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Friday, December 20, 2013

F5 Hits the Agile Button and Accelerates its Path to NFV

It is a well-established goal for service providers to maximize their agility in creating services and at the same time increase their efficiency and reduce the marginal costs of scaling. This is true for cloud and media and mobile and residential and social networking and the Internet of Things and, well, in every important area of service and application innovation providers are pursuing.

With an eye on those goals, an explosion of energy and talent has been unleashed in the past three years to make progress on them in cloud computing and the various dimensions of network infrastructures that need increased agility and scale. Most recently a broad effort to define the best paths in virtualization of critical network service functions has been put into full gear in the Network Functions Virtualization (NFV) initiative under leadership of the world’s most prominent service providers and participation by a wide array of vendors to chart the course. Progress has been made at a torrid pace in NFV throughout 2013 and gives every indication of continuing.

As is true in the formative stages of most legitimate paradigm shifts, the outlines of new architectural approaches and the best practices for pursuing them in the new solutions are starting to emerge. The ETSI groups are starting to yield important NFV specifications, and early stage use cases are starting to get implementation designs from suppliers. It’s the right time for innovators to begin showing their colors and putting new designs in play. Some of the most important areas where innovations will start making the new services possible are in the fine touches of intelligent traffic steering, service chaining for value added services, and flexible combinations of modules in heavily virtualized processing pools that will retain the behaviors advanced applications require and still achieve the efficiency and scaling goals required to support the world’s relentless growth in utilization.

Last week, at the Carrier Network Virtualization conference in Palo Alto, F5 conveyed a powerful and compelling blueprint for navigating the transitions in moving to a more virtualized service delivery infrastructure and providing important categories of service processing intelligence at the appropriate points in network designs. What’s relevant about the blueprint is not that individual solution components would be virtualized as required in the appropriate VM pools—those are table stakes in the process. The special ingredients in the F5 blueprint are the breadth of functionality and mix of deployment points articulated as addressable by its portfolio; the appropriateness of fit at each point for the capabilities required; and the attention to steps in the evolution cycle that make pragmatic sense in each targeted service area for the journey to virtualization to yield results.

For example, a path for transitioning the Internet to mobile integration point so important in mobile operator networks (the SGi interface) into a flexible, modular and scalable combination logic pools for data plane, control plane, and value-add services processing that can each be virtualized at their own pace, remain consistent with the architectural requirements of 3G/4G, and add value to the applications being provided was clearly outlined. In parallel and at a different point in the service delivery topology, a similar blueprint for incorporating intelligent service processing functions in the appropriate contexts in cloud data center sites was described. In this case, modular versions of firewall, load balancer, NAT, and other functions are deployable in the context of whole applications being offered to wide subscriber bases (such as media delivery or rich communication services) or through use of virtual editions of similar modules, in individual tenant computing segments for their particular needs.

Examples could continue. The point is, at a time when the need for clear articulation of practical paths to achieving network virtualization is poignant, one set of blueprints for navigating that transition is being articulated by F5 with the especially appealing attribute of being manageable and targeted at the right functional goals.

Will F5’s integration with key orchestration and SDN suppliers be effective? Will integrations with ecosystem partners for revenue services such as mobile IP and residential media delivery be successful? These are important execution questions that remain to be determined. However, before those questions can even be asked, the compelling vision for how to approach the transition and achieve the economic and functionality goals the journey to virtualization is calling for has to be in place. For F5’s purposes, it is. 

For more information about ACG's NfV services or SDN services, contact

Getting to Know OpenStack Neutron: Open Networking in Cloud Services

The OpenStack Foundation has established a bold mission for itself: to harness the cloud community's many talents in developing a robust, open and agile software suite that supports cloud computing in a wide variety of environments, including public, private and hybrid clouds. Read more.

For more information about ACG Research's SDN services and cloud services, contact sales at

Wednesday, December 18, 2013

NFV Is an Opportunity Change Network Operators' Business Models

Network Functions Virtualization explicitly targets the two biggest problems facing network operators: bringing costs in line with revenue growth expectations and improving service velocity. The basis of Network Functions Virtualization is that industry standard IT virtualization technology (servers, switches, and storage) located in data centers, network nodes or end-users' premises can be used to reduce the cost and increase the speed of service delivery for fixed and mobile networking functions. Read More.

For more information about ACG's business case analysis services, contact

Monday, December 16, 2013

Q3 Optical Networking Market Update

The optical infrastructure market continues to exhibit its cyclic nature with the 3Q Worldwide Total Optical Networking market dropping 7.4% quarter-over-quarter but still managing to yield a year-over-year gain of 5.7% with revenues of $3.36 billion. POTS and Metro WDM were the only two segments reporting positive quarterly growth, and for the first time the Metro WDM segment surpassed the Long Haul DWDM segment to become number one on a revenue basis. Traffic in the Metro WDM segment is closely tied to user demand and applications, and more traffic is staying within a metro, partially by network design and architecture. This growth will drive the need for higher performing Metro networks.  

