
The statement seems to be written by a customer who has no concept of how the above is profitable for the carrier.
Before we can establish service for bandwidth on demand and real time performance measurements, for which I haven't seen
some business case yet, we have to reduce IT costs and development times, especially when we think about huge infrastructures
which have been established for many years.
As incumbent operator, we are faced to a shift of the skills and competencies needed from pure Ethernet interface configuration to
API and software programming. The market is growing for Ethernet services, but the price per Mbps is going down quickly as well.
The market has come to maturity in many geographies and the rate of innovation has slowed down. Still many operators have to
invest and make carrier Ethernet available across their networks so that we can all interconnect and offer a seamless customer
experience end to end.
Move towards on-demand ad-hoc services. Major challenge will be inter-carrier real-time delivery of service. Different carriers use
different methods and the alignment, even thru APIs will require some evolution.
Cost per port and aggregate capacity will always be primary considerations.
There remains strong demand for reliable Ethernet services to more sites, in advance of the more complex capabilities.
Ethernet Service Market Evolution – Service Provider
Comments (3 of 3)
2Q13 Question 1
I think this is an evolution that will take time to develop. Today, coverage and ability to build Ethernet networks to provide
alternatives seems to be a more pressing issue as providers migrate networks from ubiquitous TDM networks.
General agreement with the evolution statement; however, significant customer base still focusing on Ethernet as commodity
connectivity and buying on price alone.
Other than highly competitive metro markets like New York, Chicago, etc., the main differentiator continues to be reach. The ability
to deliver a cost effective ubiquitous service still does not exist.
The Ethernet service will become a pipe to enable higher level applications.
Services offered over Ethernet, could be defined as services, solutions and features starting at Layer 3 and above, of the OSI model.
As the replacement for traditional TDM transport services, Ethernet become a baseline product offering.
We see Ethernet now being used for traditional L2-VPN's but mainly to deliver high bandwidth DIA services to cloud-based services.
With more market pull (customers) requiring layer 2 services and moving away from the traditional MPLS, the growth of services
on carrier Ethernet is a fact.
Services types are one of factor in competition, but in some other cases the price component is also something to consider.
Plain old connectivity (like POTS) much be differentiated as more companies offer the service. Cloud consumption is forcing
service providers to rethink how they offer and deliver Ethernet connectivity.
Right now in the UK, the state of the economy has turned the market into being totally price-orientated. Every deal is a battle
which is obscuring new trends. Cloud connectivity continues to rise in importance.
While a lot of work has been done from technology and marketing point of view, we still experience a lot difficulties in terms of
delivery to meet the market demand due to capacity, processes and system issues.
MEF 3.0 or other standards will make it easier to implement as opposed to proprietary vendor solutions.
Thinking on application aware bandwidth offering is aligned. However, MEF should focus on service definition as opposed to
making Ethernet as ATM/FR circuit. Let carriers work on service delivery alternatives.
Expect to see a further consolidation in the market regarding products and vendors.
What are your plans regarding MEF CE 2.0 certification of one
or more of your Ethernet Services?
43% of respondents said they expect one or more of their Ethernet services to be MEF CE 2.0-
certified by the end of 2013. Multiple operators who participate in the Council program already
have received CE 2.0 certification for at least one service. Those that are publicly announced
include Comcast, Telecom Italia, Fibertech and Lumos Networks.
7%
36%
26%
11%
20%
0% 5% 10% 15% 20% 25% 30% 35% 40%
We recently completed CE 2.0 certification
We expect CE 2.0 certification within 6 months
We expect CE 2.0 certification within 1 year
We expect CE 2.0 certification within 2 years
We currently have no plans for CE 2.0certification
2Q13 Question 2
When will SDN be widely adopted to the point that it
significantly impacts the competitive landscape for services?
Despite all the industry buzz around software defined networking, only 13% of respondents
indicated that they expect SDN will begin to significantly impact the competitive landscape for
Ethernet, IP or wavelength services before the end of 2014. Nearly one-fifth were hesitant to make
a guess. Comments on the next page are illustrative of the wide range of opinions about SDN.
2%
11%
32%
36%
18%
2%
0% 5% 10% 15% 20% 25% 30% 35% 40%
2013
2014
2015
2016 or later
Not sure
I don't think SDN will ever have a significantimpact on the competitive landscape
2Q13 Question 3
SDN & The Competitive Services Landscape – Service
Provider Comments (1 of 3)
2Q13 Question 3
We already use SDN-based networking equipment and technology.
Significant amount of SDN-like technologies already exist. Adoption will increase, but wide adoption will require more time.
SDN will have most impact in redefining corporate WANs to optimize private access to systems and data that have been relocated
into the cloud.
Highly disruptive to specific bandwidth-related applications.
SDN will be an enabler of service delivery as customers will demand faster, better and flexible services. The operator that can
provide that option will have a big competitive edge.
