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Transcript of Mrv Other Ocs Ethernet Roi Brief Hi
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7/31/2019 Mrv Other Ocs Ethernet Roi Brief Hi
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Marketing Brief
Intelligent Ethernet Demarcation with
Zero-touch provisioning:
Enabling Service Creation with quick ROI
Version 1.0
Copyright 2012 MRV Communications, Inc. All rights reserved.
This document contains proprietary information and is
confidential. Its contents shall not be disclosed or reproduced in
whole or in part.
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Empowering the Optical Edge
MRV-OCS Ethernet ROI Marketing Brief Page 2
AbstractEthernet has been playing a strategic role and is seen as the transport technology of choice as carriers
and wholesale providers open their optical Ethernet networks to the revenue promise of next-
generation packet services. Low cost, simplicity, bandwidth scalability & granularity and ubiquity are
among the key attributes of the compelling value proposition that Ethernet provides.
Carriers investment in Carrier Ethernet is growing rapidly. Infonetics Research estimates Carrier
Ethernet revenue will grow to $32.3B by 2014, driven chiefly by the move to IP NGN packet networks
and growing traffic from consumer, business and Ethernet mobile backhaul networks.
While carriers are rapidly adopting Ethernet as preferred service, a survey conducted by IDC and
Enterprise CIOs shows that the providers key challenge is delivering and supporting services.
Service visibility and service delivery assurance is essential. Comprehensive service provisioning and
performance management are important competitive advantage in todays market.
This paper outlines how the new paradigm of Ethernet flexibility enables service oriented selling,
combined with incremental revenue generation from tiered SLAs at reduced operating and
equipment costs. It also outlines how carriers and wholesale providers can benefits from the Ethernet
economics and plethora of functionality that Intelligent Ethernet demarcation provides for delivering
business Ethernet and Ethernet-based Mobile backhaul services with quick ROI.
Business Ethernet Services
Carrier Ethernet business services are a lucrative segment enjoying a phenomenal growth and strong
demand. This demand is fueled by lower transport cost per Mbps and speeds up to 10Gbps and
above. This in turn is creating demand from enterprises and for cloud-based service providers as well
as traditional telecommunications companies.
The sharp increase in IP traffic is driven by new applications such as business data and data
replication, video conferencing, online trading, content distribution networks, and point of saleplatforms. From their end, carriers see an opportunity to enhance their portfolio with next-generation
services with a lower Total Cost of Ownership while combining enhanced user value with sustainable
revenue potential.
Market researches provide the numbers to support such claims. Vertical Systems Group, for example,
believes that the total worldwide market for business Ethernet services between 2009 and 2014 will
exceed $162 billion, declaring such services the fastest growing strategic data product for service
providers throughout the world. (Vertical Systems Group: Worldwide Business Ethernet Market
Update, 2011).
Carrier Ethernet business services are now available from incumbent carriers, competitive providers,
cable MSOs, and wholesale providers worldwide.
Ethernet Mobile Backhaul ServicesMobile operators and backhaul transport providers are adopting IP/Ethernet backhaul as the
technology of choice to cost effectively scale instead of relying on existing TDM-based transport
networks for Mobile backhaul for the following reasons:
Ethernet presents the most scalable cost-effective transport solution and it offers simplicity andflexibility
Ethernet is a future-proof RAN (Radio Access Network) transport technology (3G, 4G/LTW, andWiMax backhaul)
Ethernet can be extended to the cell-site over various low-cost and ubiquitous technologies(xDSL, PON, WiMAX, xWDM, Ethernet-based radios and HFC)
Ethernet opens up wholesale opportunities
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Key Market Trends
The following graphs displays key findings from recent market research conducted by Infonetics
Research (Worldwide Mobile Backhaul Installed Connections by Technology) and Heavy Reading
(Global Rate of Adoption of Ethernet Backhaul) that illustrate the rationale for the transition to
Ethernet-based mobile backhaul solutions.
