Reselling wide area network (WAN) bandwidth and services may be the wave of the future as enterprises look to offload service provider contracts that no longer fit business needs.
Despite surges in WAN traffic and services,
A branch office might have fewer users because more employees are mobile or working remotely. Or, in this economy, the company just has fewer employees. Whatever the case, a multi-year WAN services contract for that branch carries far more bandwidth than is needed, but the company's service provider is unwilling to renegotiate.
"Unfortunately, what's happening is that companies are being saddled for extra bandwidth now because all their users are moving to wireless for data," said John Stehman, associate senior research analyst at Info-Tech. "In some cases, providers will renegotiate the contract if it benefits them. But in other cases, it doesn't and they won't, and enterprises are facing a dilemma."
Such shifting WAN usage patterns are a part of modern life and are not likely to become any more predictable in the near future as competing trends take hold. Businesses are tapping into more and more bandwidth hogs like software as a service (SaaS) and streaming video, but those services are less and less likely to be actually delivered over the WAN as users get 3G and 4G connections via cell phones or wireless USB modems.
"In a surprising number of cases, a lot of people don't even care how many voice minutes are on a wireless plan," said Jeff Cotrupe, founder and CEO of networking and telecommunications consultancy MarketPOWER, LLC. "What they care about is unlimited texting and multimedia texting and data, so I believe that they could be 'outbanding' the people who are remote from headquarters. So usage patterns are entirely different than the good old days of 'Hey, we'll get a T1, and we know how many users we'll support.'"
Fortunately, rigid contracts do not mean that the company is completely out of luck, according to Stehman.
"The larger companies like GM have been reselling network capacity for 20 years," he said. "What smaller enterprises are looking at is, they're not going to make money doing this, but they may be able to sell this to a partner or reseller for strong business benefits."
The first thing to do, Stehman said, is go over any current WAN service and bandwidth contracts with a fine-toothed comb.
"In some of them, you're precluded from reselling," he said. "In others, you may be able to resell, but you have to deal with service problems."
Cotrupe compared it to a sublease on an apartment: Terms and conditions may vary, and the original WAN buyer might have to take on added responsibility and risk if the relationship goes sour.
That means that the enterprise, rather than the service provider, might have to field support calls if something goes wrong. While Verizon and AT&T have dedicated teams already devoted to just such tasks and have the support tools needed to rapidly diagnose problems as they arise, an enterprise IT group will probably have to absorb at least the first-level support calls. This means added man-hours to factor into the final WAN resale price.
Stehman said these factors make an internal customer -- for example, another division within the company -- an optimal resale customer. Just as with a sublet, knowing who you will be working with can save headaches and surprises later on.
If that route does not work out, however, companies might need to get creative with how they price and package WAN service.
WAN for widgets: Bartering WAN bandwidth
Rather than a strict cash-for-WAN arrangement, Stehman recommended bringing surplus WAN services and bandwidth to the bargaining table when negotiating with partners.
"It's one of those things you have to look under the covers," he said. "It may make sense to lose a few bucks if they can leverage significant discounts from a supplier." Instead of a market rate on WAN bandwidth, for example, Stehman suggested asking to exchange the bandwidth for a percentage discount on parts. Not the most traditional bartering arrangement, but with the right conditions and a clear understanding of support roles, everyone can win.
Get WAN services right the first time around
Ideally, however, companies will learn from past mistakes and take a long, hard look at WAN bandwidth needs.
While WAN bandwidth might be exploding today, consider the impact that mobile workers, 4G technology like LTE and WiMax, and telework strategies might have on WAN usage.
"When you buy a critical technology or service, you have to really consider the term of the contract, the capabilities of the technology to stay competitive and adapt with your changing business requirements," Stehman said. "This is tricky stuff, particularly over a three-year contract."