ACG Research

ACG Research
We focus on the Why before the What

Tuesday, March 31, 2015

Forecast of Mobile Broadband Bandwidth Requirements

The consumption of video content is creating a shift from use in the home to mobile devices. This is driving exponential increases in mobile bandwidth demand. ACG Research projects most likely peak period bandwidth requirements to increase at 52 percent compound annual growth rate through 2018.

Dr. Michael Kennedy uses the forecast to model engineered backhaul capacity requirements for a 1,200 square kilometer metro area with a population of 2.5 million. This case study finds that the cell site backhaul bandwidth requirement will range between 0.4 Gbps and 2.5 Gbps in 2018. The odds favor the high end of this range. 10 Gbps Ethernet links in the access network and 10 Gbps rings will be needed to meet the demand requirement, support growth, and maximize load sharing. Agile network architectures will reduce the cost of supporting the expected rapid and volatile increases in mobile bandwidth demand.

Click here to download the business case "Forecast of Mobile Broadband Bandwidth Requirements."

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Monday, March 23, 2015

Is Tomorrow’s Cloud Operations Manager a Highly Specialized Real Estate Broker?

As the world gets driven more and more by cloud-based services, what do tomorrow’s operations jobs look like? A decade and more ago ops managers were blue chip contractors, assembling custom-tuned components into environments a well-known set of visitors could use for a prescribed set of tasks. In tomorrow’s cloud-based world the picture that’s emerging is one in which a much larger and more diverse set of visitors needs to be accommodated for purposes that vary widely depending on when and why they show up. Their expectation is that the cloud infrastructure makes a wide range of capabilities available when they need it, and that the underlying platform will be dynamically allocated to simply make it possible at that time. In this sense the new operations manager has to be aware of the capabilities of a variety of ‘venues’ (three-tiered applications, web-scale apps, elastic storage pools, etc.) and ready to let them out for exactly what the renter needs, now. The mix is larger. The versatility of functions is greater. And the client mix is constantly expanding.

In this way the operations manager of the future is partly an expert realtor who maintains a pool of properties ready to be leveraged for what each client needs, ready to be reallocated to the next one when the first one is done. The realtor gets known for the quality of the properties that are offered. And the clients get referred because the promptness of service and the versatility to support their many distinct needs has been shown. The realtor simply has to ensure the range of properties on offer continues to be value to the clients who may want to visit.

For more information about ACG’s SDN services, contact

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Paul Parker-Johnson 

Tuesday, March 17, 2015

Regulations: Be Careful What You Wish For

Regulations are a critical factor in the access network. Unlike the “rest of the network” the access network is burdened with federal, state and local regulations and this is only getting worse. I’ve written extensively in the past that net neutrality is a bad idea and that Title II is a gigabit killer.

Why is regulation bad for everyone, including Google? The regulated monopoly “phone companies” depreciated equipment over 30 years. With asset-based pricing regulations you want to keep your asset base as high as possible. Thus, the innovation cycle of the regulated voice industry was 30 years. In the unregulated data networking industry the desired depreciation cycle is five to seven years with three to five years being a more common life span of equipment. Thus, the innovation cycle is three to five years.  Today, service providers want to accelerate their innovation cycle to less than one year and ideally three to four months to be more competitive with the “web companies” such as Google and Facebook.

Until recently the net neutrality debate was focused on adverse traffic impacts such a throttling P2P traffic. It’s widely reported that as few as 10 percent of users consume upwards of 80 percent of capacity. The numbers have changed with the proliferation of streaming video but the issue remains. Mobile network operators have solved this problem with data caps. They also have program where web companies can pay so their traffic doesn’t count against subscribers’ data caps. (This may be illegal soon as well.) When an analogous program (for example, paid fast lane) was implemented in the broadband access market there was outrage. 

