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P-OTS Is Not POTS Anymore, And It’s Anything But Plain

abstract binary flowWe have come a long way from the POTS (Plain Old Telephone Service) infrastructure of yesteryear. Indeed, today’s Metro P-OTS (Packet-Optical Transport Services) deliver many thousand times more capacity using less energy, and at a fraction of what customers were paying back in the days of analog voice services. Ciena, a specialist packet-optical network vendor demo’ed its latest 8700 Packetware Platform at an analyst event in London, highlighting interesting trends in the WAN infrastructure industry.

Together Infrastructure vendors, providers and end-users can lower prices and increase utilization

The digital explosion has turned the old world of monopoly telcos working with a small group of chummy proprietary hardware vendors upside down. Today it’s the customers who define the WAN infrastructure priorities. Today’s broad range of WAN infrastructure buyers encompasses telcos, co-location providers, OTTs, ISPs, cloud service providers, as well as governments and corporations. They source WAN equipment from a wide range of more specialized vendors (load balancers, security devices, access devices, routers, switches, etc.).

The new breed of vendors are much more responsive to customer demands for network hardware and applications that meet individual business needs as well as those of specific industry segments. This transition is still ongoing. Potholes in the on-demand supply chain still need to be filled — notably, corporate customers can buy on-demand and pay-as-you-go cloud services but they still have to sign long-term network contracts with significant fixed price components to get the connections they need to access these cloud services.

Here, Metro P-OTS can offer more intelligent interaction between the corporate data center and the infrastructure provider. The data center can request additional bandwidth at given times to specific destinations. If bandwidth is available the infrastructure provider can accommodate such requests in near real-time. If bandwidth is not available, the provider can get back to the customer, when bandwidth becomes available, or offer lower-priced, higher-bandwidth access at times when network capacity is underutilized. Such interaction between customer and WAN infrastructure provider reduces high-bandwidth transmission costs, while simultaneously increasing the infrastructure provider’s network utilization.

The shift from rigid to virtual networking mirrors the shift from ego-system to eco-system

Digitalization has opened the infrastructure market to suppliers from the computer industry who are prepared to address the massive demands for better capacity utilization, lower energy consumption, and smaller footprints at constantly lower price points. They also bring more customer interaction experience to the infrastructure industry. Customers want less dependence on physical networks, rigid service parameters, and siloed services. They want more interoperability with standards like OpenFlow. Infrastructure vendors are no strangers to standards, but the recent shift towards SDN (software defined networks) and NFV (network function virtualization) threatens their traditional hardware focus — using software to extend hardware lifetimes and making the infrastructure more flexible reduces the need to invest in new hardware platforms every few years.

To induce customers to invest capex in new network technologies and equipment, vendors must demonstrate wide-ranging interoperability, agility, and ROI over 2-4 years (not yesterday’s 10-15 years) as well as a migration strategy that ensures uninterrupted services. The huge growth in the WAN Ethernet market proves that it can be done, and companies like Ciena show healthy growth and good margins. But this positive performance example is based on the company’s increased focus on software and services, as well as the ability to expand its government and corporate customer base.

It’s encouraging to see that there is still good money to be made in the cut-throat WAN infrastructure business despite consolidation, the drive towards (more) open standards and the strong buyer focus on reducing capex. But then, traditional box sellers are no longer just selling boxes, and what they are doing outside their hardware business now significantly impacts their bottom line.

About the author
Bernt Ostergaard