VMware alum and Arrcus CEO Shekar Ayyar: Operators can better optimize the network, and better monetize the network, with a software-first approach
Arrcus describes its mission this way: “To democratize networking by providing the best-in-class software with the most flexible consumption model at lowest total cost of ownership.” With products covering data center, 5G networking and hybrid/multi cloud including at the network edge, company Chairman and CEO Shekar Ayyar sees Arrcus as positioned to help operators drive cost out of the business while better monetizing 5G through new enterprise business.
The big thesis, Ayyar explained, is around how you software-define and virtualize the whole world one step at a time. “Overall I’m super optimistic about not just the deployment of 5G but in the ability for not just operators but the world at large to essentially benefit from that in a very economically-effective way.”
He did acknowledge two big economic challenges that need to be addressed: the cost to deploy 5G and the ability to best monetize that investment. With consumer 5G monetization lackluster, operators “can’t just keep doubling ARPUs,” Ayyar said. First, he discussed the cost aspect of 5G. “I’m always a big believer that you have to better optimize, better use your resources, and that is done through layers of abstraction and software that enable you to better utilize your infrastructure.”
Ayyar said operators have paid close attention to things like network function virtualization and Open RAN, but have “fundamentally ignored…the transport network, particularly routing and switching.” Looking to break the cycle of operators “re-writing their checks to the old incumbents,” he said Arrcus is focused on disrupting that space.
Investment here, he explains, spans the two big areas operators are investing in—moving their own operations into the cloud and while extending the cloud out to the network edge to open up the enterprise market.
To that point, Ayyar said investment in transport modernization drives ability to deliver monetizable use cases at the network edge. “I feel like there are now a set of both infrastructure services as well as application services that can meaningfully start to be delivered from these points in the network.” Services like VPNs, extensions into private 5G, existing SD-WAN complemented with fast access to hyperscaler infrastructure “are all examples of things I think honestly can be done today. We’re working with some of these carriers to make them happen.”
In terms of what it’s doing today, Arrcus has a number of public customer wins with the likes of Softbank and Coresite. For Softbank, Arrcus delivered its network operating system, called ArcOS, to demonstrate network slicing and multi-access edge computing applications. The yearlong lab trial gave way to preparations for commercial deployment. With CoreSite, a datacenter and cloud onramp provider owned by American Tower, Arrcus is providing its edge multi-cloud networking kit which “automates additional provisioning functionality within AWS and Microsoft Azure Cloud…and direct cloud-to-cloud communications capabilities on CoreSite’s fully managed virtual routers.”
By working with Arrcus to connect its infrastructure, CoreSite said it will be able to quickly scale and deploy applications in multiple markets with “inter-market connectivity,” and “improve network performance and security with guaranteed private network isolation, throughput and lower latency compared to public internet connections.” This work with CoreSite gets even more interesting when you start to think about the synergies between the tower portfolio and datacenter business that prompted American Tower to buy CoreSite in the first place; not to mention the implications for operators who know they need to deliver edge-based services but haven’t really done that yet in any meaningful way.
“I’m talking largely to telcos and network operators but of course also the cable guys as well as any of the CDN operators then leasing into tower operators that are looking to equip their cell sites and towers with compute capacity,” Ayyar said. “There’s a whole broad class of these operators sitting on assets, scratching their heads, wondering how they are going to monetize.”
How do operators develop then monetize new 5G-enabeld services? That’s a good question that seems to be confounding the vast majority of players in the game. What’s Ayyar’s take? “Now is the time for at least some subset of enterprising customers to lean feared and essentially say, ‘In our B2B businesses, and/or our enterprise-facing businesses, we’re going to take advantage of the network infrastructure as well as the geographic sites that we have access to, and rather than just sort of tamely handing these over to a bunch of hyperscalers to go monetize as they so choose, we’re going to flip this around a create a set of business-facing services, then do the right thing in terms of investment in sales and marketing around that.”
He continued: “You can’t actually start doing enterprise until you take on old models and turn them on their heads. You can either write the story and say all the telcos sank into the sunset, which is what is happening now. Or you can say, ‘And then one bright morning, here’s what happened…’”
As Arrcus continues to raise money, Ayyar said the next few years will be about “flawless execution against the customers we are going after” and perfect the network operating system. Also, “We’re absolutely on the quest for looking for the first handful of really good partners, both strategic partners as well as channel partners, and so that’s going to be the other area that I’ll put focus on.” After that, the goal is an IPO in the 2025-2026 timeframe, he said. “We are super excited to play a role in this disruptive area of technology.”