Traditional content delivery networks (CDNs) can bypass much of the public Internet to improve quality of service. Companies that want to provide a better user experience can use CDNs and cache their content in select Tier 1 locations across the country. This helps; however, from the Tier 1 cache to the user is best-effort delivery.  Once the traffic enters the local exchange carriers’ (LEC) network in a large metropolitan area the “last 50” miles are best effort. 

With this model OTT companies cannot ensure the quality of their service. Why shouldn’t they be able to pay the LEC for better traffic treatment?  The argument is that this benefits the large companies at the detriment of start-up companies. It’s just another challenge innovative start-ups must overcome. This actually benefits consumers as only those companies with a compelling offering will make it over the hurdle. Marginal companies with a marginal offering won’t flood the market and the network with garbage. This is a good thing.  Isn’t the FCC all about protecting the consumer?
Can capitalism and the free market address the issue of a “digital divide”? Yes, a case in point is Comcast in the Boston area. The company offers $10/month broadband service to any family that has children on the free or subsidized school lunch program in the city of Boston.  No laws, no regulations just a solid business driven move by Comcast. 

Service providers have invested billions of dollars deploying and managing broadband networks. Data rates have continuously increased.  Gigabit networks are being deployed around the world by a range of companies and organizations. The free market is driving them. It’s counter intuitive to expect them to spend limited CAPEX if their return on investment is regulated or uncertain.  Today, regulators are faced with conflicting priorities. On one hand they want to spur gigabit investments but on the other hand they want to regulate broadband access. It’s obvious that you can’t get both. To repeat: Title II is a gigabit killer.  

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Monday, March 16, 2015

New Entrants into the DCI Small Form Factor Market

Two equipment titans Coriant and Alcatel-Lucent entered the Data Center Interconnect (DCI) small form factor market with targeted packet optical networking products. Coriant added to its 7100 family of products with the 7100 Pico™ Packet Optical Transport Platform and Alcatel-Lucent added to its 1830 Photonic Service Switch (PSS) family of cloud optimized metro products with its 1830 PSS-4, 8, 16 optical transport platforms. Both of these devices integrate cleanly into their respective portfolios and are Software Defined Network (SDN) enabled for dynamic service instantiation.

These products are significant because they validate the need for higher performance in this growing sector of the packet optical market. Bell Labs forecasts an increase of metro traffic by 560 percent by 2017. By 2019 there will be 60 percent more data centers in the world’s metro areas and DCI volumes will increase 400 percent. Why? With cloud-based services, the industry has recognized the need for data center interconnect (DCI). Initially, service providers offering XaaS solutions were connecting customers’ data centers to service providers’ data centers.  New requirements for DCI have grown out of the operators’ needs to deploy very high-capacity, high-speed, low-latency, efficient transport between their own data center sites. In addition, rich data types such as video, multimedia mobile backhaul, cloud and data center traffic are also forcing the need for more intelligent programmability and automation in management of these traffic patterns. However, because of the size and power constraints of the metro data centers to date, platforms need to fit strategically into smaller Point of Demarcation (POD) locations with low power and high cooling requirements. This is where the DCI small form factor market emerges.

Some key specifications and product comparisons for DCI Small FF at-a-glance:

DCI Small FF Requirements
Coriant 7100 Pico
ALU 1830 PSS –4, 8, 16
4 RU Chassis or less
2 RU
PSS-4=(2 RU), PSS-8(3 RU), 16(8 RU)
DWDM w/ Tb/s fiber capacity
88 DWDM @ 10 & 100G
8 CWDM, 32 DWDM (400G – 1.6 Tb/s)
SAN (FICON, etc.)
SAN interfaces
SAN interfaces
Video (DVB, SDI, etc.)
Video interfaces
Video interfaces
40 - 100G+ ntwk interface
10G, 100G, 200G
10GE – 100GE modular I/O
1, 10 , 100 GE (176 GE max)
10 , 40, 100 GE (w/112SDX11 card)
Pwr (AC or DC)
AC/DC (110/220VAC / -48VDC)
AC/DC (110/220VAC / -48VDC)
Open API/SDN mgt
SDN Enabled

