TeleGeography’s Cloud and WAN Infrastructure analyzes service and pricing trends for four key enterprise network services: 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).
This analysis—which has recently been updated with new data—reviews these services and the developing software-defined WAN (SD-WAN) service.
Today we’re sharing trends in MPLS IP VPN and DIA services. Check back next week when we dive into Ethernet VPN and SD-WAN.
MPLS IP VPN Services
Layer 3 MPLS IP VPN is a mature network service for most providers and is by far the most widely available international enterprise network service. IP VPN 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.
Company profiles indicate that all 170 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. Beyond network footprint, individual carrier solutions are further differentiated by the availability of port capacities and class of service (CoS) implementations.
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.
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. At the 2017 London WAN Summit, 62 percent of enterprise attendees responding to a live poll anticipated keeping MPLS at most corporate WAN sites in the next three to five years.
However, 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 2016 and Q4 2017, median 10 and 100 Mbps MPLS IP VPN port prices in key global cities decreased an average of 13 and 17 percent, respectively, compared to compound annual drops of 17 and 21 percent, respectively, since Q4 2014.
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 2014 and 2017, median 10 Mbps prices in Mumbai and São Paulo decreased 19 and 20 percent compounded annually, compared to 14 percent in New York.
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 tended 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. Company surveys indicate that 133 of the 170 benchmarked providers offer the service at their global PoPs.
DIA price trends reflect changes in the underlying global transport market, specifically unit cost reductions realized by deploying 100 Gbps wavelengths in IP backbones.
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 26 percent between 2016 and 2017—the same rate as the four-year compounded annual growth rate from Q4 2014.
Price reductions continue to be particularly pronounced across Asia and the Pacific, with median FastE prices in Mumbai and Sydney falling 33 and 32 percent compounded annually since Q4 2014, compared to 17 percent in New York. As prices continue to erode, DIA will become an ever more appealing service option in the corporate WAN.
Michael Bisaha is a Senior Analyst and Manager of Data Science at TeleGeography. In addition to his work covering competitive market and pricing trends in the wholesale and enterprise telecom space, he heads the Data Science group responsible for data management, product development, design, forecast modeling, and custom analytics initiatives. He also manages a number of TeleGeography’s research and client relationships and is a regular participant at leading industry conferences.