The POTS segment, the fastest growing segment as both a percentage of revenue and total dollar contribution, saw strong demand, growing 8.3% quarter-over-quarter and 42.1% year-over-year. MSPP, Long Haul DWDM and SONET/SDH segments, however, saw demand decrease; all posted negative quarter-over-quarter growth. The Long Haul DWDM segment did grow 5.2% year-over-year and was number two in terms of total revenue contribution.

In 3Q the vendors’ performance did not vary as widely as observed in previous quarters, enabling most of the top 10 vendors to keep their relative positions. There was, however, enough variation to reshuffle positions 5–10 within the Optical Networking market.

3Q, 2013 Worldwide Total Optical Networking Market
3Q Revenue ($M)
$ 710.8
$ 427.0
$ 376.2
$ 368.2
$ 260.5
$ 247.0
$ 147.6
$ 128.0
$ 126.6
$ 120.8

Huawei and ZTE maintained their lock on positions one and two. Alcatel-Lucent and Ciena both are vying for the third place and are within 2% of one another. A similar situation exists for Cisco (fifth position) and Fujitsu (sixth place); they only differ by 5.26% points and traded places this quarter. In a similar vein Coriant and Ericsson swapped positions 7 and 8. NEC made the top 10 this quarter by bumping Tellabs out of the ranking.  

By region North America was the best performing, providing 5.2% quarter-over-quarter gains and 23.3% year-to-year. This growth was largely driven by AT&T, Verizon and Sprint. Although the CapEx spending of these Tiers 1s is winding down, it has been a significant driver throughout this year. APAC, the largest region from an optical revenue standpoint, reported a decrease of 15.4% quarter-over-quarter but managed a positive 4.5% year-over year. EMEA is still showing lethargic performance and was down 3% quarter-over-quarter and 7.0% year-over-year. LATAM posted the largest declines on a percentage basis: -26.4 quarter-over-quarter and -9.8 year-over-year.   

  • The MSPP market segment continues to decline revenue and for Q3 dropped 15.3% quarter-over-quarter and 14.5% year-over-year. The general transition away from legacy technologies is driving the decrease in this market segment. As enterprises move to the IP/Ethernet environment, product types are shifting from MSPPs to Metro WDM platforms.
  • Marlin Equity Partners continues its acquisition and privatization of companies within the optical vendor ecosystem. With its recent Tellabs offer now approved by shareholders, Marlin Equity Partners has become a major player in the optical market. In the LAM region Tellabs and Coriant held the fifth and sixth positions. 
  • Demand for 100 Gig interfaces is tapering. Although many vendors made their 3Q revenue target, the product mix is still largely being driven by 100G deployments by the major Tier 1 service providers. The overall port count for 100G deployment was down 12.5% for some vendors.
  • The Metro WDM market was strong, particularly in North America, and will soon surpass sales of the MSPP market. This transition is driven from the migration away from the legacy technologies such as ATM and TDM to an all IP/Ethernet environment. We expect this trend to continue as well as spread to other regions with long existing legacy infrastructures.

The optical networking equipment market continues to be driven by its traditional application, wireless backhaul and data centers applications. Although there has been some consolidation, the space has numerous players and competition remains fierce as vendors compete for Greenfield opportunities, target the installed base of their competitors’ aging solutions and look for any chance to unseat an incumbent. This trend is expected to continue throughout the remainder of 2013 as vendors attempt to pull in all possible revenue to have a strong finish this year.

For more information about ACG's packet optical transport services, contact 

         Jeff Ogle   

Friday, December 13, 2013

The Weather outside is Frightful, Time for ACG’s Annual Predictions for Video

It has been a tough year for many sectors of the video business. The STB business took a big hit and is now generally recognized that it is a commodity business. Home gateways grew significantly. The transition to CCAP is leaving many QAM vendors out in the cold and fights over retrans fees are not helping.

Pay TV is no longer a must have service, (about one-quarter of Charter’s customers do not want TV service) and cord cutting/shaving is becoming more common. Competition from outside the traditional competitor circle is getting stronger. Netflix continues its robust growth and now has 40 million subscribers. Google is continuing its fiber rollout. In an apparent response to Google, AT&T recently announced GigaPower, a fiber-based service with 300 Mbps and a free upgrade to gigabit service available next year.

The industry structure is shifting and talks about consolidation are rampant. Time Warner and Comcast both hired M&A staff. On the equipment side, Arris is still assimilating Motorola. Cisco is working on shifting its business away from commodity hardware to software with its NDS assets. With technology, viewing habits and competition rapidly changing, ACG sees consolidation as necessary and inevitable.

Tablets continue to grow and video viewing on tablets/mobile devices are the fastest growing segment. Forty-eight million tablets were shipped in Q3 13, 37% Y-Y growth rate. Video is about 44% of all mobile data usage and is expected to account for over 60% by 2018. 

MSOs are recognizing the need to change viewing experience with better user interfaces and more OTT like viewing options. Charter and Liberty both tested cloud-based UI/guides that are more competitive with the OTT players. They are also getting serious about business services and other services such as home monitoring. 

