A new report from Analysys Mason explores the different technical options available for operators to manage the explosion of packet-switched traffic on their core networks in a cost-effective way.
The report explains that the choice of technology dramatically influences the business model that operators can adopt to keep their core networks profitable, and provides a business-case comparison of different network architectures to enable operators to make an informed decision regarding the optimum techno-economic strategy.
For example, multi-protocol label switching (MPLS) will enable an operator to generate between 58% and 81% more revenue than an optical transport network (OTN), for the same capex investment.
“The traditional operator’s business model is being challenged, primarily because of the de-integration of the traditional ‘service-network’ vertical model, which is forcing network service providers and network operators to carry an ever-increasing amount of traffic over the top (OTT)” explains Franck Chevalier, Manager at Analysys Mason, and main author of the report.
“Yet, service providers have to carry this OTT traffic without extracting any additional income, as all the service revenue goes to the owner of the content,” Chevalier adds. “As a result, the core network has become a commodity asset, and the goal becomes relentless pursuit of a strategy and architecture that takes every single bit of cost out of that network, while making sure that it remains flexible enough to handle all the diverse traffic types it has to carry, and also meets or exceeds any quality-of-service and service-level agreements in place with customers.”
“One of the main challenges for operators today is the increasing unpredictability of traffic, in terms of the amount being carried on their networks, its source and its destination,” says John Krzywicki, Partner at Analysys Mason, and co-author of the report.
In response to these challenges, operators can implement a range of technical strategies, based on different core network architectures and technologies.
The report considers three possible strategies for handling growth in packet-switched traffic while maintaining service quality:
- Scenario 1 (MPLS) – Implement a packet-switched network based on multi-protocol label switching (MPLS) technology, where all switching in the core network occurs on a packet basis at every node
- Scenario 2 (OTN) – Implement a circuit-switched infrastructure based on an optical transport network (OTN), where all switching in the core network occurs on a circuit basis and the switching of packets only occurs at the edge of the network
- Scenario 3 (MPLS + OTN) – Implement an MPLS network as in Scenario 1, but with additional OTN multiplexers in each node to implement traffic bypass.
A key finding of the report is that MPLS is both a more cost effective and more flexible technology than OTN for providing packet-switched services. An MPLS architecture will be the optimum investment for an operator, for the following reasons:
- MPLS enables an operator to dissociate traffic bandwidth and capacity provisioning, which is a key factor in controlling costs and therefore guarding against margin erosion
- MPLS makes it possible for an operator to differentiate between different traffic types (e.g. revenue-generating versus non-revenue-generating) and to adjust its capex spending accordingly
- MPLS allows an operator to offer the full range of carrier Ethernet services, which represent one of the fastest-growing markets
- MPLS is more suited to accommodating changes in traffic patterns, which, with the advent of cloud computing and the growth in user mobility, is an increasingly significant issue.
- An MPLS-based operator incurs less opex than an OTN-based operator, because it has significantly fewer ports to operate and maintain.
- MPLS architecture and technology enable an operator to significantly reduce its power consumption, which brings cost savings and helps the operator to meet its green agenda.
As well as enabling an operator to generate between 58% and 81% more revenues than optical transport for the same capex investment, an MPLS solution also gives the operator flexibility to adapt its business model in line with the changes currently occurring in the telecoms industry, by providing a way to differentiate between revenue-generating and non-revenue-generating traffic, and offering better control over capex and opex.