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New products link service provider networks with cloud-enabled
data centers
In a nutshell
New network infrastructure products based on software-defined networking (SDN) are being
developed to extend network programmability to the optical layer. These products will help service
providers adapt to the cloud era by delivering a flatter network architecture that is likely to first be
employed to deliver better scalability, lower latency, and deterministic performance for data center
interconnect. By integrating optical transport, a switching function (typically label switch routing), and
network applications with management and control layer software, these new products provide an
abstraction layer between the physical transport infrastructure and higher-layer software functions.
With network control abstracted from physical devices, this programmable transport layer can connect
to higher-level cloud and virtualization platforms, through application programming interfaces (APIs),
for orchestration and network automation. Current data center interconnect (DCI) solutions based on
traditional product architectures cannot readily adjust to accommodate dynamic and sporadic traffic
flows. The new SDN converged optical platforms with virtual machine (VM) awareness will be aware
of the communication needs of applications and enable applications to be aware of the capabilities
and state of the network.

Ovum view
Content providers, communication service providers, and enterprises increasingly rely on cloudenabled data centers for internal business functions and to deliver applications to customers. The wide
area network (WAN) is a key component of cloud services, and network bandwidth constraints and
latency can have a major impact on application performance in the cloud.
As data centers take on more cloud services functions, server-to-server (East-West) traffic connectivity
comes to dominate client-server (North-South) traffic. This interdata center traffic is bursty,
supporting sporadic high-capacity data transfers, with traffic patterns that follow virtual machines
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(VMs) as they migrate geographically between data centers. Current DCI solutions based on
traditional product architectures are relatively static and cannot readily adjust traffic flows to
accommodate application needs or VM migration.
Ovum is seeing some equipment vendors extend SDN concepts into a programmable, converged
optical layer in order to provide end-to-end services over a multi-layer network. These converged
optical products typically integrate optical transmission, label switch routing (LSR), and network
applications with management and control software to deliver a flatter network architecture capable of
delivering scalability, low latency, and deterministic performance between network endpoints. An API
abstracts network resources and provides programmable control, allowing network configuration to be
automated. These products can work with SDN controllers to provide a network that can be
dynamically configured, scaling up or down to match application needs.

Key messages

The old networking paradigm is no longer working. With cloud- and video-centric
applications driving continuing IP traffic growth and competition from over-the-top (OTT)
service providers, carriers are seeing continued pressure on revenues. For many carriers,
a larger role in delivering cloud services presents the best opportunity to develop new
revenue streams. Fortunately, they are evolving into IT services companies as they
leverage their understanding of enterprise IT requirements along with their network,
security, and professional services expertise.

New products and services target data center interconnect. Ovum is seeing vendors
and carriers begin to develop products and services targeted directly at supporting this
emerging market for DCI, including new converged optical solutions that extend SDN
concepts to the optical layer. The growth of interdata center traffic leads to new network
requirements for low latency, security, virtualization, and automation.

2012 marked the start of SDN commercial deployment. Ovum expects SDN to
develop in phases around domain-specialized solutions. Google and NTT deployed the
first SDN commercial networks in 2012 to support DCI services. The growing need to
interconnect geographically dispersed data centers over the WAN will continue to evolve
as a market for SDN-based solutions.

Analytics and policy engines will support the automation of network operations.
Analytics and policy engines will work with control plane and application layer intelligence
to better optimize network resources and automate the changes required to match the
operation of the network to the needs of applications. With SDN and more capable
network platforms, near-real-time analytics will effectively close a feedback loop between
how the network is handling data flows and what the policy engine wants to happen.

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Cloud services transform data center traffic
Its no secret that service providers have seen immense growth in the volume of network data traffic.
Ciscos 2012 Visual Networking Index (VNI) report indicates that global IP traffic has increased
eightfold over the past five years, and this growth trajectory is expected to continue with a further
threefold increase in data traffic over the next five years.
Unfortunately, this increase in traffic has not directly translated into an increase in service provider
revenues. For many service providers, a larger role in delivering cloud services presents the best
opportunity to develop new revenue streams. Service providers already have an established base of
enterprise customers, and cloud services can be a natural extension of the communication services
they already provide. They also have a direct relationship with mobile and broadband subscribers that
are coming to rely on cloud-based services.
Data center traffic is undergoing a fundamental transformation in scale and traffic characteristics as
the deployment of cloud-based services expands. Ciscos Global Cloud Index shows a 44% CAGR for
cloud-based traffic from 2011 to 2016, with two-thirds of data center traffic coming from cloud-based
services by 2016. Ovum is seeing vendors and carriers begin to develop products and services
targeted directly at supporting this emerging market for data center interconnect.