Carriers that can support on-demand provisioning of their network will attract enterprises that have virtualized their environment
and are looking to provide self-service support to their end-users without network limitations. Likewise, cloud companies will
become front-end distributors of the network as an integrated part of their cloud offerings
SDN is not required for on-demand delivery of services. What's required are business models, APIs and effective OSS-BSS
platforms to handle them. I trust SDN will eventually evolve into an OSS-BSS platform.
The capability of change on-the-fly, demand-based reconfiguration and such will change the landscape. At the end of the day, the
technology needs to be enabled by proper capacity management to accommodate the impact of these changes on-demand.
SDN should increase service flexibility in terms of the introduction of new features, reducing very much the time needed today for
firmware distribution and hardware updating. That will increase the competition in terms of services features and market time speeds.
Networks need to be more intelligent to flex bandwidth and service experience according to customer demand. If SDN is able to
provide a proper solution for this it will make a strong difference for a carriers service offering.
SDN has the potential to simplify provisioning and open new use cases (and revenue streams). However, the industry is
fragmented on approach, and a common standards body is required to realize early gains.
Will reduce cost.
There are several ways to achieve service leadership. SDN is an automation framework and not confined to 1 or 2 technology trends.
Currently under discussion, but no firm plans to deploy.
Standardization will impact quicker adoption.
SDN & The Competitive Services Landscape – Service
Provider Comments (2 of 3)
2Q13 Question 3
There will be parts of "SDN" that are adopted and brought to market to meet demand - these components may not be as open and
standard as forums and organizations would like.
Have seen little to no discussion from carriers about the importance of this at this point (SDN’s impact on service
competitiveness). Seems to be more discussion in the media.
Wider implementation of SDN technologies is several years out. There seems to be 3 "camps" of SDN approaches currently - 1)
actually implementing; 2) developing strategies for implementation; 3) education on potential and business impact. It appears that
there are few providers actually implementing SDN strategies currently.
While the SDN is important, the collaboration on standards will take more time.
SDN will impact but not in 1 or 2 years.
Less will change in 2 years with the adoption of SDN and more will change in 10 years... SDN will play a role in certain segments
of the network and/or data center but I see in taking longer, if ever, to be widely adopted by operators.
Expect SDN to impact cloud somewhat earlier (in 2015) than the WAN (2016).
Due to the complexity of the existing implementation of the ongoing business models in the operator system IT-systems, the
transformation towards SDN will be beyond 2016.
Important for data center and cloud infrastructure, but less significant impact for Ethernet delivered to commercial locations.
SDN is already impactful in server rich data centers, but has a very long way to go before wide adoption and applicability in a
network operators network. I believe the challenges are less technical and more business and operational. Operators struggle
giving up access control to any network assets today.
It makes sense in data centers, but I'm not sure of the application across the network as it will be very difficult to get all the old
equipment update to accept SDN services.
Implementing SDN has many challenges; from billing to support to implementation. Some nuances of SDN will be implemented
within the next two years, but wide-scale availability and services will not be available until 2016 or later.
If the efforts of MEF and industry continue and the first customer cases will be there to prove its effect, SDN will be pushed forward.
The coming year will be critical to see if this will happen. Otherwise, the impact might never come to the competitive landscape.
Currently consider SDN to be a too broad term/concept to have any "significant" impact; "Many words, but less volume."
SDN & The Competitive Services Landscape – Service
Provider Comments (3 of 3)
2Q13 Question 3
SDN is about removing the proprietary OS (operating system) from the hardware and making it so that the optical / Ethernet switch
can be standard, common components controlled by open source software running on a generic server. Think Linux, or Asterisk.
That will happen to optical and Ethernet equipment, but it will take a few years.
As incumbent operator, we are faced to a shift of the skills and competencies needed from pure Ethernet interface configuration to
API and software programming. SDN is definitely a real challenge.
I believe a giant factor will be convincing carriers the software involved in SDN is "bug free" and will not bring down their network.
Network integrity is paramount for carriers.
This is perhaps a bit of a non-answer, but I think it is still to be determined. Obviously, it will be critical, but just how critical remains
to be seen.
Virtualizing things solves some problems, but creates others. There are many unknowns at this point, and I believe the industry
needs to fully understand the total cost of ownership (TCO) model.
Our customers are not there yet with SDN. Reliability, performance to SLAs, visibility and of course price remain the key factors for
their Ethernet services.
Not clear to me yet. I am interested in how to improve quality of service and how to make the network more self resilient. I think
that this will make a competitive advantage for some operators.
I think SDN is actually more a buzzword in the industry. Everybody put it on the agenda, but most of the people understand very
different functions concerning SDN. So we have to see which functions can really be supported.
I believe adoption of SDN will happen in the core of the network, or between carriers. A complete replacement of the installed
base of an existing carrier – I do not see that happening so fast.
Not sure at this point.
Not sure.
