Major Telecom News from 22 February 2016

fiber businessVerizon Acquires XO’s Fiber Business for $1.8B

 By M8trix Communications | 22 February 2016

Verizon is acquiring rival service provider XO Communications’ fiber business for $1.8 billion, a deal which is expected to complete in the first half of 2017 subject to regulatory approval from various governmental agencies. The acquisition will give Verizon a wider network to further its Ethernet penetration while simultaneously meeting its small cell and wireless backhaul needs.

As a result of the purchase of XO, Verizon will be able to satisfy the needs of a wider range of enterprise customers with traditional lit fiber services such as Ethernet and wavelengths.

At present, XO operates metro networks in 40 major U.S. markets, which includes 4,000 on-net buildings and 1.2 million fiber miles. In addition, XO’s intercity network crosses 20,000 route miles linking 85 cities.

Not only does the move take a competitor out of the market, but it also makes Verizon more attractive to large enterprise customers as it will have more of its own fiber to deliver Ethernet in more markets.

Having access to the expanded fiber assets of XO Communications could also allow Verizon to regain its Ethernet service lead over Level 3 Communications. Level 3 surpassed the telco on the US Leaderboard for Vertical Systems Group following the conclusion of its acquisition of tw telecom.

Verizon still sees gains every quarter with strategic services like Ethernet. Nevertheless, a variety of secular and economic challenges led to a 3.3% decline in total business revenues.

Additionally, Verizon may possibly offload wireless backhaul costs it pays to other fiber providers beyond its wireline territory to meet its wireless densification projects, including small cells. The service provider has been a supporter of dark fiber-based solutions for its small cell network, and this acquisition could see them gaining more of those assets to leverage.

As Verizon carries on its network densification process, the service provider has been clear about its desire to have dark fiber for small cell backhaul, something that Sprint is also now advocating.

Rumors were already afoot that Verizon wanted to acquire XO to gain its LMDS spectrum holdings, which it could deploy to deliver an alternative wireless backhaul source. In its place, Verizon will lease XO’s LMDS spectrum until the end of 2018 with the potential to buy it at that juncture.

This transaction will create a stronger provider of business broadband services for the customers of XO Communications,” said Chris Ancell, chief executive officer of XO Communications.

XO will continue to operate independently while it and Verizon pursue the necessary regulatory approvals from governmental agencies.

sdn nfv Commitment to SDN and NFV Continues from AT&T, CenturyLink, Verizon & Others

 By M8trix Communications | 22 February 2016

The wireline and wireless industry segments have begun, or are thinking about implementing SDN and NFV into their networks to benefit from new network agility and the potential to drive automation into their service delivery processes.

Sprint is currently claiming to have transformed the experience of customer care by creating a retention strategy that employs data-driven, next-best-action solutions. By authorizing agents to have real-time, contextual conversations, Sprint was able to deliver this to care agents in only 13 weeks.

A number of other service providers including CenturyLink Orange, Verizon and AT&T have also begun a virtualization program for their networks.

CenturyLink has been rolling out SDN-based plans and services over the last year. The service provider has more than 36 locations in numerous geographies furnished with its virtual network services (VNS).

Last April 2015, Verizon announced it was moving to a software-centric network architecture to reduce costs and accelerate service delivery. As part of that effort, the service provider said it would at first partner on its SDN deployment with vendors Alcatel-Lucent, Cisco Systems, Ericsson, Juniper Networks and Nokia Networks. Last month, however, it joined AT&T and others as a member of the ONOS (Open source SDN Network Operating System) Project. This will enable Verizon to work with various other service and solutions providers as well to solve the trials of developing scalable, highly-available SDN architectures.

Verizon intends to deploy SDN in its IP multimedia subsystem and evolved packet core. The provider will at first concentrate its efforts on its core network and data center network functions, but will also employ SDN in the radio access network.

AT&T has perhaps demonstrated itself to be the most aggressive service provider on the SDN and NFV front as a result of their focus on providing cloud and network on-demand services. AT&T set itself a goal to virtualize 5% of its network functions by the end of 2015 and a future ambitious goal of 75% by 2020, which John Donovan, CTO, said recently that the carrier is on track to achieve.

The work on SDN and NFV has seen fruit in services like AT&T’s Network on Demand capability, which is being used as part of its User Defined Network Cloud (UDNC) strategy, which was initially launched in February 2014.  Furthermore, AT&T is implementing SDN in its mobile packet core with preliminary plans to virtualize sections of its connected car program, as well as its MVNO and VoIP services.

Regardless of the breakthroughs that operators and their vendor partners are currently highlighting, the transition to SDN and NFV is hardly straightforward. In its 2015 Carrier SDN/NFV survey, Current Analysis revealed that while network suppliers are concentrated on helping service providers make SDN and NFV operational, an “uncertain ROI” is a remaining obstacle. In additional, a large-scale network trial of SDN and NFV has yet to be seen, which will reveal how significant the benefits and revenue can be from SDN and NFV.

software defined networking portfolioVerizon is Partnering with Viptela to Unveil a New Software Defined Networking Portfolio

 By M8trix Communications | 22 February 2016

Verizon is partnering with software-defined WAN start-up Viptela to provide a new software defined networking solution that deploys Viptela’s Software Defined WAN Platform. The agreement is an exclusive managed services arrangement between Viptela and Verizon in the United States.

