Despite the hype generated by SD-WAN and secure access service edge (SASE), multipath label switching (MPLS) remains a top enterprise WAN option. According to the research firm IMARC Group, the worldwide managed MPLS market hit $60B in 2022 and is forecast to grow to $80.6B by 2028. SD-WAN, in contrast, was a fraction of the size of MPLS in 2022, reaching only $4B, according to Global Market Insights.

The vendors that offer newer, cloud-based WAN services often deride MPLS’ drawbacks, most notably its cost and complexity, but if the critiques of SD-WAN/SASE vendors are accurate, why is MPLS still such a force in the WAN market?

Below are five reasons why MPLS retains a big chunk of the WAN market and why it won’t be displaced anytime soon. 

1. Business and IT leaders trust MPLS for mission-critical applications 

Trust is important for many business decisions, and both business and IT leaders have learned over the years that they can trust MPLS. Thus, for use cases that require high-speed, low-loss connectivity with predictable quality-of-service (QOS), such as video, conferencing and rich media, MPLS remains the top choice.

For instance, BKK AS, the second largest power grid operator in Norway, chose MPLS to modernize its power grid network, which had been running over a deprecated TDM network.

BKK’s TDM network was nearing end of life. Maintenance and operational costs were high, and only a handful of employees with the specialized skill sets knew how to keep the network running smoothly. Furthermore, BKK AS was rolling out new smart grid applications that would require any-to-any communications flows, while also helping the company converge IT and OT networks.

To accomplish all of this, BKK AS deployed Cisco MPLS routers to securely connect all systems and grid devices. BKK AS had already deployed Cisco gear to provide IP broadband services, so they already had a comfort level with Cisco networking gear.

According to BKK AS, moving to a packet-based utility network will save them significant operational costs for the utility network because it can now use standard IP networking gear and will not incur the costs of maintaining two separate networks at substations.

“Building and operating a high–bandwidth, packet-based network has given us a lot more flexibility. In addition, we can leverage the same processes and skill sets that we use to

operate our Cisco commercial broadband network,” said Svein Kåre Grønås, managing director and CEO, BKK Fiber AS.

2. The need for private, stable, highly available connectivity favors MPLS

Many businesses have mission-critical applications, often legacy or homegrown ones, that need predictable, high-availability, high-speed connections to function well. Similarly, businesses in heavily regulated sectors, such as healthcare, banking and defense, prefer MPLS infrastructure for security and compliance reasons, considering it too risky to move their core apps and data to the cloud.

According to research from Mordor Intelligence, many businesses in the banking sector are choosing traditional layer 2 Virtual private network (VPN) and MPLS in response to increasing cyber-attacks and data leak incidents. Mordor also notes that financial firms are then sticking with MPLS to support voice and video applications.

The emergence of SASE, a security-first version of SD-WAN, complicates the picture somewhat, but its market share is still a fraction of MPLS.

3. Rather than replacing it, SD-WAN often augments MPLS

As the SD-WAN market has evolved, many businesses purchase SD-WAN services not as a replacement for MPLS, but as a lower-cost alternative network for nonmission-critical traffic. Mission-critical applications that require high SLAs get priority over the MPLS network, but lower-priority traffic, such as web browsing and email, is routed over SD-WAN.

“Many enterprises refuse to abandon MPLS because they need the SLAs for mission-critical traffic,” said Khalid Raza, CEO of network edge startup Graphiant. Raza was previously the CTO of SD-WAN provider Viptela. After Cisco acquired Viptela for $610M in 2017, Raza served as a distinguished engineer for Cisco.

According to Raza, while SD-WAN is well-suited for lower-priority traffic that doesn’t require highly available, low-loss, private connectivity, for mission-critical apps that directly impact the bottom line, businesses require the robust service level agreement SLAs that come with MPLS.

As SD-WAN has evolved, Raza says that many organizations create SD-WAN overlays on top of MPLS, with mission-critical traffic given priority.  While SD-WAN and MPLS can indeed complement each other, Raza believes this marriage of convenience creates its own problems, including complexity and high costs.

4. Complexity doesn’t disappear with SD-WAN

One of the reasons many businesses turn to SD-WAN is for simplicity. Since it’s a managed services provider (MSP), businesses expect a set-it-and-forget-it experience, but that is often not the case.

Instead, network architects are tasked with using two (or more) networks to connect a complex web of digital business resources, including those housed in a variety of cloud data centers, on the network edge, and even at partner sites. Connecting workers to the right assets at the right time is a time-consuming, error-prone process that is full of security risks.

“The problem with the MPLS/SD-WAN hybrid model is that the enterprise’s network team must maintain and manage two different networks,” Raza said. Many of these hybrid WANs become a thicket of overlays, tunnels, and complicated policy management. “What ends up happening is that these enterprises turn to back to MPLS providers, seeking to hand those challenges off to them.”

Most MPLS providers offer their own or resell SD-WAN services, so many provide managed MPLS alongside SD-WAN, delivering a fully managed hybrid WAN service.  

5. Extreme climate events focus attention on disaster recovery and business continuity

Massive forest fires like those that were raging in Canada, the northeast suffering through hurricane-level flooding, and the global temperature setteing new record highs for four consecutive days have meant power and network outages,  making bad situations much worse.

While SD-WAN offers flexibility to route traffic around outages, many businesses consider MPLS a must-have connection for quick failover disaster recovery (DR) and business continuity (BC) efforts.

With MPLS connections, enterprises can create dedicated routes for DR traffic, allowing it to bypass congestion on public networks, and organizations can prioritize DR traffic, thus ensuring that DR data gets top billing to limit the risk of data loss during disasters.

As the enterprise edge continues to expand, MPLS will continue to be a top choice for a range of use cases that range from DR to fast connectivity to mission-critical apps to low-loss bandwidth for video and voice. For the foreseeable future, MPLS is here to stay.