It is not clear at this time whether SDN will be widely adopted by operators.
Not sure whether SDN values are sufficiently compelling to drive adoption.
Still to early to assess the projected operational and financial benefits.
SDN is for the aggressive players like HP and Cyan as vendors.
What is your company's current plan for transitioning to an
SDN architecture?
Council member feedback illustrates that we are still very much in the early days of any
potential industry-wide transition to SDN. Nearly two-thirds of respondents said that their
companies are learning about SDN, planning their SDN strategy or evaluating SDN solutions,
while only 9% indicated they currently are using or starting to use SDN technologies.
28%
28%
35%
4%
5%
0% 5% 10% 15% 20% 25% 30% 35% 40%
We currently have no plans to transition to SDN
We are now getting up to speed on SDNconcepts, benefits, and challenges
We are in the early stages of planning our SDNstrategy or evaluating SDN solutions
We have recently begun deploying / using SDNsolutions
We have been using SDN-like solutions for quitesome time but just did not call it SDN
2Q13 Question 4
What are the most important factors driving the decision to
transition to SDN?
The two most important factors driving the decision of Council members to embrace SDN
currently are (1) the desire to lower network operational costs through automation & other
efficiencies and (2) the desire to increase network agility. Nearly 40% of respondents also said
faster time-to-market with new services & applications is a critical factor.
2Q13 Question 5
41%
38%
35%
29%
24%
19%
16%
10%
43%
36%
37%
50%
64%
52%
61%
43%
10%
19%
19%
12%
7%
21%
16%
36%
7%
7%
9%
10%
5%
7%
7%
12%
0% 20% 40% 60% 80% 100%
Lower network operational costs through automation & otherefficiencies
Faster time-to-market with new services and applications
More elastic and scalable services with user control
Greater service & application differentiation
Greater network agility
Enable dynamic service-driven virtual networks capable ofsupporting everything-as-a-service (including the network itself)
Lower network capital costs by using as much commercial off-the-shelf (COTS) hardware as possible
Extract & utilize business intelligence
Critical Important Marginal Not important at all
What percent of your revenues do you expect to come from
Ethernet, IP, cloud or wavelength services delivered over an
SDN architecture in coming years?
The vast majority of respondents indicated that they do not expect more than 10% of their
revenue to come from Ethernet, IP, cloud or wavelength services delivered over an SDN
architecture in the next 18 months. 2015 appears to be regarded as an important transition year
in terms of a revenue shift as well as the anticipated impact on the competitive landscape.
2Q13 Question 6
78%
71%
36%
19%
7%
9%
34%
28%
4%
7%
4%
26%
4%
4%
11%
2%
2%
4%
9%
13%
4%
4%
6%
13%
0% 20% 40% 60% 80% 100%
2013
2014
2015
2016
Less than 10% 10% to 20% 20% to 30%
30% to 40% 40% to 50% More than 50%
What are the most important areas of SDN development for
your company?
Respondents identified service orchestration & network functions virtualization (NFV) as the
most important areas of SDN-related development for their company, with 84+% saying these
were critical or important. While 69% said a centralized control option was critical or important,
just 19% said this was critical.
2Q13 Question 7
37%
27%
23%
19%
15%
8%
47%
58%
58%
50%
60%
47%
12%
8%
13%
25%
21%
31%
4%
6%
6%
6%
4%
14%
0% 20% 40% 60% 80% 100%
Service orchestration across technologies, layers, anddomains
Network functions virtualization
Standardized northbound APIs that would make itunnecessary for operators to create their own APIs
Centralized control option to supplement distributedcontrol (includes hybrid SDN-enabled switch/router)
Multilayer management, visualization, & modeling
Open source software
Critical Important Marginal Not important at all
Over the past 12 months, how has the competitive pricing
environment changed for various services?
Opinions regarding the service pricing environment varied widely. While a strong majority of
respondents said that pricing has deteriorated either slightly or significantly for Ethernet and
wavelength services, one-third said that price competition for metro Ethernet and metro
wavelength services has remained the same or has eased in the past 12 months.
2Q13 Question 8
4%
2%
2%
4%
2%
12%
6%
8%
6%
4%
4%
21%
14%
20%
10%
17%
28%
44%
41%
41%
49%
29%
43%
21%
20%
24%
28%
17%
14%
2%
16%
6%
6%
29%
10%
0% 20% 40% 60% 80% 100%
Metro Ethernet connectivity services
Long-haul wavelength services
Long-haul Ethernet connectivity services
Wholesale Ethernet access service (deliveredby operators to service providers)
Layer 3 VPN services
Metro wavelength services
Price competition has decreased significantly Price competition has decreased slightly
Pricing has remained the same Price competition has increased slightly
Price competition has increased significantly Don't know / Not sure
What have been the most important service features affecting
customer buying decisions over the past 12 months?