Carrier networks evolve to link the data center and central office
The days when the central office (CO) is the sole locus of control in service provider networks may be
ending. The IT world and the communications world are coming together as carrier networks evolve to
be more software-centric and network intelligence migrates to the data center. Today, carrier data
centers largely support managed services for enterprise customers, and they are beginning to provide
public and private cloud services. Tomorrow, data centers will play a key role in controlling the
operation of carrier networks and in serving applications. The data center is becoming the strategic
hub for the global carrier, as the wire center was for legacy local telecoms carriers.
Software-centric SDN networks will take advantage of the compute power in general-purpose server
blades, and advances in operating and managing virtual machines, to provide virtually centralized
intelligence in networks. This intelligence will enable networks to be easily configured and controlled,
respond quickly to changes, and rapidly deliver new services and applications.
This massive addition of new computing requirements leads to a significant need for additional server
capacity throughout the carriers footprint. With facilities spread throughout a service area, carriers can
add IT infrastructure to distributed COs and bring the cloud much closer to customers, reducing
latency and bandwidth costs. With control of the data center and the network, carriers can guarantee
service quality and performance from the data center to the customer premises. The new role of data
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centers in carrier networks also leads to additional requirements for interdata center connectivity that
can be met by more flexible converged optical platforms.

Carriers can tie the WAN to the cloud

AT&T, British Telecom, CenturyLink, Chunghwa Telecom, KDDI, Tata, Telstra, Orange, and Verizon
are among the carriers that have created cloud service businesses, although most carriers were
slower than most IT service providers to catch on to the cloud opportunity. Now that they have
embraced the possibilities, they have been a bit frustrated in positioning themselves against the IT and
Internet players that dominate the cloud services market.
However, carriers are in a good position to leverage their understanding of enterprise IT requirements
along with their network, security, and professional services expertise in providing cloud-based
services and are evolving into IT services companies. With control of the customer access and data
center interconnect networks and their data center infrastructure, the carriers complete network
becomes part of their service offering, and they can differentiate their services with programmable
network access and economies of scale. Application-aware software-centric networks can support the
continued evolution of carriers in this direction and enable flexible delivery of applications and

Data center evolution changes network traffic patterns

Data centers are undergoing a transformation brought about by an evolution to cloud-based
computing services, server virtualization, and distributed computing platforms such as Hadoop. The
transition of computing workloads from traditional data centers to cloud data centers is bringing with it
a change in network traffic patterns.
The traditional client-server model results in a predominantly North-South traffic flow as traffic moves
from servers in the data center to end users through the Internet or IP WAN. As data centers evolve to
support new computing models, East-West traffic comes to dominate networks within the data center
and between data centers, as storage replication, VM migration, and application service requests can
generate intensive server-to-server and data transfer traffic. This rise in East-West traffic has led to
flatter network architectures and virtualized overlay networks within data centers. It also produces a
sharp increase in traffic between data centers to support storage synchronization, interdata center
storage virtualization, and migration of virtual machines. As cloud services grow, service providers are
allocating workloads across multiple data centers to handle variable demand requirements and
operate multiple data centers as a virtualized shared pool of data centers.
This growth of interdata center traffic leads to new network requirements for low latency, security,
virtualization, and automation. Network solutions that effectively coordinate high-capacity bandwidth
and are capable of rapid changes in network topology based on application needs will help service
providers deliver effective solutions for these interdata center workloads. For more on how data
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centers are changing network traffic patterns see Ovums September 2012 report Data Centers:
Defying Gravity.

