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Cloud interconnect - new revenues from cloud DCI

Cloud interconnect – or cloud data center interconnect (DCI) – offers communications service providers (CSPs) a chance to increase profitability.

DCI is the fastest growing sector of the optical market and CSPs offer a range of managed and unmanaged DCI services. They also interconnect their own data centers to support service delivery and back office functions.

But data centers and IT are moving to the cloud, with an emerging ecosystem and participants requiring new approaches to DCI to take full advantage of the cloud opportunity. CSPs are ideally placed at the heart of the cloud ecosystem to offer cloud interconnect to all participants and thereby drive additional revenues.

CSPs need to recognize that cloud DCI services must be more scalable, agile and flexible than current DCI services to match the dynamic nature of the cloud.

Find out how to seed the cloud for profit with Cloud DCI – register or replay our Cloud DCI webinar with Light Reading.

Data center interconnect services

DCI services are widely used to link and transport traffic between customers’ data centers. With the continued growth of data centers across all segments of the market and the adoption of cloud, DCI is the fastest-growing application for optical transport and is projected to grow at twice the rate of the global optical network market[1].

In a recent update to its study of metro network traffic growth, Nokia Bell Labs predicts that data center interconnect and user-to-data center traffic will increase by 430 percent from 2015 to 2020, mostly due to customer adoption of cloud[2].

Many CSPs already provide a wide range of optical DCI services including:

  • Dark fiber
  • Managed wavelengths
  • Carrier Ethernet

IP DCI is also becoming important to interconnect data centers. In fact, IP DCI has emerged as a growing router application for CSPs who need to connect cloud-based data centers across existing IP/MPLS WANs.

CSPs have the advantage of incumbency in regions and locations where securing dark fiber and offering DCI services is difficult for other participants. DCI services represent a high-revenue, high-margin business for CSPs and have helped them retain customers due to the business-critical nature of the business continuity and disaster recovery capabilities that DCI provides.

This has created a level of “stickiness” so that organizations are reluctant to move DCI services from one provider to another. DCI services are also very competitively priced, and CSPs are often willing to reduce prices or offer add-on incentives, such as hosting, to retain customers.

Many CSPs can leverage existing data centers that support service delivery and back office functions to deliver their own cloud services. Some are also looking to leverage these data centers and repurpose central offices (COs) to support next generation SDN and NFV server-based architectures. The main reason is to improve agility, flexibility and costs when delivering cloud services.

CSPs’ fiber, optical and IP networks span the globe and they have central offices and points of presence in thousands of locations to maximize footprint and reach. As a result, CSPs are ideally placed to benefit from the cloud ecosystem by offering a new type of cloud DCI – cloud interconnect – to all participants to connect their distributed data centers in private, virtual private, public and hybrid clouds.

Cloud interconnect matches the dynamic nature of cloud services and the cloud ecosystem to help CSPs take full advantage of the opportunities that cloud offers. It provides scalable, cost-effective bandwidth with high performance, reliability and low latency. It also supports business-critical cloud applications with security, QoS and end-to-end management – characteristics that the Internet cannot easily provide.

Cloud interconnect also provides the ability to increase and decrease bandwidth as needed, with multi-site and multi-technology capabilities to help share data, distribute applications and balance workloads.

Most importantly, cloud interconnect provides agile, dynamic provisioning with support for orchestration of network resources quickly and easily, particularly across multiple cloud types and administrative domains in the cloud ecosystem.

The cloud ecosystem and the role of CSPs

The cloud ecosystem comprises private, virtual private, hybrid and public clouds that all have unique benefits to offer, such as agility, flexibility greater control and lower costs. The different types of cloud and different participants in the cloud ecosystem are described in the article Cloud interconnect - where network and cloud meet.

Cloud interconnect presents an ideal opportunity for CSPs to increase revenues and drive profitability. For example, they can offer enterprises, carrier neutral providers (CNPs) and internet cloud and content providers (ICPs) cost effective, highly scalable and high performance cloud interconnect services to connect data centers, co-location facilities and exchange points in the cloud ecosystem, as shown in Figure 1.