The most important differentiators other than price in the past 12 months were: (1) end-to-end
performance SLAs, (2) rapid service turn-up and (3) extensive on-network service coverage
within metro markets. About 30% of respondents also said diversity was critical to deal wins.
2Q13 Question 9
49%
40%
31%
28%
21%
18%
17%
12%
12%
12%
6%
6%
0%
19%
42%
31%
47%
37%
51%
48%
39%
35%
28%
39%
15%
17%
26%
17%
31%
23%
29%
26%
21%
33%
31%
31%
33%
19%
31%
4%
6%
2%
10%
4%
10%
12%
18%
22%
22%
44%
42%
2%
4%
2%
4%
4%
4%
8%
15%
10%
0% 20% 40% 60% 80% 100%
Extensive on-network service coverage within individual metro markets
End-to-end SLAs with service performance guarantees (availability, jitter,packet delivery, latency)
Diversity (node, link, geography) for improved reliability
Rapid service turn-up
Bandwidth scalability (including up to 10 GE UNI)
Intercity reach via your company's own points-of-presence
Expanded service reach via network-to-network interconnectionarrangements with other operators or exchanges
Support of virtual services with more than one class of service (CoS)
<50 ms protection
Multiple access methods (on-network fiber, G.SHDSL bonded copper pairs,xDSL, bonded TDM access circuits, PON, microwave, or third-party access)
Enhanced web service portals (including network utilization, real-timeperformance metrics, self-service capabilities, etc.)
Dynamic bandwidth (changes within minutes or hours)
Application awareness (visibility into application traffic and the ability tomanage & prioritize applications)
A critical differentiator (key to winning deals) Very important Important Marginal Not a factor at all
Performance
SLAs have
grown
increasingly
important in the
past 12 months.
While 87% of
respondents
identified them
as important,
very important
or critically
important in
2Q12, that rose
to 100% in
2Q13.
What will be the most important differentiators influencing
customer buying decisions in the next 12-18 months?
Using a weighted calculation of responses, it appears very likely that the top 3 service
differentiators through the end of 2014 will be: (1) end-to-end performance SLAs, (2) rapid
service turn-up and (3) extensive on-network service coverage within metro markets.
End-to-end SLAs with service performance guarantees (availability, jitter,packet delivery, latency)
Rapid service turn-up
Extensive on-network service coverage within individual metro markets
Diversity (node, link, geography) for improved reliability
Intercity reach via your company's own points-of-presence
API-driven capacity management or performance-on-demand (dynamiccapacity + guaranteed performance)
Bandwidth scalability (including up to 10GE UNI, perhaps even 100GE UNI)
Application awareness (visibility into application traffic and the ability tomanage & prioritize applications)
Support for virtual services with more than 1 class of service (CoS)
Enhanced web service portals (including network utilization, real-timeperformance metrics, self-service capabilities, etc.)
Expanded service reach via network-to-network interconnectionarrangements with other operators or exchanges
Dynamic bandwidth (changes within minutes or hours)
Multiple access methods (on-network fiber, G.SHDSL bonded copper pairs,xDSL, bonded TDM access circuits, PON, microwave, or third-party access)
<50 ms protection
2Q13 Question 10
1
2
3
What are your company's plans to offer retail or wholesale
Ethernet service SLAs with "real-time" performance reporting?
35% of respondents said that they currently offer “real-time” performance reporting on all or
most of their retail and/or wholesale Ethernet services, while another 35% offer this on a limited
number of services. Nearly 90% of respondents expect to provide real-time reporting for a least
some services within 2 years.
2Q13 Question 11
vs. 23% in 2Q12
vs. 32% in 2Q12
35%
35%
11%
7%
11%
0% 5% 10% 15% 20% 25% 30% 35% 40%
We already offer these SLAson all or most services
We now offer these SLAson a limited number of services
We plan to offer these SLAswithin 12 months
We plan to offer these SLAsin 1 to 2 years
We have no plans to offer theseSLAs within the next two years
What are your company's plans for major types of cloud-
related services?
50+% of responders said that they expect their companies to offer the major types of cloud
services within the next 2 years. 85% said they offer or plan to offer Ethernet cloud connectivity
/ transport of cloud services within the next 12 months. Meanwhile, more than 60% expect to be
providing network-based cloud broker services within the next 2 years.
2Q13 Question 12
67%
43%
40%
29%
29%
17%
18%
12%
10%
20%
10%
19%
6%
12%
8%
12%
10%
27%
10%
33%
42%
39%
50%
38%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Ethernet cloud connectivity and transport of cloud services (access to datacenters and data center interconnectivity)
Infrastructure-as-a-Service
Software-as-a-Service
Virtual Private Cloud Service
Platform-as-a-Service
Network-based cloud broker service (bridges chasm between cloudproviders & cloud users; manages the performance and delivery of cloudservices and applications; provides bandwidth and end-to-end assurance)
We offer this service now We plan to offer in the next 12 months
We plan to offer in 1 to 2 years We don't plan to offer in the next 2 years
Over the next 12 months, what are your company's most
realistic revenue growth expectations for major services?