Network programmability enables automated delivery of new services

Network programmability and emerging software-centric network architectures are the foundations for
a new networking paradigm that will turn service provider networks into a dynamic system that
continuously adapts to meet subscriber needs. Future networks will be aware of the applications and
application data traversing the network. Analytics and policy engines will work with control plane and
application layer intelligence to better optimize network resources and automate the changes required
to match the operation of the network to the needs of applications. This automation of network
provisioning will not only increase the value of communications networks to users, but will also change
the economics of networks and reduce the opex necessary to operate and maintain the network.
Network programmability will also support the rapid and efficient development of new network services
and applications for users. In addition to the network being aware of applications, applications will be
aware of the capabilities and state of the network. Ultimately, a programmable network will allow
software to rapidly adapt the network to the needs of applications and provide an improved quality of
experience to individual users.

APIs will proliferate in future networks

An application programming interface (API) is a software interface that abstracts details of underlying
resources. APIs are well established in software systems and the IT environment and can take many
forms, from the function calls in an operating system to the web-based interfaces that integrate
Facebook with custom applications. As networks become more programmable, APIs will be widely
employed at multiple network layers to enable software to readily access network resources.
Today, in the cloud environment, APIs are available to make infrastructure, services, and application
resources of the cloud data center available to application developers. However, there is no
recognized API standard for cloud computing, and the number of APIs has multiplied as more vendors
develop their own, although OpenStack, Amazon Web Services, and VMwares vCloud are moving
toward becoming de facto standards.
Fast-growing mobile networks are also generating interest in APIs to exploit the value inherent in
network data. With network APIs, customers, suppliers, and third-party application developers can, for
a fee, use a carriers existing processes, platforms, and data to create new applications or services,
Network APIs are available from tier-1 carriers such as AT&T, Telefonica, DT, and Verizon to support
location information, payment and billing features, multimedia messaging service (MMS), and short
message service (SMS) functions.

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Network infrastructure APIs are being introduced into many equipment platforms to allow customers,
partners, and third parties to build network applications that extend network functionality or modify the
behavior of a network dynamically. Ciscos onePK API and the Junos XML API, for example, provide a
representation of the configuration statements and operation mode commands that control their
switches and routers to enable a programmable interface to networks. With SDN, controller software
will have access to these APIs in addition to other interface protocols to access equipment resources.
The controllers will provide their own Northbound API to higher-layer functions.

Analytics will support SDN with visibility into network performance

Operators have begun to mine network data using analytics tools to identify trends, patterns, and
subscriber behaviors. These business intelligence and operational planning analytics tools collect
information from active and passive network probes, sensors, deep packet inspection (DPI) tools,
billing systems, subscriber records, and other data sources and process it offline. With analytics,
service providers can better examine traffic statistics and network policy control data to gain insight for
business decisions. For example, examining data on network performance, availability, and latency
can support operational planning and ensure compliance with cloud services SLAs.
To support a dynamic programmable network, the role of analytics will have to develop far beyond its
use in an offline function. With SDN and more capable network platforms, near-real-time analytics will
provide visibility into how the network is handling data flows.


Converged optical platforms incorporate SDN concepts
If service providers are going to extract maximum value from their network infrastructure, then they
must look at all the layers including an emerging converged optical transport layer. SDN development
was initially focused on use in university and research networks and later migrated to application in the
intradata center network at Layer 2 and above. In 2012 SDN was deployed for data center
interconnect in the WAN. Now some equipment vendors are beginning to demonstrate approaches
that extend SDN concepts to the optical layer to provide a flatter architecture between data centers to
deliver better scalability, lower latency, and deterministic performance at the lowest cost per bit.
By integrating optical transmission with a switching function (typically label switch routing) in
conjunction with management and control layer software, some vendors are supporting the
development of a programmable transport layer. BTIs Intelligent Cloud Connect, Cienas OPn network
architecture, Ciscos Elastic Core, and Infineras Optical Transport Switch are all examples of
approaches to offering end-to-end services over multi-layer, and sometimes multi-vendor, networks.

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These converged optical layer solutions provide an abstraction layer between the transport network
resources and SDN controllers. With a global network view, and working in conjunction with analytics
and policy engines, the controllers can provide end-to-end service management and automate the
setup of network paths based on the needs of applications. Through integration with SDN controllers,
applications will interact with the network to adapt network paths, capacity, latency, and other
performance parameters to application needs.


