In case you missed it, we’re looking back at some previous hypothetical network scenarios to see how the cost of network ownership can change over time.
In last week’s blog, Senior Research Manager Brianna Boudreau explored our first tiered scenario, which takes a conservative approach to integrating internet services and SD-WAN into the WAN.
If you haven’t read it yet, I encourage you to start there. Brianna’s post also provides important context about our hypothetical network and baseline dual MPLS network.
For Part 2 of this analysis, I'll map out a second, less conservative tiered approach, then switch gears to our Remote Hybrid Network.
Let’s dive in.
Regular Tiered Approach
Some enterprises are ready to integrate a larger proportion of internet services into the WAN.
In this scenario, we’ve made the following changes:
- Tier 1 sites. Tier 1 sites have a single MPLS port of the same size as our original network, plus a DIA port about 50% larger at large offices/HQ (not data center sites).
- Tier 2 sites. Tier 2 sites are running dual DIA ports about 50% larger than the original MPLS connections for the same markets.
- Tier 3 sites. Tier 3 sites have dual broadband connections of larger sizes than our original MPLS network.
- SD-WAN. Added managed SD-WAN to all sites.
Comparing the figure below to our conservative tiered approach, you can see the big jump in the amount of broadband connections (represented by the red columns) as well as DIA (in the turquoise columns).
Regular Tiered WAN Network Site Count by Capacity Range
Notes: Each column represents the number of network sites for each WAN service in the hypothetical network scenario. Source: TeleGeography © 2023 TeleGeography
This tiered network has an average global site capacity of 435 Mbps, compared to 246 Mbps in our original dual MPLS network, or a 77% increase.
Dual MPLS & Regular Tiered WAN Average Site Capacity by Subregion
Notes: Each column represents the average site capacity in Mbps across all sites in the listed subregion for each hypothetical network scenario. Source: TeleGeography © 2023 TeleGeography
In 2023, the annual TCO of our regular tiered network was $3,376,665. That’s 11% less than our 2022 scenario.
Looking at the figure below, you can see the biggest cost reduction was for DIA ports (the turquoise portions of our columns), which decreased 28%. This was followed by SD-WAN costs, which fell 17%. MPLS decreased just 9% in this scenario. Access costs increased again, 27%, in this scenario.
Regular Tiered WAN TCO, 2022-2023
Source: TeleGeography © 2023 TeleGeographyIn 2022, the regular tiered approach cost 39% less than the TCO of the baseline MPLS network. In 2023, it was 42% less expensive.
Remote Hybrid Network
Many workers have now adopted a hybrid work schedule, returning to the office at least one day a week, but working from home other days.
When employees are in the office, they continue to utilize bandwidth-hungry applications like Zoom, Microsoft Teams, and Google Meet to stay connected.
As such, many enterprises are thinking of consolidating the number of sites they have, while increasing bandwidth in those that remain open, in an effort to save money.
Many enterprises are thinking of consolidating the number of sites they have, while increasing bandwidth in those that remain open, in an effort to save money.
To model this situation, our remote work scenario implements the following changes:
- Close some sites entirely (especially any redundant metro sites). This hypothetical network includes 126 sites, down 24 from the original 150.
- Decrease all MPLS significantly (i.e. 50-75% reduction in bandwidth) and remove backup ports/lines. Only voice and video traffic will remain over MPLS at Tier 1 and Tier 2 sites.
- Add in DIA to all sites to match original size at remaining Tier 2 and Tier 3 sites.
- Increase data center port sizes to accommodate people accessing the network remotely.
- Add in managed SD-WAN to all sites.
The resulting network has a global average capacity of 345 Mbps at each site, a 40% increase over our original MPLS WAN.
Once again, most of our DIA sites fell in the 11-50 Mbps range, while the largest amount of broadband sites were in the 51-100 Mbps range.
While site capacity increased across all of our subregions, it is notable in this scenario that Latin America saw an increase almost on par with Western Europe.
Remote Hybrid WAN Site Count by Capacity Range
Dual MPLS & Remote Hybrid WAN Average Site Capacity by Subregion
Notes: Each column represents the average site capacity in Mbps across all sites in the listed subregion for each hypothetical network scenario. Source: TeleGeography © 2023 TeleGeography
In 2023, the remote hybrid network cost $3,572,715, 13% less than in 2022. The cost of the DIA ports decreased the most (29%), followed by SD-WAN (22%), and MPLS (20%).
With DIA prices decreasing at such a rapid pace, the service is no longer the biggest contributor to the annual TCO. In 2023, local access costs (which increased 5%) became the biggest contributor to TCO.
The annual TCO of our remote hybrid network was 38% less than our baseline MPLS network.
Remote Hybrid Network TCO, 2022-2023
Source: TeleGeography © 2023 TeleGeographyThe rise of cloud services, remote work, and SD-WAN have caused many enterprises to rethink their network architecture.
While it is critical for WAN managers to be able to map out how adopting different network services can impact their total cost of ownership, it is also important for them to track how prices for these services change over time.
With MPLS, DIA, and SD-WAN prices continuing to fall at a steady pace, keeping track of changes in the market can help enterprises determine what pieces of the WAN to focus on to further optimize their network costs.
Keeping track of changes in the market can help enterprises determine what pieces of the WAN to focus on to further optimize their network costs.
This is particularly the case when prices fall at different rates for different underlay products, as we have generally seen in this analysis.
Many enterprises may benefit from updating underlay strategies as the multiples between products fluctuate over time.
Rob Schult
Robert Schult is a Research Director at TeleGeography and manages the company’s wholesale pricing and enterprise network research groups. His areas of expertise include telecom service pricing, corporate WAN technologies, and Cloud service integration.