Source: Infonetics Research, May 2011
Source: Heavy Readings Ethernet Backhaul Quarterly Tracker, July 2011
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The Economics of Ethernet for Mobile Backhaul
To prepare for the high-bandwidth usage, even for 3Gs HSPA+, mobile operators are moving from
TDM to packet networks for backhaul connectivity. Typically new backhaul networks use Ethernet
because the associated costs are well under half of costs for comparable TDM approaches. As celltower bandwidth requirements increase savings are even greater. By transitioning from TDM to
Ethernet, the reduction in monthly recurring charges paid to backhaul transport providers for wireline
backhaul means dramatic savings as yearly capacities increase (see figure below).
Source: Infonetics Research, Mobile Backhaul Equipment and Service Biannual Worldwide and Regional Market
Share, Size and Forecasts, November 2010
The following 500-node network analysis illustrates the economics of Ethernet-based mobile
backhaul.
10 Mbps or equivalent to
500 sites
Backhaul cost per
month: one site
Backhaul cost per
month: 500 sites
Backhaul cost per year:
500 sites
7 T1s at $300
per month per T1
$2,100 $1,050,000 $12,600,000
10M Ethernet at
$75 per month per T1
$750 $375,000 $4,500,000
10M Ethernet at
$40 per month per T1
$400 $200,000 $2,400,000
Source: Yankee Group; prices may vary by region
For a 500-node network Ethernet saves the
Mobile Operator between 65% and 80% in bandwidth costs per year.
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The Benefits of Multiple Classes of Service for Ethernet Mobile BackhaulAs discussed above, Mobile Operators are transitioning their networks from TDM to Ethernet-based
backhaul. Instead of leasing E1s/ T1s, the Mobile Operator leases Ethernet Virtual Connections (EVCs)
from the Access Provider. In the vast majority of cases, these EVCs are running a single, highest Class
of Service (CoS). This arrangement has come about primarily for operational simplicity. If the EVCbehaves exactly like an E1/T1 but just with higher bandwidth, then the modifications to the Mobile
Operators networks, SLAs, OSSs and processes are minimized and they can more quickly get the
solution to market.
The Metro Ethernet Forum (MEF) has recently authored a positioning paper (as part of the recently
announced MEF CE 2.0 Initiative) with an analysis showing (see below illustrative network diagram)
that the use of Multi-CoS EVCs for mobile backhaul is a superior practice when compared with the
Single-CoS EVCs along with its a viability and expediency. MEF concluded that:
Multi-CoS mobile backhaul results in substantial cost savings for both the Mobile Operator andthe Access Provider
When implemented correctly, this lower cost Multi-CoS solution will result in equivalent or betterquality (as experienced by the Mobile Subscriber) than the Single-CoS solution
The main challenge of Multi-CoS backhaul is increased operational complexity. But the difficultyof overcoming this challenge is justified in a large majority of cases. Emerging industry standards,
especially MEF 22.1 and MEF 23.1 will guide operators on how to implement Multi-CoS mobile
backhaul to help minimize this complexity
Source: Source: MEF, February 2012Prioritizing Traffic (1 - Network control, 2 - Interactive voice, video, 3 Signaling, 4 - Internet data,
business data, streamed video)
Multiple CoS id part of the recently announced MEF CE 2.0 Initiative.
Bringing CapEx and OpEx into Balance
One of the major challenges that service providers are facing as they consider upgrading to advancedservices is how much they are willing to invest in intelligent Ethernet Demarcation. On the one hand,
they will have to deploy thousands of these devices in different types of locations.
On the other, if they intend to offer sophisticated differentiated retail or wholesale services they need
to keep close control of their OpEx and service costs because ultimately Ethernet is an inexpensive
service per Megabit of bandwidth. So ideally they will balance modest CapEx increases with greater
revenue opportunities and lower OpEx.
Multiple CoS creates intelligent MBH network with great rewards
including 25% + savings for Mobile Operators
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Service Positioning Strategies and OfferingsService providers are exploring strategies to address their need to create value in light of price
erosion in mature, highly competitive markets. One of the strategies they are exploring is based on
service differentiators.
