Will Broadband Aggregation Reach Critical Mass This Time?
Enterprise interest in broadband aggregation has waxed and waned a few times over the past 10 to 15 years, but here's why it might now have sticking power.
Use of broadband Internet access in the enterprise is gaining real traction, and market forces may finally bring broadband to light in a meaningful way as a part of the large enterprise WAN.
Some large enterprises are already using broadband as the primary connection for select smaller sites, and are actively considering expanding the types of sites for which the primary connectivity is broadband.
The emergence of software-defined WAN (SD-WAN) products through software/hardware providers such as Viptela and VeloCloud (and many others) is also driving the broadband take-up. SD-WAN solutions (for which some estimates say the revenue will reach $6 billion annually within four years) can utilize supplemental broadband service to offload select lower-priority traffic from what is typically an MPLS WAN. SD-WAN also offers the potential of using multiple broadband circuits as a site's primary network transport. In turn, this is likely to see increased requests for broadband aggregation to manage multiple broadband suppliers, which we discuss in more detail below.
Another growth factor originates with the partially informed executive, who, usually after seeing or hearing a commercial advertisement, asks the IT folks, "Why does a 100-Mbps connection cost us hundreds of dollars, but I can get it at my house for $50 per month?"
This is a valid question, even if the services aren't exactly comparable and notwithstanding the lack of enterprise-type SLAs applicable to broadband Internet access. Broadband availability is not ubiquitous or consistent, and in many cases, it is better for residential customers than enterprise customers. This is particularly true for retailers located in malls or shopping centers (versus standalone retail sites). In such instances, the telecom point of demarcation can be far removed from any particular store, thus introducing challenges such as in-building routing issues and expensive cabling installations.
Furthermore, while a multitude of broadband providers exist, sometimes several for any given site, most are limited in geographic coverage and lack a comprehensive ubiquity across the U.S.
However, at any given location there's likely some type of broadband service available. One approach clients have taken is cobbling together broadband services from a mixture of suppliers, most often the independent local exchange carriers and cable companies, in order to provide broadband services at all their locations. Of course, the overhead of maintaining and managing multiple contracts and supplier relationships (and therefore multiple pricing structures, SLAs -- if any -- support and account management issues) is unappealing to most enterprises.
Thus, we regularly get the question from enterprises: "Can anyone provide us with a nationwide broadband solution with good service, centralized billing, consistent on-time provisioning, and with enterprise-type SLAs?" In other words, the proverbial "single point of contact" (or, when things go awry, the "single throat to choke"). The answer: "Not yet, but gaps in coverage, service and support are shrinking."
Due diligence is required, of course, but specialty aggregation providers such as GTT Communications, MetTel, Diversified System Resources (DSR Global), Global Capacity or Industry Retail Group offer provisioning/aggregation services and often have some of the largest footprints. The large aggregation offerings from the major telcos are less than compelling. AT&T pushes its ANIRA offering for network-based IP VPN remote access (and only AT&T offers an aggregation solution via its partnership with previously mentioned DSR). Verizon mentions FiOS, but its bids often push dedicated Internet services rather than broadband (a strategic gap that Verizon will need to address). Additionally, in recent years cable companies like Cox, Charter, and others have been pursuing the enterprise broadband market as well. Given their success, a natural next step for them would be to fill geographic or specific site gaps with a targeted aggregator offering, but we have not seen much meaningful progress yet.
The list above is not comprehensive, but highlights some of the alternatives. The key is how a provider's "sweet spot" coverage matches your requirements.
Forcing selection with one provider often can come with a significant price premium, and, often, one provider simply cannot arrange the coverage. The specialty aggregation providers can "arrange" coverage, but an enterprise must use caution as the contract terms it seeks relate to third-party circuit providers. For big inventories it may be possible to work with more than one primary provider to strike a balance between cost and coverage.
For broadband specifically, the contracting paradigm has changed. Many providers have come from the consumer space and, whether via an aggregator or to an enterprise directly, their contracts are simply not as robust as those that enterprises have worked hard to secure for MPLS and other services.
An additional challenge is working out what the enterprise manages in-house versus via an aggregator. While aggregators may promise a single management interface, enterprises can find themselves wanting/needing access to the third-party providers for deeper investigation, fault chasing, or order status. In such a case, an enterprise does not want to find itself paying an aggregator to do something it has to do again, and it must make sure that aggregators are going to effectively perform the management an enterprise needs.
It is also likely that an enterprise will need to consider broadband alongside higher-speed (and higher-cost) dedicated Internet services (which, presumably, would be accompanied by better SLAs), as well as increasingly usable LTE/3G services. How the aggregator fits in a multiservice type environment must also be considered. Much of the potential utility of broadband aggregation will depend on an enterprise's unique requirements in terms of broadband versus other circuit types, as well as their management and contracting expectations.
That said, it is clear that increased broadband use is highly likely as broadband speeds have increased (dramatically in some areas) and technologies such as SD-WAN are providing a means to embrace lower-cost broadband as part of the network services portfolio. Hence, there is going to be a need to manage the broadband services more effectively than leaving small officers with locally ordered circuits to their own devices.
Enterprise interest in broadband aggregation has waxed and waned a few times over the past 10 to 15 years, but this time, as enterprises use broadband for more business-critical traffic, it may well stick. It will be interesting to see how the big carriers, current aggregators, and cable providers adapt their offerings to secure enterprises' business.
Keith Cook is a project director based in Atlanta and Mark Sheard is managing director TC2 (UK) in London; both are part of TechCaliber Consulting, LLC, a global IT and telecom consultancy that advises the world's largest companies on transformational strategies for reducing their costs for telecom and IT products and services. Keith and Mark can be reached at [email protected] and [email protected].