SD-WAN: The New Elixir for Service Providers

By Kangwarn Chinthammit
Director of Solutions, VeloCloud
January 6, 2016

“We viewed SD-WAN as a threat to our business. We don’t like any overlay solution. It takes away the value of our network. But customers are putting pressure on us, so we really have no choice. If we don’t offer SD-WAN, our competitors will,”  said one of the Service Providers (SP) to me during our SD-WAN discussions last year.

Since then, we have seen significant interest for SD-WAN  from both the incumbent and alternative SPs. In fact, there have already been several SD-WAN announcements from various SPs recently, for example:

The last time a new technology disrupted Service Provider WAN was more than 10 years ago with the introduction of MPLS and IP VPN. MPLS enabled SPs to converge all services (voice, video, and data) onto a single IP based network. Very few things have changed in the Service Provider WAN since. Just like MPLS did a decade ago, SD-WAN gives the SPs an opportunity to again change the game. But in order to realize the full benefits of SD-WAN, SPs should really think about how to incorporate this technology into their network and what new services they can now offer.

There are two approaches for Service Providers to offer SD-WAN. They can offer managed SD-WAN service, or they can leverage SD-WAN to offer new services. These two  approaches are very distinct. Let me explain.


To offer managed SD-WAN service, SPs work with vendors like VeloCloud to deploy their products into the end user enterprise network. Just like managed CPE, SPs manage the SD-WAN devices on behalf of the end customers. The SD-WAN solution builds an overlay across multiple carrier networks (including the SP’s own network). All the underlying links are used in active/active fashion or per the configured policy. SPs use the SD-WAN centralized management capabilities to provide business level policy control to steer the application flows per customer requirements. The end customers are now happy that they can make good use of the backup Internet link that lay idle for ages, and they have an easy to use portal to define how to steer applications across various underlying transports as well as to monitor the usage. This approach also requires SD-WAN devices to be installed at both the customer branch and headend locations.

Alternatively, SPs can use SD-WAN as a technology to create new service offerings. In this scenario, instead of building SD-WAN overlay across their network, SPs build SD-WAN overlay to the edge of their network (at the NNI or Internet PoPs). The SD-WAN overlay tunnels are terminated at the SD-WAN headend sitting at the edge of the SP’s network and original traffic is handed off to SP’s MPLS backbone. The added benefit of this approach is that SPs can migrate customer sites to SD-WAN without having to always deploy a headend. End user SD-WAN sites get instant access to other sites and SP resources on MPLS. In addition, by bringing customers’ traffic into the SP network, SPs can focus on offering additional value-added services such as cloud-based firewall, application hosting, hosted UC, or SIP trunking. With SD-WAN, SPs have the flexibility to mix and match any types of transports (even in the case where customers sites are outside of SPs territory or SPs don’t have access to the last mile circuit). We have seen use cases such as pop-up retail where the life of the store is just a matter of weeks, shorter than the time it takes to procure and install MPLS. New sites can be brought up on any transport and connected to the rest of customer networks in a matter of hours. SD-WAN enables SPs to deliver MPLS like service over any type of transport (wired or wireless) while ensuring performance and security.

Building new services may take a little bit more effort to deploy and integrate, but the software nature of SD-WAN makes it much simpler. It is just a piece of software that needs compute resource and hypervisors. I haven’t come across a single SP which tells me they don’t have a server that can be used to deploy the SD-WAN headend. SPs don’t need to rack and stack new equipment like they used to. They can just use compute resource they already have. Running on hypervisor means SPs can scale the size of SD-WAN headends up and down, as the workload changes. To do this effectively, however, the SD-WAN solution should be multi-tenant. This means a single SD-WAN headend should service multiple customers and provide complete separation just like MPLS. The management platform should also be multi-tenant and have API to integrate with SP OSS/BSS.

In summary, SD-WAN is a new elixir offering a lot of potential and benefit to SPs. There is some work required to create new services, but for sure much less than the traditional networking devices. Once it’s fully integrated into the SPs’ network, it enables new business opportunities and greatly increases the value to the SP end customers. SPs will surely enjoy and realize the full benefits of SD-WAN technology over time, similar to what they have gotten with MPLS. See our website if you want to learn more.

In a future blog post, I will dive into more details on different SD-WAN use cases for Service Providers.


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