SD-WAN

Australian telcos need to act on managed SD-WAN to offset slipping revenue: GlobalData

Driven by the accelerated adoption of new technologies such as software-defined networking, as well as intense competition and price erosion, the Australian data and IP market revenue is forecast to decline at a CAGR of 1.3% over the period 2017-2022, according to data and analytics company GlobalData.

While the adoption of services such as cloud, big data and video conferencing is driving the demand for more connections and bandwidth, enterprises are not allocating more budgets. Against this backdrop, telcos need to get serious with managed SD networking wide area networks, GlobalData said.

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“In terms of competition, besides tier-2 players such as Vocus and TPG, there are players such as Megaport and SuperLoop which are entering the market and leveraging SDN-based technologies for market disruption,” emphasised GlobalData Asia technology market analyst Siow Meng Soh.

Soh said that in terms of technologies, he expects SD-WAN to start having an impact on the market. “While we do not suggest that vast swaths of enterprise customers are already moving network estate away from multi-protocol label switching (MPLS) and Ethernet, the demand is undeniable and SD-WAN is happening now.”

“This is consistent with the CIOs and IT managers in Australia that GlobalData interviewed on a regular basis,” he added, noting that most of them had already evaluated SD-WAN and some had already started to deploy the technology.

“In addition, the company’s survey results show that among the various enterprise network and communications, budget allocation upside is mainly in SD-WAN and network services,” GlobalData said.

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“Besides potential cost-savings, SD-WAN offers enterprise a much greater level of control over their networks and therefore, most of the early adopters are self-managing the solution. At the moment, the SD-WAN vendors account for a large percentage of the initial uptake. Vendors such as VeloCloud (now owned by VMware), Aryaka and Silver Peak have made a big entrance into the market,” Soh said.

GlobalDat said that enterprises with existing MPLS/Ethernet networks were increasingly looking to develop a hybrid network leveraging SD-WAN. “This trend is expected to accelerate as telecom providers and managed service providers are now actively partnering with SD-WAN vendors to tackle this segment,” it added.

Soh said that while SD-WAN adoption will limit the growth of traditional data and IP services in Australia, he expected more opportunities in the managed network services space to offset the decline in carriage revenues.

“Telecom providers which do not have SD-WAN in their portfolio need to act fast,” Soh warned.

 

Categories: SD-WAN, Uncategorized

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