The MPLS-OPS Archive

[Irwin Lazar <ILazar@burtongroup.com>]

this isn't exactly operational, but I thought it was worth passing on:


http://www.lightreading.com/document.asp?doc_id=13273

MARCH 21, 2002    

MPLS 'Could Save Billions' Says Study
------------------------------------------------------------------------

Users need to be "forced" to deploy Multiprotocol Label Switching (MPLS) and
start setting priorization bits in the traffic they send over broadband
networks, according to a study released this week by TeleChoice Inc., a
market research consultancy (see MPLS is Key to Profits, Says Study ).

The issue could be the difference between service providers making a healthy
return on investment or facing a "very ugly" financial future, according to
the study, which analyzes the impact of current campaigns in the U.S. to
roll out 100-Mbit/s connections to 100 million homes and offices by the end
of the decade.

The study, Telechoice Perspective on Super-Broadband Deployment Initiatives,
says that if these plans go ahead, service providers will have to cope with
a massive increase in traffic on metro and long-haul networks.

If nothing is done about prioritizing traffic, then service providers will
face a bill of $840 billion over the next five years to upgrade their
optical transport infrastructures to cope with the deluge, the study says.
With prioritization, capacity could be used much more efficiently. A
reduction of more than 40 percent could be made in optical transport
infrastructure expenses.

The impact on profitability is even more dramatic, according to the study:

If you assume a 2002 IP services market size of $6B and a 2002 profit margin
of -20%, in either scenario, revenues increase to $613B by 2006. In the
[unprioritized] scenario, industry costs increase to $554B by 2006 (10%
margin); in the [prioritized] scenario, industry costs only increase to
$422B by 2006 (31% margin)...

Cumulative profit over the 2002 to 2006 period is also dramatically
different: The [unprioritized] scenario yields $114B (less than 15% of the
CapEx) while the [prioritized] scenario yields $267B (45% of the CapEx).

In order for prioritization to work, carriers need to deploy MPLS rather
than Internet Protocol (IP) services, according to Telechoice. And they need
to come up with a way of forcing users to also deploy MPLS and categorize
traffic so that the prioritization schemes supported by MPLS are actually
brought into use. It notes that previous technologies such as Asynchronous
Transfer Mode (ATM) have supported different grades of service, but users
haven't been penalized for calling all of their traffic important. That's
going to have to change, Telechoice says.

< Peter Heywood, Founding Editor, Light Reading
http://www.lightreading.com 

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