ACG sees a bifurcation of the DCI market between small and multislot form factor devices. The total high-speed DCI market was approximately $400 million in 2013 and is forecasted to grow to $4 billion by 2019. Growth for the DCI small form factor is predicted to be $3 billion by 2019, 97.3 percent CAGR 2014–2019. Growth for the DCI multislot is predicted to be $1 billion by 2019, 27.1 percent CAGR 2014–2019. This market segment is growing because of ADVA, BTI, Ciena, Cisco, Cyan, ECI Telecom, Ekinops, Fujitsu, Huawei, Infinera and ZTE. Who will command the market share? Time will tell but in the meantime ACG is tracking the progress of this exciting market in its new DCI Optical Networking Market Worldwide syndication.

Contact to find out more information or schedule a meeting with Dennis Ward and Paul Parker-Johnson to discuss this research.

Thursday, March 12, 2015

Infinera Puts Agility into Pacnet's Optical Transport Services with Its Open Transport Switch

Infinera’s announcement yesterday that Pacnet has deployed its Open Transport Switch (OTS) embedded intelligence layer into its Pacnet Enabled Network (PEN) for trans-Pacific and intra-Asian optical network services brings an innovative design into production in the fast-moving market for dynamically controlled network services.

Infinera’s OTS brings an innovative design to the table as operators’ efforts to embrace SDN move ahead. Most SDN solutions include an abstraction, or ‘adapter’ layer of software to translate consistently described templates (say, secure VPN or elastic content delivery) into semantics an underlying platform can process. This approach provides agility at the service creation and management level—in an SDN controller tier—and puts the burden of integration with the ‘not SDN-enabled’ infrastructure on the controller.

Infinera has taken an interesting tack in this evolution. Recognizing that operators have a wide range of control environments in play as they move ahead on SDN, OTS puts the ‘agility inside’ the infrastructure and allows it to support dynamic network services in a variety of northbound environments. While its first ‘connection path’ for SDN in Pacnet’s PEN is REST-based, there is no requirement for OTS to be REST-limited in all future scenarios. Underlying data models could be adapted to alternative protocol environments such as NETCONF if an operator requires that model to be used. In this way Infinera enables its DTN-X family to support dynamic controls in a variety of service control environments.

Putting ‘agility inside’ adds a refreshing level of flexibility for designers to take advantage of as they plot their course toward more fluid SDN world. OTS does not take away the value of control plane streamlining or innovations in management applications at higher layers. It simply creates the opportunity to accelerate the path to flexible service deployments operators need for data center interconnect, secure VPN, real-time content delivery, and other high-value services—the point of pursuing agility in the first place.

Will OTS evolve to support multilayer packet and optical operations in Infinera’s portfolio? Will it adapt easily to additional SDN control tiers beyond Pacnet’s REST-based PEN? We expect the odds are ‘yes’ though time will tell. In the meantime we can appreciate the innovation coming to market by introducing agility into the underlying network infrastructure that the OTS solution provides.

For more information about ACG's services, contact

Paul Parker-Johnson 

Tuesday, March 10, 2015

Reshaping System Architectures: Open at Every Turn?

Disaggregated, modular, mix and match, open, these are the sound bites of the emerging white box and open software ecosystems. Will they define the architectural thinking used throughout our information-driven world moving forward?

From the Open Compute Project in data center hardware to open source software such as Open Daylight and OpenStack, the principles of ‘don’t lock me in’ and ‘let me be in charge of components I need for my best-in-class solution’ are making a play for being the dominant drivers for solution designs in nearly every network and IT platform category.

Take Cavium’s just-announced XPliant family of terabit-scale Ethernet Data Center switches as a fresh example. Its Open Compute Project design foundation means, with OCP’s Switch Abstraction Interface (SAI) the switches can be used by any open networking software team to build functions that suit their needs – without being held back by the underlying hardware’s processing architecture. And, with its Open Network Install Environment (ONIE), solution designers can decide whichever network OS best suits their needs. 