Service differentiators can cover a variety of aspects such as SLA guarantees, resiliency, service portals
or application based QoS. When enterprises are able to select the service combination that best suits
their needs, service providers can justify higher margins and differentiate their offerings from the
competition. Service providers can offer a broad range of choices, including scalable bandwidth from
low to super high rates, a variety of QoS and SLA levels, resilience and restoration options and
connectivity topologies. This allows them to present a rich portfolio that provides future upgrade
opportunities and a better chance of meeting the enterprises long-term objectives.
Service differentiators with sample attributes:
Multi-tier QoS: from single level to 4 levels or more Security: from VLAN separation to data encryption SLA Monitoring & Reporting: from no reports to self-managed web-based customer portal Restoration options, 1:1, 1:n, diversely routed fiber or copperIntelligent Ethernet Demarcation - Enabling Services with Revenue GenerationIntelligent Ethernet demarcation devices are known to provide significant operational savings to
service providers offering business Ethernet services and Ethernet Mobile Backhaul services. These
demarcation devices define the service boundary and establish end-to-end OAM (Operation,
Administration, and Maintenance) functionality that supports loopback testing from existing test sets,
remote fault isolation and end-to-end service management. This feature-set translates to a number of
proven benefits to service providers: reduced technician on-site operations and time to repair, fewer
test sets required in the field, end-to-end service visibility, and ultimately, higher reliability and better
QoS. The net result is reduced OpEx & CapEx and an overall increase in operational efficiency.
Strategically installed at service end-points, intelligent Ethernet demarcation devices are ideally
located to establish revenue-driving Ethernet services backed by assured SLAs.
Independent of the service providers network topology, Ethernet demarcation devices can now map
Ethernet services over multi-vendor, multi-carrier and multi-technology networks, and provide
advanced per-flow QoS with advanced traffic management capabilities such as rate limiting and
shaping. Complementing these service creation capabilities, advanced service assurance functionality
allows carriers to use a Ethernet demarcation devices built-in traffic generation and analysis
functionality to turn up new services, then continuously monitor SLA performance using testing
techniques.
Intelligent Ethernet demarcation devices allow service providers to profit from accelerated serviceroll-out, reduced spending on network elements, and the ability to offer premium SLA-backed
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services. As such, these intelligent devices have established a valuable role in revenue generation,
enabling efficient, accelerated, large-scale deployment of packet-based services and the applications
they enable in demanding business services and Ethernet mobile backhaul applications.
Two key functions now available in intelligent Ethernet demarcation devices act as catalysts for new,
revenue streams for service providers: service creation functionality and remote zero-touch
provisioning.
Creating New ServicesCarrier Ethernet services not only present new revenue opportunities but also differentiates the
service providers from their competition. Creating differentiated service requires activation and
testing the service end-to-end. Service providers must ensure services are provisioned, configured (E-
Line/E-LAN) and proper service turn-up testing procedures are executed. In addition to the existing
business services such as Ethernet Private Line (EVL), Ethernet Virtual Private LAN (EVPL) and Internet
access service providers can offer differentiated premium value-added SLA services. Service creation
is also important for the rapid deployment of next-generation business and consumer applications
such as IPTV, video on demand (VOD), Voice over IP, mobile video conferencing, real-time gaming and
more.
Enabling Service Oriented Selling with OptiSwitch 900/9000 Series and Pro-
Vision Service Provisioning System
MRV's OptiSwitch family is an award-winning solution comprises of compact Carrier Ethernet
demarcation and 1st mile aggregation platforms that range from the OptiSwitch OS900 intelligentEthernet demarcation portfolio to the OS9000 Carrier Ethernet packet-optical aggregation product
line.