Figure 1. The role of CSPs in the cloud ecosystem

Specifically, cloud interconnect helps CSPs:

  • Offer direct connect and managed DCI services to connect multiple data centers in private, virtual private, public and hybrid clouds
  • Deploy data center gateways to extend data center virtualization over IP/MPLS services and connect remote sites and end users to applications in the cloud
  • Use data center connect between distributed data centers and central offices to optimize resource pools and improve efficiency when delivering cloud services
  • Expand footprint to reach more customers by co-locating in CNP facilities to create cloud interconnect and exchange points

Connect customer data centers, remote sites and end users to the cloud

Using cloud interconnect with data center gateway functionality, CSPs can enable seamless connectivity between SDN-enabled data centers and existing IP/MPLS WAN services to deliver enhanced cloud services. The benefits include the ability to:

  • Deliver flexible virtual private cloud services to enable multiple enterprise, industry and public sector customers to complement their private clouds
  • Extend tenant subnets across the WAN to enable virtualized data center resources to be consumed and repurposed by customers on demand
  • Support multi-tenant applications and distribute workloads across servers between different data centers
  • Enable customers to move applications between data centers with no perceivable effect on end users
  • Offer innovative services, such as combining cloud and business VPN services or collaborating with third-party data center operators like CNPs and ICPs

Deliver cloud services more efficiently and cost effectively

Many CSPs are repurposing their own data centers and COs so they can deploy network functions virtualization (NFV) and implement higher-level network functions and features in software. This telco cloud approach will improve the efficiency and reduce the cost of cloud services.

The telco cloud network will need to be managed through a layer of abstraction using carrier software-defined networking (SDN). With NFV and carrier SDN, CSPs can automate the telco cloud and the end-to-end process of provisioning, delivering, managing and billing customers for the use of cloud services.

By using cloud interconnect internally to connect data centers and repurposed COs in the telco cloud, CSPs can enjoy the following business benefits when using NFV and SDN to offer cloud services:

  • Increase operational efficiency and reduce costs by deploying multiple customers or departments on the same machine to maximize data center resource utilization
  • Optimize compute and storage resources across all data centers by extending virtualization beyond a single data center and balancing workloads between facilities
  • Easily configure, move, scale up or scale down resources across data center and central office infrastructure
  • Improve business continuity and provide transparent workload mobility to enable customers to access services even during major failures

Create cloud exchange points to expand footprint and reach

By co-locating in CNP facilities, CSPs can further expand their cloud interconnect service footprint to reach more customers. They can access more peering points, increase their peering options and interconnect with each other to provide main cloud exchange points, and thereby participate more fully in the cloud ecosystem.

Cloud interconnect can facilitate the creation of private, multi-layer inter-exchange points for CSPs, ICPs and CNPs. The benefits include:

  • Ability to create more open multi-lateral peering arrangements giving participants more options to interconnect and exchange data
  • Enable enterprises, systems integrators, industries and public sector organizations to co-locate and create communities of interest
  • Expand cloud partnerships, extend connections to public cloud services and enable hybrid cloud environments

Nokia cloud DCI solutions

Nokia offers a choice of optical, IP and SDN solutions for cloud DCI to meet the varying needs of CSPs, CNPs, ICPs and other organizations. These solutions provide high performance and secure cloud interconnect with the capacity, flexibility and agility to support different cloud types.


Cloud interconnect for communications service providers white paper

Seamless data center interconnect application note

Cloud ecosystem and the role of cloud interconnect white paper

[1] Optical Networks Forecast Report: 2015–20, Ovum TE0006-001182, February 2016.

[2] Metro Network Traffic Growth: An Architecture Impact Study, September 2015 update to a Nokia Bell Labs report published December 2013.

Gary Holland

About Gary Holland

Gary is responsible for marketing Nokia's IP and Optical Networks (ION) portfolio to Enterprise, Industries, Government and Public Sector verticals, both direct and through Global Alliance partners. With more than 25 years’ experience in the telecommunications industry, Gary has held senior roles in corporate, portfolio and product marketing, partner and business development and product line management with technology companies including Alcatel-Lucent, Riverstone Networks and Digital Equipment. Gary brings a combination of marketing, partner development and technology expertise to his current role at Nokia.

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