Carrier Aggregation: An Overview, Pros, and Cons
Aggregation occurs when instead of duplicating existing infrastructure, a carrier leases another carrier’s infrastructure and resells it to enable local access.
Have you noticed how more streaming services are operating as “bundles,” with multiple channels under one digital roof? In the telecom space, a similar concept exists called “carrier aggregation.” Carrier aggregation occurs when instead of duplicating existing fiber or copper infrastructure, a carrier leases another carrier’s infrastructure and resells it to enable local network access.
Carrier aggregation allows carriers to expand the network size and coverage they offer enterprises, both nationally and multinationally, without having to build new underlying infrastructure. Carrier aggregation also allows enterprises to access the underlying networks of hundreds of carriers via just a small handful of approved ISP vendors, simplifying their vendor onboarding and bill payment experience. Sounds amazing, right? Unfortunately, nothing in life is perfect. Today, we’re delving deeper into carrier aggregation, its main uses, pros, and cons.
Understanding Carrier Aggregation
Less is more is a concept that resonates strongly with the average enterprise when it comes to vendor count. The more vendors performing tasks for a company, the more MSAs there are to approve, the more contact points to keep track of, the more bills to pay, and so on. Conversely, fewer vendors means a lot less to manage. You can likely see why larger enterprises prefer fewer vendors overall and are attracted to “do-it-all” vendors.
On the carrier side of things, building new telecom networks is anything but simple. Building fiber often requires extensive construction, permits for every step, and management of several administrative headaches. And “overbuilding” on other carriers isn’t always the smart solution – it can often reduce returns for all involved ISPs, as demand gets split across 2-3 carriers who each had to foot the same capex bill. So, carriers will often lease and resell another carrier’s existing infrastructure (even though they compete) to respond to customer requests in areas where building new networks is unattractive. That is the core of carrier aggregation – when a carrier leases and resells another carrier’s infrastructure to enable local network access.
Aggregators act as a means for enterprises to access many different networks while maintaining a single point of contact for sales, implementation, billing, and repair, rather than dealing directly with each underlying carrier. Many midmarket and enterprise customers leverage aggregators for convenience and are willing to pay a premium to do so. There are various models available for aggregation.
What Types of Aggregation Do We See?
Aggregators buy network services from other carriers via the carrier “wholesale channel,” where they can buy underlying network at lower costs – but without the standard support and certain components of network operations included, as the aggregator will be responsible for these aspects of network operations. Some aggregators have several wholesale partners, other aggregators have hundreds. Pretty much all carriers engage in some form of aggregation, selling network infrastructure to and from other carriers when they need to bridge gaps in their enterprise when they don’t have network space. But when we refer to “aggregators” in telecom, we are typically referring to carriers who have little to no underlying network and purely resell the networks of others.
There are two major types of aggregators:
Pure Resellers work end-to-end providing enterprise telecom services without provisioning their own network ASN. Examples of this type of carrier you may recognize include Granite, Nitel, Spectrotel, and New Horizons Communications. These companies resell carrier services where the underlying access provider is also the network provider. If you purchase underlying Spectrum infrastructure from Granite for example, you’ll end up getting Spectrum Fiber, Spectrum IP Addresses, and Spectrum Network.
Type-2 Carriers provision their own ASN and provide access/transport over their own network backbone, but lease last-mile infrastructure from other carriers. Example carriers who take this approach are GTT, Lumen, and many other major carriers. In most cases, these companies only lease access and backhaul to their own network backbones. If you purchase underlying Spectrum infrastructure from GTT as an example, you’ll end up getting Spectrum last mile fiber, GTT IPs, and GTT Network.
What Benefits Does Carrier Aggregation Offer?
Now that you understand the basics of carrier aggregation better, let’s unpack some of its benefits.
We’ve briefly touched on the administrative ease of aggregation. The enterprise can now access many carrier networks through a single vendor, with simplified paperwork.
Additionally, this allows for access to dozens, or even hundreds, of networks under one umbrella, without the need to micromanage which network provider is in use and where. Such centralized implementation allows for greater support across large geographic distances, with a centralized billing system, single invoice point, and single point of contact for service and repair issues.
This compounds when dealing with international network requirements, as each country has its own carrier landscape that would be costly to navigate without the help of an aggregator who has preexisting carrier relationships in that country.
For ISPs, carrier aggregation allows the flexibility to build infrastructure where returns will be best, and lease from others where it better suits the market. This also allows them to “test the waters” in specific areas before investing in last-mile infrastructure of their own, building a viable customer base and retaining interested customers. Additionally, when competing for enterprise-level customers, the more availability you can offer, the more likely you are to land large-scale and attractive service contracts, especially to entities that need to service multiple locations.
What Are the Drawbacks of Carrier Aggregation?
Of course, aggregation has some real costs and drawbacks, too, both monetarily and at the expense of the network itself.
The costs on an aggregated network are typically 25-30% higher than buying directly from providers. And volume doesn’t typically change that dynamic. Primarily, because as with any middleman-style service, aggregators buy service from carriers and mark it up to be able to provide their part of the service. Taxes, fees, and surcharges are often exponentially higher with aggregators vs direct providers, too.
Alongside this comes a loss of transparency into who is providing the network service. The number of last-mile providers and ASNs essentially running the same underlying service can become bewildering.
Additionally, what is saved on the admin side is lost on the implementation side. With an intermediary in place between the customer and network service provider, more complex implementations are inevitable. There is also an increased time to repair outages. Together with that comes the potential for overreliance on a single ASN, especially in the Type-2 aggregation model, where there is last-mile provider diversity but none on the ASN side.
There is also a competition argument to bear in mind. As enterprises become more reliant on a single provider for quoting new services, they tend to stop shopping competitively and, in time, their pricing creeps up. And, of course, aggregators are only as exhaustive as their wholesale provider portfolio. If you have a service need in a building that is on-net and easily serviceable, you will only get a quote from that provider if your aggregator has a wholesale agreement in place.
As you can see, there are strong benefits to carrier aggregation, especially when it is used intelligently and selectively to augment a multi-carrier environment. However, overreliance on aggregation can come at a high cost, both in actual dollars, as well as the ultimate network uptime and performance. In some situations, this is a compromise that is worth making. For others, the drawbacks are too high.
Do the benefits of aggregation outweigh the drawbacks for your business? Chat with one of Lightyear’s network specialists today, and we can help you evaluate whether aggregation, direct carrier access, or a different approach is best-fit for your needs.
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