OptiSwitch products offer service providers a full suite of carrier-grade Ethernet services along with
high-availability, Hierarchical Quality of Service (H-QoS) for dynamic bandwidth management, multi-
stage scheduling, policing for global Ethernet Network-to-Network services, security, Ethernet
operation, administration and maintenance (OAM) support, and TDM circuit emulation services. This
full suite of hardware-based and multi-layer OAM features & tools creates flexible service awareness
and rigid SLAs. OptiSwitch products meet IEEE, ITU, IETF standards and MEF specifications, offering
complete control to simplify deployment and management while maintaining full interoperability and
visibility into customer and provider networks. OptiSwitch is fully compliant with the MEF Carrier
Ethernet 2.0 (CE 2.0) initiative that will enable service providers to transform their metro networks fora wide range of next-generation services including mobile backhaul to support the growing 4G and
LTE networks.
Study conducted by Heavy reading reveals that there are about 500 different
Ethernet services being offered by over 200 Carriers in the U.S. alone.
The rich feature-set & capabilities of MRVs Carrier Ethernet Access solution
form a service enabler solution for the service providers customers.
MRVs Pro-Vision service provisioning and management system combined with the
powerful OptiSwitch Carrier Ethernet Access solution further enriches the OptiSwitch CE
2.0 solution by enabling service creation with zero-touch mass deployment with rapid
service turn-up and consequently reduces OpEx and secures service providers investment.
It provides complete visibility of service performance and automated SLA monitoring.
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Carriers can charge their customers by service category & offerings as outlined below:
Chargeable protected services with redundancy schemes(e.g. mission critical applications, health, banking, etc.):
o Link Aggregationo Ring Protection (ERPS G.8032)
QoS (guarantee voice, video and online trading)o Platinum, Gold, Silver, Bronzeo Guarantees by traffic typeo Guarantees by traffic type and bandwidths
OAM tools enable carriers to ensure measure, monitor and ensure strict SLA offering to theircustomers:
o SLA performance metricso Delay, Delay Variation
VLAN (traffic separation for security, traffic separation so different departments or applicationscan allocated bandwidth or other QoS treatment)
o VLAN by departmento VLAN by geography (per remote branch)o S-VLAN for aggregation of multiple customer VLANs for transport across the WAN
MAC addresses per VPN (charge base on the number of devices or users on the network and perdepartment and location)
o Number of MAC addresses of customer devices
The combination of simplicity, bandwidth scalability & granularity, and
ubiquity of Ethernet along with the compelling OptiSwitch value proposition
creates the foundation for service creation and consequently enable carriers
to generate increased revenue and higher margins.
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Additionally, the rich feature-set of the OptiSwitch series enables service providers to generate
revenues from Tiered SLA as described belowby defining SLA and performance packages as outlined
below:
$xxxx Platinum Business Class low latency $xxx Gold $xx Silver $x Bronze
OpEx Reduction with OAM Tools
Current Costswithout Intelligent Demarcation Forecasted CostsWith MRV's OptiSwitch
Intelligent Ethernet Demarcation Solution
Cause of
outage
Percentage of
outage
Site visits per
year
Site visits
reduction with
intelligent
demarcation
Site visits per
year with
intelligent
demarcation
Net
improvement
Equipment 45% 0.9 80% 0.18 36%
Fiber/Copper
cable
5% 0.6 80% 0.02 4%
Power 30% 0.1 80% 0.12 24%
Provisioning 10% 0.2 95% 0.01 10%
No problem
found
10% 0.2 95% 0.01 10%
2 0.34 84%
Source: MRVs information collected from multiple service providers in various regions worldwide
Average cost per site visit $300
Current yearly site visits cost without demarcation $600
Expected yearly site visits cost with demarcation $102
-------
Yearly savings per single customer $498
Yearly savings per metro network with 1,000 demarc devices $498,000
SLA rebate savings Contract dependent
OptiSwitch Series provides comprehensive and hardware-based OAM tools that
enable OpEx savings with SLA rebates savings as outlined in the table below.
OptiSwitch comprehensive OAM tools provide reduction in number of site visits that results
in annual savings per customer and consequently reduces OpEx.