The new Verizon service, powered by Viptela, will allow enterprises to “mix and match” private and public IP connections such as wireless Long Term Evolution (LTE), broadband, multiprotocol label switching (MPLS) and Ethernet to serve an organization’s unique application requirements based on application service availability needs, geographic location and bandwidth. The new service is initially being offered in the U.S., Europe and the Asia Pacific region.

Hybrid WAN sends traffic across two or more links, such as MLPS, broadband Internet and LTE. Viptela’s overlay software generates Layer 3 tunnels in broadband connections and deploys software-defined policies to determine where individual applications and services should be directed. The hybrid WAN can send traffic that has high latency sensitivity, like voice, for instance, over Verizon’s MPLS links, while sending lower priority packets over broadband.

“Software defined networking is the wave of the future,” said Verizon’s vice president of Enterprise Networking and Innovation. Shawn Hakl added, “Viptela’s innovative technology coupled with our global networking and data center assets give clients an advantage in today’s digital economy where speed and agility matter most. Indicators from our testing efforts confirmed this solution is poised to take off in the enterprise space.”

Through the partnership, the service provider giant Verizon and start up Viptela are addressing the market’s demand for managed hybrid networking solutions that allow enterprises to securely, consistently and easily access applications on-site or over the cloud from any device or desktop while better managing the always increasing volume of data.

Enterprises wary of using an SD-WAN startup might be more relaxed about deploying a technology like virtual WAN if it’s offered by a major service provider, proposed Verizon’s director of product and new business initiatives, Viraj Parekh.

Vivaj Parekh said, “They need professional expertise to effectively go through this transformation with a minimum risk approach. They are reaching out to carriers like Verizon to help and assist them.”

Viptela’s SD-WAN platform features centralized management and increased agility, application performance and service availability, strong security, and service-chaining.

“The Verizon/Viptela global SD WAN offering is a watershed moment in managed, cloud-enabled networking services given the new capabilities enabled by this technology,” said Nav Chander, research manager within IDC’s Worldwide Telecom Division.  “Enterprises are just now realizing the promise of SDN and are shifting toward a managed environment especially as functions become virtualized. Verizon is well positioned to help its customers seize SDN’s benefits and the potential it offers enterprises.”

spectrum 5GDish’s Ergen: Our spectrum could be used for 5G, but we’re unlikely to build out new network

 By M8trix Communications | 22 February 2016

In Dish Network’s quarterly conference call with investors, Chairman Charlie Ergen signalled that Dish is not likely to build out its spectrum holdings to produce a fifth nationwide wireless network in the United States, although he also said that the company’s spectrum holdings could be utilized to construct a 5G offering.

According to a Seeking Alpha transcript of the event, Ergen reported, “The nice thing about the spectrum build-out is I think that’s interesting is we’re starting to spend a lot more time looking at 5G because you’re probably — realistically when you look at our spectrum being used, it’s most likely to be used in a 5G format by however it gets used and however it gets built out, and so those timelines kind of match up.” Ergen also told investors, “You’re seeing a lot of people talking about it now and testing it, and you’ll see it at the 2018 Olympics, I mean, 5G, it’s not likely that we would build out interim spectrum in 4G.”

Ergen added that 5G will be “10 times, 100 times, 1,000 times more efficient” than existing LTE networks. “If you’re going to build them, build it with the latest and greatest [spectrum], particularly when you get those kind of efficiencies,” he said.

Ergen was asked if he thought another nationwide player could challenge tier-one U.S. wireless carriers AT&T, Verizon, T-Mobile US and Sprint, but Ergen said he doesn’t expect that to happen.

“I don’t personally see a fifth operator in the United States unless it was something like a neutral hosting where the existing carriers could use it. So, in other words, it wasn’t competitive with the — the competitive balance is pretty good,” he said, adding: “But I don’t personally think you could start a fifth network unless you are somebody — at least Dish couldn’t. I mean, somebody of scale could, right? These companies that have money overseas that they could buy AT&T and Verizon tomorrow. So the world could change.”

Speculation remains about what Dish will ultimately do with its spectrum holdings; most analysts think the company will finally sell its spectrum to a major wireless carrier like Verizon. It could also reach a kind of wholesale agreement with various carriers or offer a perpetual lease. Late last year, Deutsche Bank analysts Clay Griffin, Bryan Kraft and Sunny Kwak said, “The size of Dish’s spectrum holdings has caused some to take a view that a single carrier is not likely to acquire it all, and that even the industry as a whole might find it difficult to buy it at a meaningful premium”.

During the recent call Dish executives also confirmed the company filed an application to join in the FCC’s imminent 600 MHz auction of TV broadcasters’ unwanted spectrum, but did not comment further on the company’s plans for that event.

Last month, Dish Network complained to the FCC that attempts by AT&T and T-Mobile to make it and its partners pay more to take part in the forthcoming 600 MHz broadcast TV spectrum auction were misguided.

Dish owns approximately 75 MHz of nationwide mid-band spectrum, although based on the company’s stock price following its earnings report, investors are valuing the spectrum portfolio at only around $0.80/MHz-POP, according to analysts at New Street Research.

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