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How Much Does MPLS Cost?

Ricardo Belmar
Sep. 5 2019

How much does MPLS cost? What should you expect to pay to add MPLS capacity to your branches? And how much will you save by switching to a software-defined wide-area network (SD-WAN)?

If you’re evaluating SD-WAN solutions, these are probably among the top questions on your mind. Most likely, you’re banking on SD-WAN, which can use any broadband link, being a lot less expensive than dedicated MPLS circuits. But will Internet connectivity actually deliver huge cost savings over MPLS in the real world? Yes. But sometimes no. The short answer is, it depends.

How much does MPLS cost? It’s all about Location.

MPLS has a reputation for being much more expensive than Internet connectivity, and it can be—depending on your geography. In North America, that’s definitely the case (though prices have been dropping for several years). In other regions, however, like Western Europe, that’s not true at all. How can that be?

The telecom carriers who own MPLS networks evolved very differently in North America than elsewhere. In Europe, the same telecoms offered both MPLS and Internet from the beginning. To them, these were just two different access methods into the same core network, so they priced them roughly the same. In North America though, the early Internet Service Providers (ISPs) were completely different companies and true competitors. So, telecoms looked to differentiate by providing “business class” connections with more reliability, security, and control—albeit at a higher price.

Over time, North American telecoms ended up getting into the ISPs game themselves. Today, they’re in roughly the same place as their European counterparts: whether customers use MPLS or Internet, they’re now accessing the same core network. The difference is, North American carriers have grown to rely on high MPLS margins—revenues they use to fuel innovation in other areas of the business. So, the pricing gap between Internet and MPLS remains artificially high.

Getting a Fair MPLS Cost Comparison

Today, North American MPLS costs are steadily declining. As more companies adopt alternative branch connectivity solutions like SD-WAN, expect those prices to continue dropping—carriers have little choice.

However, you do get more for the MPLS premium, including a more reliable connection when it comes to physical outages. Modern SD-WAN solutions use clever software techniques to provide good reliability and deliver performance on par with MPLS. But if there’s a physical outage, there’s not much SD-WAN intelligence can do.

MPLS networks, on the other hand, are architected for maximum uptime and availability. Which is why MPLS carriers offer service-level agreements guaranteeing baseline levels of network availability and performance, with stiff penalties if they don’t. It’s one reason Internet access is still less expensive—carriers don’t have to open up their wallets when it slows down or fails.  

Use a Hybrid Approach to Control MPLS Circuit Costs

For all these reasons, many enterprises don’t choose to replace their MPLS circuits when deploying SD-WAN. Instead, they take a different path: using both MPLS and Internet, and getting the best of both worlds.

Even as they roll out SD-WAN, many enterprises keep MPLS circuits to maintain a minimum level of highly reliable connectivity to their branches. But they cap that investment where it is. For all new capacity, they add Internet (via broadband cable or DSL, wireless 4G, and soon 5G), where they can get more bandwidth at a lower cost.

It’s a smart approach—provided, that is, your SD-WAN is built to deliver the same optimized user experience and fine-grained traffic control as MPLS. If your SD-WAN technology is geared mostly toward swapping MPLS with lower-cost Internet at your branches, tread carefully. The connectivity price tag might look lower, but a WAN that delivers poor performance, unreliable applications, and frustrated users isn’t much of a bargain.

So how much does MPLS cost? Talk to our experts to understand the real costs around MPLS and what you can expect from SD-WAN.

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