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Zero-touch provisioningKey for OpEx Reduction
MRVs Pro-Vision is a carrier-class service provisioning and management platform that offers service
providers a wide range of applications and tools to fully manage and control large-scale MEF
compliant Carrier Ethernet based voice, data and video services. The GUI-based software platformallows service provisioning, monitoring and troubleshooting from an easy-to-use, central network
management application. Pro-Vision complements MRVs industry leading MEF compliant Op tiSwitch
900 series of intelligent demarcation devices and OptiSwitch 9000 Carrier Ethernet packet-optical
aggregation platforms. The software provides the ability to pre-define individual service profile
components that can be used to easily build new service offerings and reduce time to revenue.
Pro-Vision state-of-the-art feature set includes rapid service creation, powerful performance
monitoring and network health checking, including real-time performance metrics, port and EVC
utilization, transmission errors and QoS thresholds with historical reporting that can be exported. Pro-
Vision offers Web based Customer Portal that allows monitor real-time service performance and SLA
verification based on the customers view. The customer Web-based Portal provides dashboard view
allows monitor real-time service status, service delay SLA, bandwidth utilization and quality of service
parameters such as availability, delay, jitter, throughput, packet loss and service level alarms.
Customers can view the standardized performance management test results from their web browser.
Pro-Vision supports zero-touch mass deployment along carrier-class scalability and high-availability.
Pro-vision zero touch offline service persistence provides the flexibility and cost savings from
provisioning in offline mode without any need for physical network elements. In addition the zero
touch capability allows automatic download of device startup configuration, regional maps, batch
upgrade and scheduled backup procedures.
MRVs Pro-Vision Service Provisioning and SLA Monitorin
Automatic Zero-touch remote turn up process minimizes technician on-site operations and
simplifies device installation and turn-up. It allows auto download of up-to-date device
software and firmware versions, device configurations and database synchronization.
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TCO Analysis for operating a Carrier Ethernet Network with Service Provisioning
The Total Cost of Ownership analysis hereunder provides some numbers that demonstrate how Pro-
Vision can provide operational savings when operating a Carrier Ethernet Network.
Most TCO models have the same basic high-level elements of measurement categories: direct
(software, hardware, operations, and administration) and Indirect (downtime and end-user
operations) costs.
Nevertheless, carrying out a TCO exercise typically demonstrates that the true costs of IT, specifically
desktop are, on average, 5 times more than the costs of acquisition. Most of this cost is attributed,
not to technology, but to ongoing service management processes.
In the following analysis the TOC was divided into 3 groups which seem to be important to carriers:
acquisition cost of the product (software, hardware, and installation), maintenance cost of product
(operations, support, and downtime), and service related indirect costs (scalability, customization,
end-user operations, and shelf life - easy-to-use service creation environment that allows for rapid
development of new services).
Number of CE network devices 1000
CE elements growth annual 10%
Number of CE devices upgrades 40%
Number of CE services provisioned per day 50
Number of faults processed per day 20
Number of inventory discovery transactions per day 100
Number of SLA verificaiton transactions per day 10
Number of security and audit trials per day 150
Number of service trouble truck rolls per day 3
Cost per trouble truck roll (Labor only) 226
Loaded cost per employee per year $100,000
Hourly Loaded cost Technical personal $28
Number of customer care staff (annual) 20
Number of customers 50
Current annual churn rate 4%
Cost to acquire a new customer $10,000
The table below outlines the working assumptions for the TCO analysis they are
based on accumulated data from ongoing discussions with MRVs customers and partners
in different regions worldwide.
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MRV conducted a 3-year TCO Analysis based on the above working assumptions (direct and indirect
costs) and the Pro-Vision product survey findings. The major highlights are outlined below:
The aggregated direct and indirect cost benefits were $126,000 and $3,681,970respectively => total cost benefit of $126,000 + $3,681,970 = $4,807,970
Aggregated CapEx: $1,050,000 Aggregated OpEx: $175,054 Total savings = Total cost benefit aggregated (CapEx + OpEx) =
$4,807,970 ($1,050,000 + $175,054) = $4,807,970 - $1,225054 = $2,582,925
Payback period = 1.4 years Annual ROI = 73%
The in-depth TCO analysis can be obtained by sending an email [email protected]
and specifying Pro-Vision TCO Analysis in the Subject field.
mailto:[email protected]:[email protected]:[email protected]:[email protected] -
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SummaryThe carrier Ethernet equipment market continues to grow, having reached $12.7 billion in 2010 and
forecasted to reach $32.3B by 2014.
