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SD-WAN takes advantage of the 100x MPLS/Internet price gap

By Andy Gottlieb, co-founder, Talari Networks | Aug. 15, 2016
You can bridge that chasm without worrying about the downsides of inferior Internet reliability and predictability

This vendor-written tech primer has been edited by Network World to eliminate product promotion, but readers should note it will likely favor the submitter’s approach.

Everyone is generally aware that MPLS is expensive compared to Internet connectivity (check out “Why MPLS is so expensive”), but are you aware exactly how enormous the difference is? Even with MPLS prices coming down, the precipitous drop in Internet prices has made the gap larger. 

A few years ago MPLS typically cost $300-$600 per Mbps per month for the copper connectivity (i.e. n x T1/E1) typically deployed at all but the largest enterprise locations, while today in most of North America and much of Europe a more typical range is $100 - $300 per Mbps per month.

Meanwhile, the monthly price of broadband connectivity like FIOS, cable or xDSL dropped from $5-$15 per Mbps per month range to $1 or $2 per Mbps per month.  Monthly minimum bandwidth plans might no longer be going down in price, but available bandwidth continues to increase, and the price/bit continues to improve at Moore’s Law-type rates.

For example, high bandwidth cable modem-based Internet  connections are available from Comcast Business Internet for $1.67 - $4 per Mbps per month, while business pricing forVerizon FiOS is $0.73 - $2per Mbps per month. Even using the relatively low-end estimate of $100 per Mbps per month for MPLS compared to Verizon’s best bandwidth pricing is a factor of 137x.  Compared to the higher-end $300 per Mbps figure shows a price/performance factor of over 400x!

Typically these days, most people will see a range of ~50x – 150x as the price/bit superiority for Internet connectivity compared to MPLS.  There are very few areas in technology where IT is seeing order-of-magnitude gains, yet with SD-WANs, enterprises can actually get literally two order-of-magnitude benefits.

The newer area of price/bit benefits from SD-WANs and Internet connectivity is at the data center.  Here I’m speaking primarily about leveraging data centers located at carrier-neutral colocation facilities run by companies like Equinix, Interxion, and Telehouse.

It is worth noting that pricing for fiber-based connectivity at customer premises, for both MPLS and Internet connections a) varies widely depending on location and fiber access to the building, and the local competitive structure of service providers, and b) is fairly opaque.

Finding two different providers – critical for high availability at a data center – can sometimes be problematic.  But it’s probably fair to say that at customer premise-based data centers, traditional Internet connectivity might only offer a 2x – 4x price/bit benefit over MPLS, with prices for many connections being in the ~$10 - ~$60 per Mbps per month range.

At colo facilities, while MPLS pricing tends to be similar to what you can get at your own data center, Internet monthly pricing is usually below $1 per Mbps if you’re buying bandwidth in large amounts. 


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