94+% of respondents whose companies offer retail Ethernet services, Ethernet cloud
connectivity services and wholesale Ethernet services expect positive revenue growth for
these services during the next 12 months. 70+% of respondents expect their retail and
wholesale Ethernet services to grow by at least 10%. This contrasts with only 32% of
respondents who expect their retail wavelength sales to grow at least 10%.
2Q13 Question 13
36%
35%
35%
37%
18%
24%
8%
3%
38%
35%
30%
26%
39%
29%
35%
29%
20%
26%
30%
24%
24%
29%
40%
58%
4%
4%
4%
13%
16%
18%
18%
11%
2%
3%
0% 20% 40% 60% 80% 100%
Wholesale Ethernet for customers providing retail businessservices
Retail Ethernet services for enterprises / businesses
Carrier Ethernet cloud connectivity and transport of cloud services(access to data centers and data center interconnectivity)
Wholesale Ethernet backhaul services for mobile operators
Wholesale wavelengths
Cloud services (SaaS, PaaS, IaaS, Virtual Private Cloud Services)
Layer 3 IP VPN services for enterprises / businesses
Retail wavelengths
Grow more than 20% Grow 10% to 20% Grow 1% to 10% Remain flat Decline 1% to 10% Decline 10% to 20%
How have opinions changed regarding double-digit sales
growth for various data services since the 2Q12 survey?
The percentage of respondents anticipating double-digit growth for retail Ethernet services
was identical to the percentage in 2Q12. A higher percentage of respondents have more
positive expectations for double-digit growth of their wholesale Ethernet services, wholesale
Ethernet backhaul services and wholesale wavelengths when compared to feedback in 2Q12.
2Q13 Question 13
70%
62%
56%
52%
33%
33%
70%
73%
63%
43%
58%
32%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Retail Ethernet services forenterprises/businesses
Wholesale Ethernet for customersproviding retail business services
Wholesale Ethernet backhaulservices for mobile operators
Layer 3 IP VPN servicesfor enterprises/businesses
Wholesale wavelengths
Retail wavelengths
2Q12 Survey 2Q13 Survey
What percentage of your company's retail Ethernet service
revenue was generated by services with a 10 GE UNI in 2012
and what do you expect in 2013?
21% of respondents stated that 5+% of their retail Ethernet revenues were generated by
services with a 10GE UNI in 2012. That figure jumped to 54% of respondents when considering
expectations for 2013. 18% of respondents expect at least 10% of their retail Ethernet revenues
to be generated by services with a 10GE UNI in 2013.
2Q13 Question 14-A
79%
46%
7%
36%
12%
7%
2%
9% 2%
0% 20% 40% 60% 80% 100%
2012 retail
2013 retail
Less than 5% 5% to 10% 10% to 15% 15% to 20% 20% to 25% More than 25%
60%
30%
17%
33%
2%
14%
10%
2%
7%
14%
5%
7%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2012 wholesale
2013 wholesale
Less than 5% 5% to 10% 10% to 15% 15% to 20% 20% to 25% More than 25%
What percentage of your company's wholesale Ethernet
service revenue was generated by services with a 10 GE UNI
in 2012 and what do you expect in 2013?
40% of respondents stated that 5+% of their wholesale Ethernet revenues were generated by
services with a 10GE UNI in 2012. That figure climbed to 70% of respondents when considering
expectations for 2013. 37% of respondents expect at least 10% of their wholesale Ethernet
revenues to be generated by services with a 10GE UNI in 2013.
2Q13 Question 14-B
When will your company offer major types of Ethernet services
with a 100 GE UNI?
About 40% of respondents expect their companies to offer 100GE intercity Ethernet services
for retail and wholesale customers by the end of 2013, while just slightly less than that expect
to offer 100GE metro Ethernet services by the end of 2013.* Nearly 80% of respondents expect
to provide 100GE intercity and metro wholesale Ethernet services by the end of 2015.
2Q13 Question 15
* Keep in mind that nearly 75% of respondents are from companies that generate more than $500 million in annual revenue.
Also, we believe a number of these operators are likely to offer 100GE UNI services on just a limited, individual-case-basis at
least until the cost of 100GE interfaces on switch/routers declines more with volume shipments.
32%
29%
26%
26%
9%
10%
12%
12%
21%
10%
23%
9%
18%
14%
19%
19%
21%
38%
21%
35%
0% 20% 40% 60% 80% 100%
Wholesale intercity Ethernet service
Retail intercity Ethernet service
Wholesale metro Ethernet service
Retail metro Ethernet service
Already offer this now By end of 2013 2014 2015 2016 or later
What are the top technology innovations from the past 2 years
that are delivering or promising to deliver the greatest value?