Service providers are exploring strategies to address their need to create value in light of price
erosion in mature, highly competitive markets. One of the strategies they are exploring is based onservice differentiators.
A key benefit of Intelligent Ethernet Demarcation is the ability to enable and accelerate the revenue
generation of carrier-grade Ethernet services. Two key functions now available in Ethernet
demarcation act as catalysts for new, high-margin revenue streams for service providers: service
creation functionality and automated, remote zero-touch provisioning. Other intelligent Ethernet
demarcation capabilities such as rich OAM feature-set that ensures strict SLA offering help service
providers to reduce OpEx and CapEx.
Intelligent Ethernet demarcation provides reliability, scalability, flexibility, and manageability
capabilities that create customer benefits and consequently enable chargeable services with quick
ROI.
MRVs OptiSwitch Intelligent Ethernet demarcation Series enable service oriented selling combined
with incremental revenue generation from tiered SLAs at reduced operating and equipment costs,
and allows service providers to benefit from the economics and plethora of functionality that
Intelligent Ethernet Demarcation provides for the delivery of business Ethernet and Mobile Ethernet
backhaul services with quick ROI.
MRVs Pro-Vision service provisioning and management system reduces TCO and lowers the cost of
operating a Carrier Ethernet network. This goes hand-in-hand with increasing carriers revenues by
creating premium services. Additionally, Pro-Vision provides plug-and go zero-touch remote
provisioning that eliminates the truck-roll to provision, saves time in fault identification, and cuts
network trouble shooting. The total cost of operation is every carriers bottom line and consequently
carriers need to be sharp to win against their competitors.
Pro-Vision offers Web based Customer Portal that allows monitor real-time service performance and
SLA verification based on the customers view. The Customer Portal functionality translates to huge
benefits that allow carriers to create rich services without too much development effort and truly
differentiate themselves in the market.
Hereunder is a list of key quantitative findings that derived from operating a Carrier Ethernet network
with zero-touch provision outlines:
For a 500-node Mobile Backhaul network Ethernet saves the Mobile Operator between 65% and80% in bandwidth costs per year (page 4)
Multiple CoS creates intelligent MBH network with great rewards including 25% + savings forMobile Operators page 5
$498,000 yearly savings for a metro network with 1,000 demarc devicesWith SLA rebate savings (contract dependent) page 9OptiSwitch comprehensive OAM tools provide reduction in number of site visits that results in
annual savings per customer and consequently reduces OpEx
A 3-year Pro-Vision TCO Analysis revealed the following findings:
The aggregated direct and indirect cost benefits were $126,000 and $3,681,970respectively => total cost benefit of $126,000 + $3,681,970 = $4,807,970
Aggregated CapEx: $1,050,000 Aggregated OpEx: $175,054 Total savings = Total cost benefit aggregated (CapEx + OpEx) =
$4,807,970 ($1,050,000 + $175,054) = $4,807,970 - $1,225054 = $2,582,925
Payback period = 1.4 years Annual ROI = 73%
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About MRV CommunicationsThe Optical Communications Systems division of MRV Communications is a global provider of Carrier
Ethernet, WDM transport and infrastructure management solutions since 1988. MRV products
enable the delivery of next-generation optical transport and Carrier Ethernet services over any fiber
infrastructure. Since its inception, MRV has demonstrated expertise and experience offeringinnovative products that address future challenges while reducing network complexity and costs.
MRV solutions are deployed in prominent worldwide networks of multinational service providers,
wireless operators, cable MSOs and mission-critical enterprises in government, finance, military,
transportation and utility sectors.
MRV delivers a continuous stream of innovative technologies and has won numerous technological
awards for its products. MRVs global infrastructure includes R&D centers in North America and
Europe, along with support centers, and sales offices around the world.