TeleGeography's Cloud and WAN Infrastructure is hot off of the press with new data and analysis for 2019.
This unique report details the international wide area network services, cloud connectivity offerings, and cloud geographies of 180 service providers. We examine the evolution of WAN services, as well as the architecture, geographic coverage, and pricing of these services.
Do we have new trends to report? Absolutely. Keep scrolling to get the scoop on what's new with virtual private networks (VPNs) based on internet protocol (IP) and multi-protocol label switching (MPLS), dedicated internet access (DIA), Ethernet VPN (EVPN), and Ethernet private line (EPL).
MPLS IP VPN Services
The State of Affairs: Layer 3 MPLS IP VPN is by far the most widely available international enterprise network service. These services remain a critical component of the global WAN, despite the fact that a growing number of enterprises are diverting some corporate traffic to the public internet.
Our company profiles indicate that all of the 180 providers we reviewed offer this service via their global points of presence (PoPs).
While geographic availability is crucial in choosing an IP VPN provider, customers must also navigate the array of service features and product differences across carriers. In addition to network footprint, individual carrier solutions are further differentiated by the availability of port capacities and class of service implementations.
Trend Alert: Enterprise customers are diverting a substantial amount of corporate traffic to the public internet, but performance, security, and reliability requirements ensure that MPLS IP VPN remains a critical component of global hybrid WAN designs.
In 2018, 64% of respondents to TeleGeography’s WAN Manager Survey plan to or have kept MPLS at most sites in their WAN. Yet falling wholesale transport prices, increasing market pressure from alternative transport technologies, and expanding service provider footprints are driving down IP VPN prices globally. Between Q4 2015 and Q4 2018, median 10 Mbps MPLS IP VPN port prices in key global cities decreased an average of 14% compounded annually.
Service Provider Footprints are Driving Down IP VPN Prices
Best Efforts 10 Mbps Median IP VPN Port Prices in Key Global Cities
The most significant shifts were seen in parts of Asia and Latin America, regions that have been ripe for new carrier investment over the past few years. Between 2015 and 2018, median 10 Mbps prices in Mumbai and São Paulo decreased 17 and 18% compounded annually, compared to 9% in London.
Ethernet Private Line Services
The State of Affairs: Carrier-grade Ethernet has emerged as a standard global technology. Carriers are expanding their network footprints and making higher link capacities available.
Services are available in the same step increments as LAN Ethernet: 10 Mbps, 100 Mbps (FastE), 1 Gbps (GigE), and 10 Gbps (10 GigE). More recently, 40 Gbps and 100 Gbps services have been deployed for those customers requiring even greater bandwidth. Offered over MPLS, SDH/SONET, or DWDM networks, Ethernet provides simplified end-to-end connectivity that reduces overall equipment costs.
Trend Alert: International long-haul Ethernet service prices continue to decline thanks to sustained competition and a reduction in optical transport costs.
Since Q4 2015, median FastE EoMPLS prices on a sample of primary global routes decreased an average of 15% compounded annually. Network upgrades improve economies of scale, reducing the cost per Mbps and enabling greater price compression in more mature markets.
The median price on the core Frankfurt-London route decreased 5% compounded annually over the past three years. It ranks among the least expensive international routes globally at $428 per month for a FastE connection.
Prospect of New International Capacity Injects Price Declines
Median FastE EoMPLS Prices on Major International Routes
New market entrants—or just the prospect of new international capacity supply—in developing markets can inject price declines. Miami-São Paulo reported sharper declines, with the median dropping 33% compounded annually since 2015 with the median FastE EoMPLS price reaching $1,387 per month in Q4 2018.
The State of Affairs: DIA delivers a private, business-grade on-ramp to the public internet that supports access to web-based applications and online content.
Recently, enterprise customers have opted to add site bandwidth in the form of DIA—and even business broadband—in lieu of more expensive MPLS bandwidth. DIA is well-suited for many enterprises, as they take advantage of cloud applications designed to perform well over the public internet. Our company surveys indicate that 133 of the 170 benchmarked providers offer the service at their global PoPs.
Trend Alert: DIA price trends reflect changes in the underlying global transport market, specifically unit cost reductions realized by deploying 100 Gbps wavelengths in IP backbones.
These technological advancements, coupled with carrier investment to expand backbones and upgrade existing networks, have further advanced DIA price erosion. Median FastE DIA prices across major global cities decreased an average of 22% compounded annually between 2015 and 2018.
DIA Prices Keep Going Down
Median FastE DIA Prices in Major Global Cities
Price reductions continue to be particularly pronounced across Asia and the Pacific, with median FastE prices in Singapore and Sydney falling 21 and 26% compounded annually since Q4 2015. The highly competitive London market exhibited the most significant price reductions, with FastE prices dropping 33% compounded annually over the past three years. As prices continue to erode, DIA will increasingly become an appealing service option in the corporate WAN.
Ethernet VPN Services
The State of Affairs: For many enterprises, Layer 3 MPLS IP VPNs are ideal because routing and management is outsourced to the service provider. However, Layer 2 Ethernet VPN (EVPN) may be preferable for enterprises that want to retain full control of their network configuration and IP routing, and have the in-house expertise to manage it.
The service is often considered to connect sites such as headquarters and data centers in any-to-any architectures, particularly where CoS prioritization is useful and at higher capacities where the cost per Mbps may be attractive.
Trend Alert: Customer adoption of EVPN has been tepid at best, yet the availability of the service has expanded over the past few years, especially in developing markets.
EVPN Prices Eroding
Median Best Efforts FastE EVPN Port Prices in Select International Cities
As underlying transport costs of the MPLS meshed network have fallen, EVPN prices have also steadily eroded. Between 2015 and 2018, median FastE port prices in global business centers declined an average of 23 percent compounded annually and ranged from $1,066 per month in New York to $5,758 in Mumbai.
Quick! Connect Me to the Cloud! How do you manage an SD-WAN migration for a cloud-enamored team? GE Digital and Microland teamed up to present a case study on just this. Read their story.
From the Hub to the Edge: There's been plenty of talk about the vital importance of edge as it relates to new types of network configurations. Jon Hjembo went to the edge and back during our 2019 telecom workshop to explain. Watch his presentation.
Patrick Christian is a Principal Analyst with TeleGeography. Patrick has over 15 years of telecom market research experience. Patrick heads the Cloud and WAN Infrastructure research service. He also focuses on West African and European markets specializing in international bandwidth markets and Internet infrastructure, WAN services, terrestrial and submarine cable systems, and international voice traffic analysis.