In another closely related category, look at Ericsson’s Hyperscale Data Center System (HDS 8000) introduced at Mobile World Congress last week. To support an array of cloud-scale workloads, Ericsson determined it makes sense for the processor and memory elements in its HDS server ‘sleds’ (individual units) to be mixable in a manner customers decide are optimal for their needs. Each combination can be made available to the larger ‘pool’ of resources available and allocated as desired by the cloud management system in use. Each module is attached via an optical infrastructure to simplify storage and compute integration, again based on the workload’s needs.

Mix and match, modular, see

Does this ultra-modular perspective mean the era of integrated product and solution deliveries is dead? Not completely. They will be less prominent in the long run but unlikely to go completely away. For example, HP delivers its Helion OpenStack cloud computing platform as a whole system offering for which it is accountable to its customers. It includes HP and open community components. Juniper delivers its OCX 1100 Open Networking Switch as a platform full of choices about the OS a customer chooses to use in its data center for which Juniper is accountable. It includes Juniper and open community components. 

The increased role of open and modular thinking in solution deliveries is just an indication that the range of ingredients available to producers is increasing (these options were not possible 10 years ago) and the opportunity to bring them to customers in creative ways have expanded. In that sense, the line defining for whom a solution integrator works—a ‘whole system’ vendor (Cisco, Ericsson, HP); a professional services firm (Accenture, Tata); or an end customer (DT, Equinix, NTT)—is being drawn more flexibly today (and moving to the future) than was possible a decade ago. Each party can decide the amount of responsibility it thinks it should shoulder in delivering the end result. The range of options has increased.

Like many deeply rooted transitions, there are parts of this one that are sometimes messy and a bit fragile compared with the ‘certainty’ that integrated platform deliveries of the past have offered. However that fragility will likely subside in coming years as integrators of every type get more familiar with the open building blocks with which they are working, and the use cases they’re supporting put their real and natural pressure on where the boundaries of responsibility should lie for the solutions to be practical. The outcome will be a downshift in the unit cost of underlying hardware, an uptick in the amount of choice that solution integrators decide to use in their designs, and a rise in the value of the software in the solutions at every stage of deployments—from network nodes to server units to higher level applications—that support the services we decide we want to use.

That transition will undoubtedly have its jarring and its stellar moments and will take some time to occur. In the meantime as it unfolds, it’s worth paying close attention to the shifts being brought to market in line with that trajectory in offerings such as the Cavium and Ericsson solutions highlighted here.

For more information about ACG's SDN services, contact

Click here for more information about Paul Parker-Johnson.

Paul Parker-Johnson 

Monday, March 9, 2015

Ericsson: Adding Trust + Governance to Agility in the Cloud

Periodically advances are made that propel the state of the art to a new level and allow us to accomplish things that were just not possible before.  It’s a powerful experience and is the nature of real progress.

In the steadily advancing domain of cloud computing an improvement of this sort has recently been made that could help service providers increase the security and governance of their cloud-based services by an order of magnitude. Improvement in these areas has been a gating factor holding back adoption of the cloud in many operators’ environments, and strengthening capabilities in each of them is crucial for bringing cloud offerings to market with increased confidence.

In its Hyperscale Data Center System (HDS) and Cloud System announcements at Mobile World Congress last week, Ericsson demonstrated innovation and powerful insights for success in cloud-based offerings ( HDS incorporates secure storage protections, mitigating concerns about data security in the cloud. Additionally its Cloud System software incorporates an elegant policy enforcement solution that ensures governance criteria for data and software management are enforced in both development (DevOps, PaaS) and operations environments.

