Outsourced WAN optimization services increasingly present telecom service providers with a new source of revenue as one of a new generation of services designed to help customers make the most of IP networking. While many carriers have already entered the market, others like Global Crossing are planning to roll out their own versions.
WAN optimization is linked to a broader trend of managed services, according to CIMI Corp. president Tom Nolle. "Enterprise networking has always been a combination of public network and private equipment," he said. "And from the beginning, the debate has been over how that balance should be struck." According to Infonetics Research, the WAN optimization appliance market went above the $1 billion mark for the first time in 2008 -- an increase of 29% from 2007 -- and service providers are often the beneficiaries.
Enterprise strategy in the U.S. has traditionally been to buy basic services from a carrier and then add on their own equipment, Nolle said. But as the managed WAN services trend takes hold, enterprises are asking their managed service providers to package an equipment vendor's WAN optimization or WAN acceleration product and include it in a managed service offering. And in bad economic times, enterprise willingness to outsource may be greater in that outsourcing exchanges capital expenses for monthly fees.
The timing for is good because as more applications are networked, enterprises and service providers are past the point of being able to throw bandwidth at the problem to eliminate latency that can affect an application's performance. In the millisecond or less that it takes optical signals to make a round-trip, latency can impair an application's performance.
On the subject of WAN optimization services and the opportunity they present telecom providers, we talked to Dave Siegel, vice president of IP Services Product Management at Global Crossing.
Are enterprise customers uniformly interested in WAN optimization services?
David Siegel: Our customers are very interested in WAN optimization outsourcing but more in Europe than in the U.S. because they are a little more progressive there. We also see a number of customers using hardware- and software-based solutions for accelerating the network. One of our large entertainment customers runs a software-based tool that runs on each PC and basically helps optimize downloads, accelerate file transfers and maximize bandwidth on the network compared with FTP or HTTP downloads.