Where have all the global network aggregators gone?

SD-WAN can reduce network transport costs for enterprises, but only if there’s enough competition among network access providers. Consolidation in the market means IT teams need to strengthen their procurement practices.

SD-WAN  >  The concept of a visual transition from hardware cables to software code.
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One of the key selling points of SD-WAN is the ability to use a variety of network transport options. Enterprises can select MPLS, dedicated Internet access, business broadband, or wireless broadband, for example – whatever makes the most sense, technically and economically, for each site that needs connectivity. Cultivating a mix of suppliers can allow enterprises to significantly reduce transport costs as well as improve the flexibility of their networks.

The growth in SD-WAN deployments over the last four or five years created a sweet spot for Internet transport aggregators, which, frankly, had struggled to break into the enterprise market when it was dominated by traditional MPLS providers.

Read more: SD-WAN buyers guide: Key questions to ask vendors (and yourself)

Aggregators don't own network infrastructure but use relationships with many different network access providers to manage the provisioning of services to their customers. Before SD-WAN took off, aggregators existed but largely supplied wholesale access services to Tier 1 and other telecom carriers. More recently, enterprise business has boomed for the aggregators. The success of the aggregators has led to changes that now threaten the choices that SD-WAN enabled for enterprises.

Take global aggregator Expereo, for example, which now positions itself as a provider of managed Internet, SD-WAN, secure access service edge (SASE), and cloud-access solutions. Expereo has been on the acquisition trail for some time. Last year, it acquired Global Internet, one of its better-known competitors in the enterprise internet transport aggregation space, and Brodynt, a provider of managed Internet transport services to the wholesale market for ISPs, carriers and systems integrators. Another provider, GTT, swept up aggregators Giglinx and MegaPath, among other acquisitions.

The net effect of all this consolidation is fewer global internet transport aggregators available to enterprises. Having fewer options lessens the potential for enterprises to save money through competition in the market. Significantly, these aggregators often play both sides of the coin: the aggregators supply access services to enterprises, and they provide services to telecom carriers, which white-label the services to enterprises. The telecom carriers then act as default aggregators; they supplement their own networks by using aggregators to fill access-circuit gaps. As a result, the reduction in aggregators also cuts back on the white-labeled aggregation that other telecom providers can offer to their customers, particularly for harder-to-reach locations.

How to expand options for network circuit providers

The best way to leverage SD-WAN’s potential for reducing network transport costs is to have a portfolio strategy with respect to selecting internet transport suppliers. Through robust acquisition processes and detailed coverage and cost modeling, enterprises need to come up with a manageable number of vetted suppliers that meet their global transport requirements. Potential suppliers should be evaluated based on provisioning, SLAs, operational and service support, and commercial and contractual terms, for example.

Typically, for larger businesses, a portfolio approach may include one global or strong regional aggregator alongside two-to-five other telecom service providers with different provisioning models. Having a small handful of suppliers as go-to partners rather than a single supplier can yield significant cost savings – and those savings can run 30% higher compared to a single-source supplier approach.

If managed correctly, a portfolio approach also offers a way to keep performance/pricing pressure on competing suppliers. However, with the consolidation of established aggregators, the options available for enterprises are shrinking.

This loss of competition makes life easier for carriers that own their network infrastructure (such as AT&T, Lumen and Verizon), as well as for other network providers that offer transport as part of managed SD-WAN and SASE offerings (such as Cato Networks and Aryaka). They have less competition from aggregators, which were taking some of their business.

In addition to there being fewer enterprise-grade aggregator alternatives in the market, the aggregators that remain are trying to move up the food chain by expanding their range of services. 

Pure-play aggregators have traditionally had a narrow product focus and a white-glove approach to service management. Expanding their range of offerings can lead to greater service-management overhead for the provider, less differentiation among competitors, and higher prices. Overall, there is less competitive pressure in the market than when there was a range of aggressive new aggregator entrants.

With fewer aggregator options, what can enterprises do? One approach to consider is to widen the search to include new or emerging providers. 

Regional aggregators – although they don't provide the same ubiquitous coverage as global players – can offer alternative supplier options for service in some of the more commercially challenging places around the globe. In the U.S., aggregators like MetTel and Granite can play a part, but while they have flirted with expansion of their footprints, they remain largely focused on North America. Perhaps the time is right for enterprises to consider testing the market and enhancing their internet transport portfolio with emerging players such Iceblue from the U.K., which claims global coverage, and, in the U.S., Aquablue, Bandwave Systems, and BCN. 

Also, given the shortage of mature, enterprise-grade aggregators, it’s more important than ever to be able to evaluate the strengths and weaknesses of available providers and perform robust service-coverage and cost-modeling analysis. At TechCaliber Consulting, we advocate taking an RFP approach that allows a mix of suppliers to be tested for fit without getting bogged down, and then quickly focusing on the most credible providers. The key is to generate appropriate competitive tension among the more traditional carriers. Enterprises can secure the best pricing by modeling different scenarios across a specific footprint, providing targeted feedback for improvements, and selecting circuits from a mix of suppliers. 

TC2 makes no representation on the use or otherwise of providers mentioned in this article unless part of specialist assessment for the specific requirements of clients.

Mark Sheard is managing director of TC2(UK). Based in London but working globally, Mark is part of TechCaliber Consulting, LLC, a global IT and telecom consultancy headquartered in Washington, D.C., that advises the world's largest companies on transformational strategies for reducing their costs for telecom and IT products and services. Mark can be reached at msheard@techcaliber.com

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