Using a weighted calculation of responses, the top two technology innovations were: (1) web
service portals with performance statistics and (2) 100G optical transport. The MEF 33 E-
access specification and expanded use of OAM tied for the No. 3 slot. SDN ranked 12 out of 14.
2Q13 Question 16
1
2
3
3
Web service portals with service performance statistics
100-Gigabit optical transport
Carrier Ethernet 2.0 - MEF 33 wholesale Ethernet access specification
Expanded use of OAM technology throughout the service life cycle
Network interface devices with Ethernet service OAM
Carrier Ethernet 2.0 - MEF 23 multi-provider class of service agreement(delivering end-to-end class-of-service across interconnected networks
ROADM-based metro networks that provide cost-efficient, flexible access
100-Gigabit Ethernet interfaces on switches / routers
MPLS-TP
G.8032 v2 Ethernet ring protection
Carrier Ethernet 2.0 - MEF 26 external network-to-network interconnectionspecifications for operators
Emerging SDN technologies / standards (OpenFlow, service orchestrationplatforms, etc.)
OTN switching
10-Gigabit Ethernet intelligent demarcation platforms
At what stage is your company in terms of evaluating, testing,
trialing or deploying various next-generation technologies?
100G optical transport & 100GE interfaces on switches/routers are the new technologies that
have generated the most deployment, test/trial and evaluation activity. More than 50% of
respondents said that their companies have deployed or are starting to deploy 100G optical
transport. Only 15% said that SDN-related technologies have moved beyond the evaluation
stage. 51% have no plans for standalone OpenFlow switches or OpenFlow controllers.
2Q13 Question 17
28%
19%
16%
13%
12%
10%
6%
4%
2%
2%
9%
13%
36%
15%
26%
10%
13%
2%
11%
19%
18%
28%
26%
13%
27%
11%
11%
11%
21%
21%
16%
17%
22%
17%
21%
34%
34%
43%
32%
28%
14%
28%
14%
50%
33%
51%
51%
45%
0% 20% 40% 60% 80% 100%
IP/MPLS to the customer demarcation site(with control-plane based management)
10-Gigabit Ethernet intelligentdemarcation platforms
100-Gigabit optical transport
OTN switching
100-Gigabit Ethernet interfaces onswitches / routers
MPLS-TP (using either IETF-backedOAM or ITU-backed OAM)
G.8032 v2 Ethernet ring protection
OpenFlow controller
OpenFlow switch
Hybrid OpenFlow switch/router (OpenFlowintegrated into a traditional switch or router)
We already have significant deployment We are starting to deploy now
We are testing/trialing We are evaluating but have not started testing
We have no plans for this at present
What is your company's plan for extending MPLS out to the
access network to support various applications?
More than 75% of respondents said that they are using or intend to use MPLS at least to a
limited degree in the access network to support business and wholesale services. 50% already
use MPLS extensively in the access network for business and wholesale services, while 41%
use MPLS extensively in the access network for cloud and mobile backhaul services.
2Q13 Question 18
53%
50%
41%
41%
27%
25%
27%
20%
20%
25%
33%
39%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Business services
Wholesale services
Cloud services
Mobile backhaul services
We will use MPLS extensively in the access network for this service
We will make limited use of MPLS in the access network for this service
We don't plan to use MPLS in the access network for this service
Which technologies do companies prefer in the access
network to support retail business services?
The top three preferred technologies in the access network supporting retail business services
are: (1) IP/MPLS, (2) Q-in-Q (VLAN stacking) and (3) VLAN switching.
2Q13 Question 19-A
66%
51%
11%
15%
13%
23%
64%
60%
0% 10% 20% 30% 40% 50% 60% 70%
IP/MPLS
VPLS
H-VPLS
MPLS-TP (MPLS-Transport Profile)
Provider Backbone Bridging (PBB)
G.8032v2 Ethernet Ring Protection
Q-in-Q
VLAN switching
Which technologies do companies prefer in the access
network to support wholesale services?
The top three preferred technologies in the access network supporting wholesale services are:
(1) Q-in-Q (VLAN stacking), (2) VLAN switching and (3) IP/MPLS.
2Q13 Question 19-B
52%
50%
12%
19%
14%
26%
69%
62%
0% 10% 20% 30% 40% 50% 60% 70% 80%
IP/MPLS
VPLS
H-VPLS
MPLS-TP (MPLS-Transport Profile)
Provider Backbone Bridging (PBB)
G.8032v2 Ethernet Ring Protection
Q-in-Q
VLAN switching
Which technologies do companies prefer in the access
network to support cloud services?
The top three preferred technologies in the access network supporting cloud services are: (1)
IP/MPLS, (2) VLAN switching and (3) Q-in-Q (VLAN stacking). VPLS ranked almost as popular
as Q-in-Q.
