Introduction

MPLS has been an extremely useful technology for the last 15 years, as a way of delivering private, secure, high quality data networks, and it remains the de-facto standard for corporate networking today.

However, over the last couple of years, as organisations have started to move their applications over to the cloud, some are saying that MPLS has had its day, that it was built to do something which is not now what people want to do.

TNC’s research does indeed show that there has been a decline in companies buying MPLS. Does this mean that MPLS is dying?

Benefits of
MPLS

Before we tackle the question of whether MPLS is dying, let’s remind ourselves why organisations chose MPLS in the first place:

1. Performance guarantees

A benefit of MPLS is the quality of service, the ability to define what traffic goes across a reserved circuit, which is not possible with the public internet. For example, using this reserved circuit, or bandwidth, for priority traffic, such as video conferencing and voice calls.

2. Security

MPLS is a private networking solution and therefore inherently secure. This is in obvious comparison to the internet which is a public network and therefore organisations using the internet as part of their solution have to take steps to secure their traffic.

3. Simple operational model

OK, so technically this isn’t a benefit of MPLS itself, and more about how organisations buy it, but generally organisations have a small number of MPLS suppliers, if not a single supplier. In large part that’s because it is complex and expensive to interconnect MPLS networks, but the upshot is that it typically creates a relatively simple operational model with a small number of suppliers and genuine transfer of management, risk and end-to-end ownership to the service provider(s).

Reasons why MPLS may
be declining

We’ve looked at what’s good about MPLS, so the question is why are these benefits potentially less attractive to end-user organisations:

1. Performance

There is a school of thought that says MPLS does not always deliver great performance for the organisations that use it. Proponents of this school argue that it’s good at pulling traffic back to a central point, like a data centre, however if the application you’re using is on the internet, all you’re doing is paying a premium to bring traffic back to your internet break-out point, whilst adding unnecessary round-trip delay to your traffic. In other words, the argument goes that it’s an inefficient technology now so many of us are using cloud services.

2. Price

It is true that, in many cases, MPLS is a more expensive connection type compared to the internet. This can be particularly the case in certain global markets where the price gap is very large. Additionally, where cloud services require more bandwidth, organisations can’t necessarily afford to fund the upgrades in their MPLS network that they may require. Therefore, they may look at alternatives to MPLS to get more for their money.

3. Flexibility and agility

Many organisations have an IT flexibility and agility agenda, especially as IT becomes a more important part of not just the back office, but also the front office and service offering to consumers. With business strategies moving a lot faster than the replacement cycle on networks, organisations are increasingly concerned to ensure their network infrastructure, and the vendors who are selling it, mirror that flexibility, rather than trying to tie them into long term, inflexible contracts. They require a solution that’s more flexible, more agile, and that can be scaled and changed to meet their business objectives. It is often the case that smaller local and regional suppliers, with simpler supply chains, are more flexible and agile, providing an advantage over the traditional Telco’s.

Alternatives to
MPLS

The main, realistic alternative to MPLS today is the internet. It is mature, widely available, well understood and most organisations already have experience using it. TNC’s research shows that the most common approach to using internet as a replacement for MPLS is as part of a hybrid network which mixes MPLS, typically for big, important sites, with internet for smaller sites, or where MPLS is cost prohibitive.

Exponents of hybrid networks believe it offers the best combination of performance, flexibility and cost. There certainly is logic to this, with the use of internet circuits to provide more direct access to cloud services, potentially adding additional suppliers to the network to gain flexibility and reduce costs.

TNC’s research partially supports this analysis. Certainly, multinational companies are almost exclusively moving to hybrid networks and the number of organisations now procuring pure MPLS networks is decreasing rapidly.

However, TNC’s research also shows that domestic organisations with locations solely in the UK are still predominantly buying MPLS networks. There are two main reasons for this:

1. The price point for MPLS and internet services in the UK is very similar, meaning there is very little commercial benefit from migrating from MPLS to internet or hybrid

2. Given the small geography, there is little round-trip benefit from switching

In other words, two of the three drivers for migrating from MPLS don’t hold in the UK market, explaining why use of hybrid networks remains something for multinational organisations, but not for those with solely UK networks.

Of course, there is a great deal of discussion about SD being a potential replacement for MPLS. However, TNC’s research shows that there are significant barriers to this migration today. Whilst it is feasible that SD will become a true MPLS replacement in the future, it doesn’t appear that it is today.

Supplier Response

Perhaps unsurprisingly, suppliers selling MPLS have not sat on their hands whilst this significant change occurs in their market. On the one hand they have invested many millions of pounds, Euros and dollars building MPLS networks and they want to get a return on this investment. However, there is also a genuinely held view in many service providers that private, guaranteed networks are the best way to deliver services, so they want to find ways to ensure MPLS remains relevant.

One approach to this is technical. For example, launching solutions such as multi-access circuits which deliver both MPLS and internet, without the cost of having two circuits. Another is the integration of cloud access directly into the supplier’s core network, thereby providing high performance cloud access.

The other approach is price. As is often the case, the price of the “old” tech falls to help keep it relevant in the face of “new” tech. For example, think about what happened to the price of traditional voice services as VoIP entered the market. TNC’s research is showing similar behaviour now, with the price of MPLS services coming under great pressure in the face of alternatives such as hybrid and even SD.

TNC View

  • For multinational organisations, there is a clear shift underway from pure MPLS networks to hybrid networks
  • However, this trend is not yet apparent for domestic UK networks, where MPLS remains the dominant solution
  • Internet certainly seems a viable model for delivering connectivity at smaller, and/or less critical sites, as well as delivering perfectly acceptable performance for SaaS applications
  • However, MPLS and/or other direct, private connections remains the dominant model for PaaS, IaaS and large, critical site connectivity

Conclusion

It is without doubt true that there is less MPLS being bought today than 2 – 3 years ago, because demand has changed, and because there are viable alternatives on the market. For these reasons, TNC’s research suggests we’ve hit and passed “peak MPLS”; it was 100% of the market and now is less. It seems unlikely it will recover its position, it’s more likely the trend of decline will continue.

There is a tendency to view the issue as black and white, which it isn’t. Legacy will always be with us; the idea that 100% of companies will have moved 100% of applications into the cloud is most likely incorrect. Therefore, MPLS will continue to have a role to play.

However, there are alternative solutions available and there are organisations which are finding MPLS is no longer the best fit for some or all their requirements.

TNC’s view is that MPLS will definitely be around for the next 5 years. Depending on the vendor’s response to the market, including price drops and technological innovations, it may still be around for much longer than that.

Disclaimer

Other than matters relating to The Network Collective, this research is based on current public information that we consider reliable. Opinions expressed may change without notice and may differ from views set out in other documents created by The Network Collective. The above information is provided for informational purposes only and without any obligation, whether contractual or otherwise. No warranty or representation is made as to the correctness, completeness and accuracy of the information given or the assessments made.

This research does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Clients should consider whether any advice or recommendation in this research is suitable for their particular circumstances and, if appropriate, seek professional advice.

No part of this material may be (i) copied, photocopied or duplicated in any form by any means or (ii) redistributed without the prior written consent of The Network Collective Limited © 2018

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