Contact

Contact Us

Scroll to top of page

You are here

   

The Results Are In: vCPE's Most Compelling Use Case

Feb 12, 2019

In a recent poll we conducted during a RAD webinar, we asked participants which was the most compelling use case for vCPE.

Want to guess the results?

The majority of respondents (44%) believed that vSD-WAN was the best vCPE use case, 28% voted for L3 VPN with value added services (VAS), while a fifth (20%) of respondents felt it’s actually Carrier Ethernet business and wholesale offerings with VAS that present the most popular use for vCPE. The remainder (8%) chose “other” use case/s.

The top three implementations represent the way vCPE technology is changing our market. This is true for vendors and communications service providers (CSPs) alike as it affects product and service offerings, the competitive landscape and growth strategies.

Let’s now take a quick look at each of these use cases to understand these effects:

vSD-WAN

The Software-defined wide area network (SD-WAN) originated in the enterprise market as a lower-cost alternative to the pricey L3 VPN, one which can overlay secure VPNs on whichever infrastructure is available – including the internet or LTE.

In the last two years, as SD-WAN became increasingly popular within this market segment, CSPs have come to realize that, unless they start offering it themselves, they stand to lose a significant share of an otherwise profitable market to SD-WAN vendors.  

vCPE allows them to do that. SD-WAN is virtualized (vSD-WAN) and offered as one of several services hosted on a powerful Commercial Off the Shelf (COTS) server within the uCPE at the customer premises. This represents a departure from the original monolithic offering of SD-WAN.

CSPs are positioning vSD-WAN as a Best Effort connectivity option, while they attempt to preserve their premium, L3 VPN services. This also forces service providers to remain competitive by supporting any number of vSD-WAN alternatives, to fit their enterprise customers’ – especially the larger corporations – preferences.

vCPE use case: vSD-WAN
vCPE use case: vSD-WAN

 

L3 VPN with Value Added Services

As mentioned above, IP VPNs have become too costly for many enterprise customers who no longer perceive the value of this connectivity-only service as justifying its cost. vCPE allows service providers to add premium offerings – or VAS -  on top of the Layer 3 service. These can be virtual firewalls, virtual routers and even IT services, which, until now were not part of a typical business service offering. Such upgraded bundles help CSPs move up the value chain, penetrate into new market segments and, as a result, protect their revenues.

vCPE use case: L3 VPN with VAS
vCPE use case: L3 VPN with VAS

 

L2 vCPE for Business & Wholesale Carrier Ethernet Services with VAS

Up until now, the L2 divisions within CSPs have focused on providing Carrier Ethernet VPN services, which were mainly about SLA-based bandwidth and pipes that allow connectivity between different types of enterprise branches, and between branches and the data center.
Here, too, vCPE presents an opportunity for these divisions to move up the value chain by introducing new managed services.
This presents a unique win-win situation, in which the service provider can increase revenues by hosting their customers’ virtual routers, firewalls, etc., and at the same time, the customer saves on the deployment and operational costs that they would have otherwise incurred had they did so on their own.

vCPE use case: L2 VPN with VAS
vCPE use case: L2 VPN with VAS

 

So, What Does it All Mean?

The results of the poll mirror RAD’s own insights based on our extensive conversations with CSPs over the last few years. They illustrate the extent of market transformation brought on by the fact that the technology behind the disaggregated architecture has reached a level of maturity that allows it to make a true impact. They also shed light on the driving forces behind them: The most compelling use case is driven by the biggest external competitive threat to CSPs’ business model (SD-WAN), while the others present opportunities to upgrade CSPs’ business services and offer more value to their customers.


 

< Blog Home

About RAD's Blog

We’ll be blogging on a wide range of hot topics affecting service providers and critical infrastructure network operators. Our resident experts will be discussing vCPE, Cyber Security, 5G, Industrial IoT and much, much more.

   

What would you like to do?