2Q13 Question 19-C
68%
43%
10%
10%
13%
18%
45%
53%
0% 10% 20% 30% 40% 50% 60% 70% 80%
IP/MPLS
VPLS
H-VPLS
MPLS-TP (MPLS-Transport Profile)
Provider Backbone Bridging (PBB)
G.8032v2 Ethernet Ring Protection
Q-in-Q
VLAN switching
Which technologies do companies prefer in the access
network to support mobile backhaul services?
Q-in-Q (VLAN stacking), VLAN switching and IP/MPLS essentially tied in terms of the preferred
technologies in the access network used to support mobile backhaul services. G.8032v2
Ethernet ring protection ranked higher for mobile backhaul than it did for other services.
2Q13 Question 19-D
49%
41%
11%
8%
16%
30%
51%
51%
0% 10% 20% 30% 40% 50% 60%
IP/MPLS
VPLS
H-VPLS
MPLS-TP (MPLS-Transport Profile)
Provider Backbone Bridging (PBB)
G.8032v2 Ethernet Ring Protection
Q-in-Q
VLAN switching
Which of the following best describes how your company
provides Ethernet mobile backhaul services?
71% of the respondents whose companies offer Ethernet mobile backhaul services said that
they now run these services on the same network as their Ethernet business services. This
illustrates the growing trend toward service convergence on a common high-performance
carrier Ethernet/MPLS network.
2Q13 Question 20
71%
9%
20%
0% 10% 20% 30% 40% 50% 60% 70% 80%
We run Ethernet mobile backhaulservices on the same network as
Ethernet business services
We run all Ethernet mobile backhaulservices on a separate network from
Ethernet business services
We run some Ethernet mobile backhaulservices on a separate network fromEthernet business services, but we
run others on the same network
Yes.
Sometimes.
Yes, QOS to deliver multiple layers at different price points,
including dedicated bandwidth services to migrate from the
TDM network.
We don't oversubscribe. QOS is not something we see value
in at this point. Lack of fiber would be a catalyst.
From a marketing point of view, we have always been
reluctant to overbook due to the risk of cannibalization of the
existing business that is not oversubscribed.
QoS yes, but only at the edge. Especially for business and
wholesale services every data packet within the network
MUST be transported. So oversubscription in the network is
actually not used. The link usage between two routers will not
reach more than 50% to 70% of the link capacity before a new
link will be added.
No, although we have been asked. We do not plan to offer
over-subscription as it introduces significant complexity,
especially to performance management reporting/portals.
Would likely allow for "over-subscription" related to increase
of mobile broadband traffic, support of service differentiation
and integrated solutions across mobile and IP.
For mobile backhaul operators, do you run your network with
oversubscription? If not, do you ever see the need/value of
using QoS techniques to allow for oversubscription?
About half of those who responded to this question said that they run their networks with
oversubscription on at least a limited basis. The remaining half of respondents said they do not
run oversubscribed.
2Q13 Question 21
1. No 2. Yes - microcell
Limited mobile backhaul deployments - we have been
opportunistic here.
No oversubscription; converged service capacity
management in all IP network.
No oversubscription on backhaul services.
We believe that enhanced QoS techniques are a powerful tool
to optimize the bandwidth .
We do not run with any oversubscription or QoS. Only use
dedicated bandwidth.
We run with oversubscription.
Yes
Yes and yes.
Yes, we do.
Yes.
Yes.
No.
No, as fiber-based company, we will continue to utilize
additional fiber in place of oversubscription.
For core network operators, what role do you see for carrier
Ethernet technologies in a core router bypass application?
About half of the respondents who answered this question indicated that they see a role for
carrier Ethernet in a core router bypass application. Several noted they’re using DWDM/OTN
for router bypass.
2Q13 Question 22
Yes, costs dictate need for bypass at L2 and also at optical
transport.
No. From my point of view we have to do a separation
between a very cost critical and mostly automated layer for
mass market and consumer services and business services
which have to be flexible in any direction.
We do not see router bypass becoming a standard rule, but
we will consider it for all highly loaded routes. However, our
current plan is to configure bypass at the TDM circuit layer
(wavelength or OTN) rather than Ethernet.
Absolutely! But the subtending architecture must include a
routing function node along with a server cluster (Akamai-style)
CDN. These subnets can serve 50-100 towers in a given
region and assist in reducing backhaul congestion, reducing
latency and overall opex and improving the user experience.
Some lower cost Ethernet platforms can perform some
upfront, backhaul/aggregation functions but router type
platform still needed for full services support (point-to-point
and multipoint services, QoS, etc.).
Router is also an Ethernet switch, virtualizing routing sw takes
the cost equation out of this discussion.
Cost savings and performance enhancements.
Have not identified any cost benefits.
Maybe, but WDM mostly used or MPLS based.
No.
The matter is under study.
We do not use Ethernet in the core. I do see opportunities to
lower cost with Ethernet.
Yes - we are in the process.
Yes this makes sense .
