MPLS still biggest network segment despite SD-WAN migration

The global SD-WAN segment for large multinational enterprises is worth $3 billion, accounting for just 5% of the total market, according to TeleGeography’s latest WAN Market Size Report. 

Local loops connecting customer sites to direct internet access (DIA) are worth $3.8 billion in TeleGeography’s model, representing or 6% of the market.

Meanwhile, MPLS is worth $17 billion and maintains 29% of the global WAN market. Together, MPLS and access loops connecting to MPLS PoPs account for 60% of the market for large multinational enterprise WANs. 

All together, MPLS and DIA port charges remain the largest contributor at $33.6 billion, followed by local access charges at $22.1 billion.

TeleGeography senior manager Greg Bryan said that SD-WAN adoption is ramping up globally, but MPLS still remains the dominant networking technology. 

“It’s interesting to note that DIA market share is larger than SD-WAN,” Bryan. “The market for internet underlay services is slightly larger than overlay.”

He said that, overall, the WAN market has diversified and, across geographies, the pricing differences within product sets vary considerably. 

For example, compared to other well-developed countries, the United States is a more expensive local access and broadband market.

The research firm attributes the market diversification and disruption to how multinational corporations design and source their networks to cloud computing, the migration of the data centre away from corporate premises, local internet breakouts, and the introduction of SD-WAN.

“Currently, MPLS exceeds SD-WAN, although we expect a considerable shift in the next few years as businesses demand better flexibility, reliability, and cloud access,” said Bryan. 

“Moving forward, reliance on MPLS and private access from customer sites to MPLS PoPs will lessen, and we predict that this is likely to have a material impact on the business of selling corporate networks,” he added.

This new research uses a data-driven model to provide a granular view of the market opportunity for the underlay network or corporate WAN. 

Using insight from TeleGeography’s WAN Manager Survey and WAN Cost Benchmark customers, the team used the total number of global corporate WAN sites and market price ranges as key variables, with static assumptions about the geographic distribution of network sites, mix of connectivity products, bandwidths, distance of local loops, and SD-WAN rollouts.