Networking reaches a critical juncture
For years networking technology has been marching towards software-centric architectures. Service
providers took steps to offer network APIs to developers to provide some access to network services,
but these solutions are generally proprietary and implement a limited set of capabilities. Vendors
began to support network programmability with the introduction of software development kits (SDKs)
and APIs that allow access to some network resources. However, these approaches provide a limited
range of features, do not scale well, and are typically restricted to proprietary solutions.
Service providers are looking for a network infrastructure that will reduce costs, enable faster service,
and support network monetization. Traditional network architectures provide no discernible exit from
the unsustainable situation of bandwidth growing faster than revenues. With SDN, service providers
can reap the benefits of resource sharing, programmability, and automation in network operations and
will have the opportunity to be full participants in service and application delivery.

Service providers deploy SDN to support specific needs

Ovum believes SDN will be deployed as the best solution to deliver specific services or applications.
We are already seeing this happen in initial deployments. Google and NTT deployed SDN in 2012 to
support data center interconnect services. We expect additional service providers to join Google and
NTT in announcing SDN deployments in their production networks over the next several years. AT&T,
Verizon, Comcast, and Deutsche Telekom are known to be trialing SDN and are prime candidates for
future production deployments.
Google has a history of committing resources for internal development of technology that supports its
business objectives, so its not a surprise that the company would be the first to deploy SDN, but other
Web 2.0 companies, such as Facebook and Amazon, as well as cloud service providers, such as
Rackspace, cant be far behind. Initially service providers will be attracted to SDN for the cost savings
it can provide in automating networks and improving utilization. Later they will begin to take advantage
of the opportunities for SDN to monetize network resources.

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SDN will be deployed first at the edge of data centers

Ovum expects SDN to develop in phases around domain-specialized solutions. The first deployments
of SDN in service provider networks, at Google and NTT, operate at the data center edge,
interconnecting geographically dispersed data centers over the WAN. This use case will continue to
evolve as a market for SDN solutions.
Ovum believes the next domain to benefit from SDN will be mobile networks. The typical architecture
of mobile core networks today includes long service chains, with packets passing through a series of
appliances each performing an individual network function. Turning many of these functions into
virtualized software functions will provide flexibility and resource utilization benefits that will allow
mobile carriers to reduce capex and opex while improving their ability to deliver new services.
As SDN matures, the business case for deployments will move from being based on cost reduction to
increasing revenues as it is deployed to optimize application performance and support rapid delivery
of new services.

SDN architectural migration

Over the next several years we expect vendors to continue introducing new SDN architectures and
products. They will bring more programmable platforms to market including converged optical layer
solutions. There will be growing availability of application software and an emphasis on integrating
network service and application software into solution sets. The industry will start to coalesce around
specific northbound APIs in advance of the development of standards for this interface. The large
majority of controllers will operate with a number of equipment interfaces including OpenFlow, SNMP,
NETCONF, and vendor-specific command-line interfaces (CLIs). Major vendors will attract (or acquire)
an alliance of suppliers to offer turnkey solutions that address a particular network service or delivery
of an application.

Ovums long-term SDN deployment view

Ovum expects SDN deployment will be a decades-long process. Short term, there are immediate
service provider benefits in enabling cloud services with more intelligent data center connectivity. In
the medium term, service providers will continue to push vendors for open platforms to support multidomain, multi-vendor networks. Longer term, SDN will evolve from an alternative to traditional
networks to become simply the standard architecture of service provider networks. Deployment will be
a matter of survival, particularly for larger carriers, as it will be the architecture necessary for carriers to
effectively monetize their network.
Anything that derails the formation of strong ecosystems in support of particular solutions can affect
the speed of SDN deployment. These ecosystems will be critical to offering service providers an

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integrated solution. Ironically, the strongest threat to the development of such ecosystems is likely to
come from rapid development of converged solutions from a few of the larger vendors.

The information in this report comes from both primary and secondary sources. Primary sources
include briefings, email exchanges, and phone conversations with vendors and service providers
covered in this report. Secondary sources include industry news articles, operator and vendor press
and financial releases, and existing Ovum databases.

Further reading
Software-Defined Networking: Vendors and Product Landscape (October 2012)
Data Centers: Defying Gravity (September 2012)

David Krozier, Principal Analyst, Network Infrastructure

Ovum Consulting
We hope that this analysis will help you make informed and imaginative business decisions. If you
have further requirements, Ovums consulting team may be able to help you. For more information
about Ovums consulting capabilities, please contact us directly at

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