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The opportunity for service providers to deliver IP MPLS VPN services is significant and growing. Worldwide IP MPLS VPN service revenue grew 20 percent to $13 billion in 2007, according to research published in July by Infonetics Research.
Tapping that opportunity presents challenges for many service providers. That’s because gaps in coverage make it difficult to meet the needs of the multisite customers that are the targets for IP MPLS VPN services.
“There are a number of ways you can achieve this [ubiquitous footprint] — invest yourselves or acquire. ...Our approach is to partner,” said Jeroen Labots, marketing manager for KPN International, citing strategic partnerships with Sprint Nextel Corp., SingTel and Telefónica S.A. to reach 80 percent of the world.
Indeed, partnering or sourcing networks from other providers is for many carriers a necessity.
“I would say a majority of [wholesale] customers and prospects are already on the path,” said Dave Falter, director of wholesale services for Sprint Wholesale. “It’s about how we can get there sooner. It’s about how they can get their product developed and get it out to market.”
Carriers that are early in their network development can resale another carrier’s MPLS network. This also is an option for switchless resellers or for VARs and systems integrators that are using MPLS as part of a managed offer of their own.
Carriers that already have an MPLS network that is being built or is regional in nature can take advantage of network-to-network interface (NNI) agreements with other IP MPLS network service providers.
Let’s take the example of a CLEC that has coverage in the northeast and southeast United States in two dozen markets where it is running its own fiber plant and its own MPLS switches. If it sells a multisite customer with 20 sites, odds are only 15 are on its network, said Falter, so it needs to figure out how to serve the other five sites. An NNI with another MPLS provider will extend the carrier’s network into off-net territories.
“The concept of an NNI sounds interesting, but nothing crystallizes it quite like when you have a deal that you’ve lost or it’s at risk, especially if you consider that customer to be core to your business,” said Steve Parrot, senior manager of MPLS managed services for Sprint. As an example, he cites a hypothetical provider that would be loath to lose a multinational company (MNC) based in its home market because it couldn’t provide service to some of its off-net sites.
Parrot said carriers will use their NNIs with Sprint in different ways. “Sometimes it may be one or two sites based on a particular capability or sometimes it’s all of North America. The nice thing about the model is we can enable both equally. We allow and support the customer’s need. I am interested in all of their business, not just parts of their business and not just the big business,” he said.
