Internet Moves to Primary Position 

7 October 2019 |  Mike Sapien, Chief Analyst, Ovum

Before they commit to a network migration, businesses need to know the performance requirements of their individual sites and the applications at each site. Many organizations want to have a standard WAN configuration for each site, but there are exceptions.

Catalyst

Enterprises have used business internet for many years, but Ovum sees demand accelerating as many WAN networks get a refresh. With the implementation of hybrid networks, now fueled by the adoption of SD-WAN services, business internet has become an even more common network choice. Many enterprises have relied only on business internet services. Over the past few years, internet service providers (ISPs) including traditional carriers have made investments in their internet services to improve delivery, availability, and overall performance. Customers have many choices for WAN services, but clearly business internet has become a standard WAN option, growing in both volume and bandwidth.

Ovum view

Business internet service has been available for many years. Historically, it has been considered a best-efforts service. Enterprises have used IP VPNs such as IPsec on business internet as a WAN service option since the 1990s. After decades of private IP WAN services, IP VPN over public internet is again growing in popularity as an alternative to private WAN service options, with many now making it their primary choice. ISPs have made major investments in business internet service over the years, upgrading their infrastructure in local markets and the backbones that connect their major internet regions. Carrier investments in fiber improved performance, and many copper-based facilities are now being retired in the local markets. In developed markets, providers (including incumbent carriers, cable operators, and ISPs) have made major investments in infrastructure, enhanced features, and service delivery for their respective internet services. Most large incumbent carriers and cable operators have become large ISPs that are fully experienced in managing and delivering internet services to the business market. New technology and new players have also come into play to improve service experiences and performance.  
As the overall performance improves, feature enhancements increase, and prices continue to drop, more enterprises will turn to business internet as a primary WAN choice.
 
Ovum expects to see increased acceptance of business internet as a WAN service, continued investment from a range of providers, and more new techniques to improve its performance. 
Key messages

  1. Business internet is a major WAN choice for enterprise customers of all sizes.
  2. Internet services have growth in many dimensions: bandwidth, availability, wireline, wireless, and overall geographic reach.
  3. Traditional ISPs and carriers have made improvements in business internet that have improved availability, delivery, reliability, and performance.
  4. Business internet has become a standard choice for hybrid networking and SD-WAN deployments.
  5. New players are providing even more performance enhancements through various techniques.

Recommendations for enterprises

Before they commit to a network migration, enterprises need to know the performance requirements of their individual sites and the applications at each site. Many enterprises want to have a standard WAN configuration for each site, but there are exceptions. For example, for smaller locations one reliable business internet circuit can provide all the required connectivity. Ovum sees many cases where using business internet satisfies most of the requirements for WAN connectivity, especially when the service is reliable, and performance is stable. For many knowledge workers who are mobile or work from home, residential broadband internet can be enough for most applications and meets minimal requirements for performance. Larger locations or more sensitive applications may still require a private WAN service such as multiprotocol label switching (MPLS). But business internet service can be part of the WAN mix for best-efforts applications such as public Wi-Fi. Enterprises need to ask for providers' recent service enhancements and any available service level agreements (SLAs). 
Ovum believes that every enterprise will eventually use business internet as part of its WAN mix to address the high demand for bandwidth and manage overall WAN costs.
 

Recommendations for ISPs and carriers

In general, carriers and ISPs need to market and promote what they have done to improve their business internet services over the last few years. Every provider interviewed by Ovum for this report has invested in some way in the reliability, backbone, and delivery of business internet services with many planned future enhancements. ISPs that have SLAs available for business internet services need to promote them as well as any documentation that validates performance (e.g., reliability, availability, latency, and jitter). Within the US, just using the same ISP or carrier appears to improve overall performance and simplify management requirements, and it allows the customer to take advantage of the investments made within the provider's backbone for internet services. Most US providers also leverage an IP/MPLS-based (converged) backbone network across major regions, which provides enhanced service performance compared to general-purpose public internet. Providers overall need to share more information about their business internet services, documented performance, recent enhancements, and any planned improvements more openly with customers.

Mid-market customers use internet as their main connectivity

Bandwidth speeds increase; pricing and flexibility improve

Every provider interviewed by Ovum is experiencing growing demand in volume and bandwidth for business internet services.

Providers see this in existing customers asking for more bandwidth and in new customers starting with higher bandwidth or burstable service requests. Given its high availability, lower cost, and improving service delivery, business internet has been the go-to WAN service to fill this demand. Historically, large enterprise customers added internet bandwidth at all major sites to supplement their private networks and relieve the pressure on more expensive MPLS networks. Now customers of all sizes use business internet to meet growing bandwidth demand cost effectively. 

Traditional ISPs and carriers continue to improve bandwidth, flexibility, and quality of service

All large network providers Ovum interviewed have made improvements to their overall business internet service offering. Some of these improvements are subtle and are included in the basic service. For example, every provider, especially the larger incumbents and cable operators (e.g., Comcast Business), continues to invest in their fiber networks, which support highly reliable network services of all kinds including business internet. Just moving away from older copper or coaxial physical infrastructure will improve the service and increase service visibility. Many large providers have domestic - in some cases global - backbones that provide higher reliability and performance. Some providers offer premium SLAs with their internet services.
CenturyLink, now merged with Level3, is a good example of a provider with infrastructure assets that allow for an improved global business internet offer.
 

CenturyLink also is investing in local fiber in the US to provide better access. Like many larger providers, CenturyLink has improved its service with continuing work on diversity, better management of its peer connections, and tighter SLAs. These SLAs are available across CenturyLink's major regions (e.g., the US and Europe). Some of CenturyLink's customers leverage its converged core backbone as well.

Bell Canada (Bell) likewise is making a major investment in fiber deployment and increasing its coverage nationally. Bell is working on SLA improvements that approach its private network SLAs. Bell's development of its Virtual Network Services platform will let customers mix multiple services on one common platform with a self-service portal for customer visibility, control, and bandwidth management. Bell Canada is promoting its wireless services as a standard backup option to its internet services.

Cloud providers make improvements

With the increasing move by enterprises to deploy multiple cloud services, many cloud providers have also invested to improve the overall performance of their network infrastructure. Some of these improvements include the deployment of regional service nodes in data centers to get closer to end users. Most large cloud providers have also invested in data centers and a global backbone to provide long-haul connectivity between their service nodes to reduce performance issues from long-haul public internet connections. Some of the techniques used by cloud providers include direct or express connections to their larger customers' data centers or hub locations. Major cloud providers including AWS, Microsoft, and Google have adopted this strategy. But others including software-as-a-service (SaaS), software, and conferencing firms have also created global cloud platforms supported by a global backbone. Cisco Webex platform is an example of this global cloud infrastructure. Cisco Webex has its own global backbone and multiple services nodes to provide optimal performance of the conferencing service.

Newer players offer improved performance for internet service

Over the past few years there have been new players and new efforts to create conditioned internet with improved performance. One of the first demonstrations was sponsored by an American content delivery network and cloud service provider, which created new techniques that improved the delivery of large media files including video streaming over internet services.

Internet services will continue to grow with some price compression along the way in competitive markets. Most carriers are reporting modest volume growth and some small revenue growth. This tracks with Ovum's Enterprise Broadband forecast, which predicts volume growth at 2.48% CAGR  and revenue growth at 3.64% for the next five years in North America. Enterprises of all sizes will continue to deploy more and more internet services as business internet takes a primary enterprise WAN role.

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