  • 2014 will be the year of 
    • CCAP 
    • Home gateways 
    • Online video advertising systems 
    • Cloud-based UI deployments 
  • STB prices will continue to fall; there will be increasing competition from no-frills vendors.
  • Traditional pay TV subscribers will continue to fall in developed countries; OTT services will grow.
  • More MSOs will launch multiscreen and OTT like services, though if history is a guide, few will take much share from Netflix and other OTT services.
  • Current home monitoring/security offerings from the MSOs will be modestly successful. Offerings must overcome negative brand perception that MSOs created over with high prices and poor service.
  • Pay TV subscribers in developing nations will continue to grow, though long term we see that penetration rates will disappoint as customers just get data service and watch via streaming.
  • Google will continue to deploy fiber in existing markets and may announce one more market in 2014, but no massive nationwide effort. 
  • Google’s Loon project with weather balloons in the stratosphere is fraught with technical and business problems; there is a slight chance of it being deployed commercially. 

 For more information about ACG's video services, contact

David Dines

Tuesday, December 10, 2013

Business Case for Cisco Intelligent WAN

ACG Research analyzed four approaches to replacing all or some MPLS VPN WAN services with business broadband Internet services without compromising network availability. It found service cost savings of 34 percent to 81 percent, project payback of five to 11 months, and return on investment of 199 percent to 1,220 percent for three years of monthly cash flows. Network downtime can be reduced by 79 percent by adding a second router at each branch. This does not affect monthly savings but it doubles project payback; none-the-less ROI is 279 percent when dual broadband services are used. IWAN also greatly increases bandwidth utilization by making both bandwidth paths active simultaneously. In addition, IWAN offers features to support secure direct Internet access, where guest access or Software-as-a-Service can be automatically offloaded to the Internet. This eliminates the costly and performance diminishing practice of backhauling Internet traffic to the data center. Also, throughput and application performance are enhanced through application-specific optimization capabilities.

For more information about ACG's business case analysis services, contact

Monday, December 9, 2013

Q3 2013 Mobile Market Update

The mobile infrastructure market continues to be a bright spot for the telecom industry. According to the industry statistics (GSA), 109 LTE networks have launched commercially in the past 12 months for a total of 222 commercial networks in 83 countries. The GSA expects 260 commercial networks by the end of 2013. Additionally, 474 operators in 138 countries are investing in LTE, of which 421 have made commitments to deploy.

Additionally, mobile broadband is living up to growth expectations: subscriptions are now over two billion, and the number is expected to grow to 9.3 billion by 2019. Of these, there are currently 100M LTE subscribers, and this expected to grow to two billion in five years. This approximate 4X growth in subscribers will drive a 10X growth in network traffic.

Mobile infrastructure spending remained strong in Q3 2013, up 3% annually to $1.2B. This growth is because of the continued strength in LTE globally, although North America is starting to peak, but other geographies are starting their ramp. The Chinese wireless carriers are just beginning their deployments, and we should see extensive growth in the coming quarters. EMEA is awakening from its slumber is starting to show signs of life.

Mobile IP Backbone grew 4.3% Y-Y. Mobile IP Backhaul continued its robust growth at 21.7% Y-Y as additional backhaul capacity is needed to deal with the increase in data handled at existing base stations as well as for new small cell sites. The Mobile Packet Core segment was down double digits Y-Y, primarily because of delays in North America.

Small cells have been one of the major hubs of innovation in the past few years and did not disappoint this quarter: it grew 42% Y-Y, with growth across all segments. Femtocells increased 57% Y-Y; picocells increase 34% Y-Y; and micro/metrocells increased 31% Y-Y. SP WiFi remained strong at 40% Y-Y increase and IP backhaul grew 22% Y-Y.

Small cell adoption has not been a smooth curve as some carriers misjudged consumers’ price sensitivity early in the adoption cycle and the demand did not meet initial expectations for femtocells. ACG sees the most interest in unlicensed spectrum/WiFi offload because of the lower costs and increased flexibility. Other issues that will impact adoption rate are LTE transitions/hetnet operations, hotpsot 2.0, new backhaul technologies such as millimeter wave and free space optics (FSO), and power.

The capacity enabled by LTE is rapidly changing the face of information technology and enabling the always-on/connected society. The next wave will enable high-quality video entertainment, video communications, gaming, location services and commerce, not just voice calls and texting. The race to  provide these services and be more than dumb pipes is paramount to MNOs. This pressure is propelling technology vendors to develop the solutions to enable and control this complex environment.

For more information about ACG's mobility services, contact

David Dines

Friday, December 6, 2013

Happy Holidays from the Crew of ACG!

Thank you for helping make 2013 another successful year for us. We look forward to 2014 and providing you and your teams with the quality services that you have come to expect from ACG. 

We wish you and yours a wonderful holiday season filled with laughter and love. Have a happy, healthy and successful 2014.