Yes, using high end layer 2 Ethernet switches.
Yes.
Yes, savings in router cost as well simplified operations.
Favor DWDM services in core network.
IP/MPLS/VPLS are and will remain the dominant network
protocols. SDH core circuits will migrate to Ethernet, but end-
to-end Ethernet will remain limited in scope and will
predominantly be delivered over the MPLS/VPLS platforms.
What are the biggest security concerns regarding cloud
services?
Based on a weighted response, the top three security concerns related to cloud services were
(1) denial-of-service attacks, (2) intrusion and (3) remote access to information.
2Q13 Question 23
Denial-of-Service (DoS) attacks
Intrusion
Remote access to information
Viruses
Bring your own (BYO) device
Mobile connectivity
Deep Packet Inspection (DPI)
Subscriber License Agreement
This Heavy Reading research product ("Research Product") and the information therein are the property of or licensed to Heavy Reading, and permission to use the
same is granted to annual or single-product subscribers ("Subscribers") under the terms of this Subscriber License Agreement ("Agreement"), which may be amended
from time to time without notice. When requesting a Research Product, the Subscriber acknowledges being bound by the terms and conditions of this Agreement and
any amendments thereto.
OWNERSHIP RIGHTS
All Research Products are owned by Heavy Reading and protected by federal, state and international copyright, trademark and intellectual property laws, under and by
applicable treaties and/or conventions. Subscriber agrees not to export any Research Product into any country that does not have copyright, trademark and intellectual
property laws that will protect Heavy Reading's rights therein.
GRANT OF LICENSE RIGHTS
Heavy Reading hereby grants Subscriber a non-exclusive, non-refundable, non-transferable license to use the Research Product for research purposes only pursuant to
the terms and conditions of this Agreement. Heavy Reading retains exclusive and sole ownership of each Research Product disseminated under this Agreement.
Subscriber agrees not to permit any unauthorized use, reproduction, distribution, publication or electronic transmission of any Research Product or the
information/forecasts therein without the express written permission of Heavy Reading. Subscribers may make this Research Product available only to other employees
within their organization. The Research Product is distributed in PowerPoint (PPT) format. The Subscriber is granted the right to include individual slides or groups of
slides for use in internal presentations, as well as for sales and marketing presentations to third parties, provided Heavy Reading is explicitly cited as the source of the
information used. Any distribution of Research Product contents beyond the license rights granted in this paragraph is expressly forbidden without prior written
permission of Heavy Reading.
DISCLAIMER OF WARRANTY AND LIABILITY
Heavy Reading has used its best efforts in collecting and preparing this Research Product. HEAVY READING, ITS EMPLOYEES, AFFILIATES, AGENTS AND
LICENSORS DO NOT WARRANT THE ACCURACY, COMPLETENESS, CURRENTNESS, NONINFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OF ANY RESEARCH PRODUCTS COVERED BY THIS AGREEMENT. HEAVY READING, ITS EMPLOYEES, AFFILIATES, AGENTS AND
LICENSORS SHALL NOT BE LIABLE TO SUBSCRIBER OR ANY THIRD PARTY FOR LOSS OR INJURY CAUSED IN WHOLE OR PART BY HEAVY READING'S
NEGLIGENCE OR BY CONTINGENCIES BEYOND HEAVY READING'S CONTROL IN COMPILING, PREPARING OR DISSEMINATING ANY RESEARCH
PRODUCT, OR FOR ANY DECISION MADE OR ACTION TAKEN BY SUBSCRIBER OR ANY THIRD PARTY IN RELIANCE ON SUCH INFORMATION, OR FOR ANY
CONSEQUENTIAL, SPECIAL, INDIRECT OR SIMILAR DAMAGES (INCLUDING LOST PROFITS), EVEN IF HEAVY READING WAS ADVISED OF THE POSSIBILITY
OF THE SAME. SUBSCRIBER AGREES THAT THE LIABILITY OF HEAVY READING, ITS EMPLOYEES, AFFILIATES, AGENTS AND LICENSORS, IF ANY,
ARISING OUT OF ANY KIND OF LEGAL CLAIM (WHETHER IN CONTRACT, TORT OR OTHERWISE) IN CONNECTION WITH ITS GOODS/SERVICES UNDER
THIS AGREEMENT SHALL NOT EXCEED THE AMOUNT SUBSCRIBER PAID TO HEAVY READING FOR USE OF THE RESEARCH PRODUCT IN QUESTION.
DISPUTE RESOLUTION
This License will be governed by the laws of the State of New York. In case of a dispute arising under or related to this License, the parties agree to binding arbitration
before a single arbitrator in the New York City office of the American Arbitration Association. The prevailing party will be entitled to recover its reasonable attorney fees
and costs.
Heavy Reading
240 West 35th Street, 8th Floor
New York, NY 10001 USA
Phone: +1 212-600-3000
www.heavyreading.com