These two sets of innovations come from a combination of investments Ericsson has made in the past year.  Secure cloud storage in HDS is made possible by technology from CleverSafe, for secure object storage in conventional data base and web-scale ‘NoSQL’ environments.  Additional storage protections in cyber attack detection and mitigation have been integrated from Guardtime. 

The Cloud System’s governance and policy control functionality is based on Ericsson’s investment in Apcera.  Apcera’s vision, based on its founders’ experience at VMware and CloudFoundry, is to embed a rich array of policy controls into a cloud service delivery platform (in both development and operations domains) as an inherent part of the underlying software.  Application modules can be prevented from communicating with each other, and production applications can be automatically prevented from operating in the wrong deployment geography, as just two examples of governance and compliance.   

The result of these innovations is a cloud platform that takes away obstacles in security and policy enforcement that have been holding back the adoption of cloud-based services in many operators’ deployments to date.   

Will these capabilities remain unique in the market as other vendors pursue their developments in parallel?  Maybe not.  But it’s worth noting the pervasive integration Ericsson has achieved for both secure data storage and cloud system governance is not a trivial accomplishment.  To deliver similar functionality in a full solution platform for NFV, XaaS and other cloud-based offerings will take a sizable commitment from any other firm, whether startup or established.  While the market may catch up over time for the moment it’s worth putting the spotlight on Ericsson’s achievement in bringing them to market now.  The added protection and compliance available in the Cloud System offering should accelerate adoption of the virtualized network and cloud-based services significantly.

For more information about ACG's SDN services, contact

Paul Parker-Johnson 

4Q Vendor Financial Index Results: Ericsson Jumps into the Low-Risk Category

ACG Research has released its 4Q Vendor Financial Index report, which delivers independent information about the sustainability of a vendor or company to help providers assess the risk of selecting the right vendor to meet their business requirements and to ascertain a risk level on the stability of the vendor regardless of technology innovations.

Low-risk vendors for the quarter are Adtran, Brocade, Cisco, Juniper and Ericsson. Characteristics of low-risk vendors include strong revenue outlook, high operating margins because of sales, solid gross margin and expense discipline, low debt dependency, and high receivable efficiency ratio. Adtran’s growth continues with new product launches, such as high- performance routers, momentum of TA 5000 and FTTN platforms, and new product wins in EMEA, which will contribute significantly to the company’s revenue in 2015. Brocade, which is focusing on efficiency, is targeting software networking investments, advanced fabric switches and datacenter markets. Cisco’s diversification strategy of relying less on specialized routers and switching devices and more on rolling SDN tools and security services will add to growth in 1H15. Juniper continues to pursue its restructuring plan, cost cutting initiatives and diversification of revenue with the goal of increasing efficiency in delivery of services and customer support. Ericsson’s sales in most regions are expected to increase sequentially in 1Q15 with rising demand for managed services, consulting and system integration.

Cyan, Ciena and ZTE are high risk, which is characterized by low inventory turnover ratio, revenue decreases and low value of equity to debt ratio. Cyan’s cautious ordering pattern by its customers will impact the revenue in 1Q15, which is estimated at $30.2 M. Ciena’s substantial segment of its revenue continues to come from sales to a small number of service providers. The firm is focusing on diversifying and broadening its customer base and increased spending on optical upgrades and higher number of international orders should positively impact its top line in 1H15. ZTE will continue to focus its efforts on major global carriers and government segments. Future growth will rely on flagship device range. 

For more information about ACG Research’s Vendor Financial Index service or other syndicated and consulting services, contact

Monday, March 2, 2015

Voice over Wi-Fi: Cable versus LTE: Part II

In the article “How Big a Threat Is VoWi-Fi to the LTE Operator?” (Video: I illustrated the potential threat cable voice-over-Wi-Fi is to the mobile network operator. In Part II of the LTE threat I look at this issue from the CxO’s point of view of each organization.

