Tuesday, February 6, 2018

Chasing the next virtual network opportunity

by James E. Carroll

For tennis fans, all attention is currently on the city of Melbourne, where the final rounds of the Australia Open are underway. For those interested in the future of cloud connectivity, the focus goes to the city of Brisbane, where an Australian upstart is making a name for itself in the emerging Network-as-a-Service (NaaS) category. Potential users of NaaS could include large multinational, governments, other cloud providers. service providers including mobile network operators, and mobile virtual network operators (MVNOs). We expect to see many mobile operators transition to virtual networks over time and this could be one model.

Founded in 2013, Brisbane-based Megaport has built what it considers to be the world's first SDN interconnection fabric linking enterprises with equipment in colocation data centres to leading cloud service providers.

Megaport says its elastic fabric is "the reason cloud connectivity will scale." The company developed and runs its own proprietary software stack for automating virtual connections across the fabric. It offers APIs that would enable customers to automate connections across its service. Megaport owns and operates its own core network infrastructure, including fibre and transport for each market and between inter-city data centres. This footprint now covers major cities in Australia, Asia Pacific, North America, and Europe – a total of 37 major markets in 19 countries. Unlike with best-effort public Internet access, Megaport is able to provide strict SLAs because it controls the transport network and the switching fabric, and the Layer 2 access inside the colo data centre.

The ASX publicly-listed company has reported steady revenue growth over the past year as it quickly scales its service. For its fiscal quarter ending 31-December-2017, revenue was A$4.68 million, up 12.7% sequentially. The total number of customer ports increased in the quarter to 2,259, up 9% sequentially.

From Virtual Layer 2 to Virtual Layer 3

Just this week, Megaport is unveiling a virtual router service that enables customers to rapidly and privately connect at Layer 3 without the need to own or manage routers or physical infrastructure.  The Megaport Cloud Router (MCR), which rides the company’s same physical network, aims to make it easier for companies to expand their service footprint through virtual Points of Presence (PoPs), and peer with ecosystem partners worldwide. It does so by removing the need to own physical routers or network infrastructure. Megaport said its service also enables cloud to cloud connectivity. Customers can use its cloud router to move workloads and data between Cloud Service Provider (CSP) environments.  Customers can create virtual routers within routing zones around the world to enable global coverage and support localized routing decisions. In addition, networks service providers connect to Megaport can use MCR to set up virtual PoPs around the world.

“As a Network as a Service company, it’s imperative that Megaport continues to innovate solutions that abstract complexities in the network buying experience,” said Vincent English, Chief Executive Officer, Megaport. We’ve moved further up the stack by expanding our SDN’s capabilities to address Layer 3 IP routing and support a broader set of customers with varying technical capabilities and business needs. With Megaport Cloud Router, there’s no need for a deep understanding of Layer 3 intricacies to take advantage of IP routing features. Cloud to cloud connectivity is one of several new use cases unlocked by MCR which provides powerful options for enterprises architecting next-generation multicloud and hybrid cloud solutions. Our customers can move beyond the constraints of their physical network and rapidly establish virtual Points of Presence to unlock unique peering and interconnection opportunities around the world.

Company leadership

Megaport was founded by Bevan Slattery, who currently serves as Chairman of the business. Over his career, Slattery built multiple successful Australian IT and telecommunications companies including Superloop and NextDC.  He also co-founded PIPE Networks which grew to become Australia’s largest Internet Exchange and Australia’s third largest metropolitan fibre network provider, selling to TPG in May 2010.

Megaport is headed by Vincent English, who previously was Chief Financial Officer for Digicel Group. Prior to joining Megaport, Vincent was for Digicel Group, the global mobile network operator active in  31 markets in the Caribbean and South Pacific.  Megaport’s engineering team is led by Tim Hoffman (CTO), who previously led the Global Network team at Twitter, responsible for worldwide infrastructure, including all interconnection, backbone and content distribution infrastructure, and global data centres.  In this role, Hoffman negotiated peering agreements with some of the largest Internet backbone providers. Eric Troyer serves Megaport's Chief Marketing Officer. Troyer previously was Director of Network Edge and Interconnection Strategy at Microsoft where he led planning and engineering teams tasked with network expansion and IP capacity acquisition to scale Microsoft’s cloud strategy. Working at Equinix, he drove the Equinix Internet Exchange product

Building the Ecosystem

Customers connect to its fabric via a single, physical "mega-port" at any of the 185 colo data centres in which is present. This physical port enables the set-up and tear-down of virtual ports to any of the other parties connected to the global Megaport network. The concept is simple. Once a sufficient number of parties are on-board, Megaport benefits from the "n-squared" magic of networks. The company is now poised to enter that rapid growth phase.

Megaport has been prolific in forming partnerships with key players for cloud. These can be sorted into the following categories:
  • Cloud Service Providers: Alibaba, AWS, Microsoft, Google Cloud, Oracle Cloud
  • Data Centre Operators: now present in 185 data centres worldwide, including those of CyrusOne, Digital Realty, EdgeConnex, 4 Degree Data Centres, IO, Cyxtera, vXchnge, QTS, FORTRUST, Stream Data Centers 
  • Network and Managed Service Providers: Aqua Comms, Cloudlogix, GT, Seaborn Networks, Rackspace

In the last category of network service providers, we see two subsea cable operators. This is interesting because it means that enterprises attached to the Megaport fabric now have the ability to activate transoceanic capacity on a short-term basis and via a simple web portal. The partnership with Aqua Comms, which was announced in November 2016, allows customers to turn on elastic interconnectivity services to Aqua Comms’ transatlantic subsea network between New York, Dublin, and London.  Consumption is be based on cloud computing models, including month-to-month services – a huge gain in provisioning flexibility compared with the old system of negotiating 20-year contracts (IRUs).

In its home country of Australia, which is probably its most developed market, Megaport is already providing a similar capability to the U.S.  Dedicated capacity between Sydney and Los Angeles now enables its enterprise customers in Australia and New Zealand to connect to multi-national cloud nodes in North America.

See also