Cable executives see VoWi-Fi as “nothing but upside.” VoWi-Fi enhances customer bundles, adds new revenue opportunities and is technically achievable. From a network perspective, their HFC networks are widely deployed, minimize access point backhaul issues, and have a presence in millions of homes and small/medium businesses. This physical presence gives them instant Wi-Fi access points on which they can add voice services. Additionally, they have a voice backend, and they are well positioned to handle the additional voice traffic throughout their network. Given these strengths, they can and will move fast, hence, “nothing but upside.”

Mobile network operator (MNO) executives see Voice over Wi-Fi as “nothing but threats” to subscriber relationships, top-line revenue and profits and CAPEX flexibility. These threats are visualized in a number of ways. MNOs lack a physical presence in the home beyond the end-user devices with most users already off-loading to broadband delivered Wi-Fi for performance and data cap reasons. Although LTE backhaul networks have substantial capacity it is questionable whether they can gracefully cope with an onslaught of Wi-Fi data traffic. No company will deploy a voice-only Wi-Fi network. MNOs that do not own fixed network assets have a more daunting competitive environment; however, those that do have fixed network assets still have substantial challenges. 

Cable is not without its own challenges. Given that they will be a new entrant to the mobile voice market they must meet certain baselines of quality of service, which will add to the deployment time, cost and complexity. Cable companies will never build out an LTE network. Never is a long time but, this is a safe bet. True, they can become MVNOs or be bold and buy Sprint or T-Mobile. Without LTE cable companies will not be able to offer the coverage MNOs can.

New Wi-Fi voice and data technologies are under development. Improvements to the over-the-air protocols to address fairness and contention are emerging but VoWi-Fi technologies are nascent and standards take time. All of this will delay cable’s first mover advantage. 

MNOs have advantages as well. The biggest, as well as the most technically challenging, is intelligently leveraging their fixed and mobile networks to gain real-time insights of both networks’ end-to-end conditions such as congestion. Then, using these insights they can provide a superior quality of experience to their subscribers, particularly those deemed as high-value subscribers. For example, a default “off-load-to-Wi-Fi” strategy may not make sense for all subscribers if the Wi-Fi network is congested and the LTE network is not. 

MNOs with small cells sites can upgrade them with LTE/Wi-Fi combo devices. The MNO has already solved the tough small cell site problems (real estate, backhaul, powering, etc.) so swapping out devices is manageable. Keep in mind that these small cell sites are not randomly dispersed. They are located in high-traffic, high-value locations. This enables the MNO to quickly expand its Wi-Fi network presence in these and high-value locations. Even more powerful is the ability to add Wi-Fi to its Self- Optimizing/Organizing Network investments. 

The MNOs have a bold strategy available to them. They can move fast too, and because they have a carrier-class LTE network on which to fall back they don’t have to start with a gold plated Wi-Fi network. They state that they want to be more like web companies and deploy services fast and improve them over time. On this point, they can walk the talk and rapidly deploy a data-only Wi-Fi network that’s “good enough” and let their subscribers use it for free until they attain the level of quality they really want. A lesson from the web world is capturing customers quickly, which is paramount to success. 

Voice-over-Wi-Fi has the real potential to be a major disruption to the service provider industry. Cable companies see this as nothing but upside, whereas mobile network operators see this as nothing but threats. Both have advantages and challenges. Cable has the footprint, voice backend and potential first mover advantage. Yet, as a new mobile voice entrant they have minimum quality thresholds they must meet to be credible. MNOs, on the other hand, lack a strong physical presence in the home and may face network capacity challenges with the addition of massive amounts of Wi-Fi data traffic. However, they have the ability, if bold enough, to take a page out of the web company playbook and move even faster to deploy a “good enough” data-only Wi-Fi network using today’s technologies and their current installed infrastructures.

Want more information or to discuss strategies to dominate the game changing market of voice-over-Wi-Fi? Cable companies, mobile network operators and vendors to both industries contact ACG at to schedule an appointment to discuss these issues with our analyst Greg Whelan