For CEO Tom O'Hagan the launch of Virtual1's national network is more than the sum of its parts, it is a manifestation of his vision for the company to become a UK-wide channel-only wholesale Digital Service Provider.
Virtual1's mid-term growth plan came to fruition this month with the launch of a national network, and its significance is impossible to escape. In launching the network O'Hagan turned agility into strategy to deliver innovation and flexibility to partners, and, if possible, prompt the wider channel to recognise the limitations of legacy infrastructure. The expansion of Virtual1's London fibre network will cover 180 metropolitan areas across the UK including Scotland, Wales and Northern Ireland. The fully software defined network comprises 280 fibre exchanges with Virtual1 adding 212 to its existing network while FTTC will be available in a further 495.
Over 75 per cent of UK businesses will become on net and the total infrastructure will cover more than 685,000 postcodes. The network is automated through 1Portal for all adds, moves and changes; and partners can apply configuration changes directly to their customers' solutions in real-time.
The network, says O'Hagan, repositions Virtual1 as a UK-wide carrier and a supplier to the aggregator market with the clout to compete directly for wholesale business against Tier 1 carriers. Following the launch O'Hagan plans to double the size of the business within three years having embarked on a 12 month roll out process with orders starting to be taken this summer. "Our wholesale-only model is not going to change, but we anticipate a new commercial structure to reward partners for increasing their volume of business," said O'Hagan.
He saw the opportunity to disrupt the market and deliver innovation to the channel over 12 months ago. "That's when this project really started," he stated. "We spent the last year looking for the right partner to support our growth plans. This led to our deal with the BGF (Business Growth Fund) in December. We couldn't have done it without their investment. We are already talking to our customer base as well as prospective new partners in the wider regions that have to date been underserved by the current vendors."
The network will roll out in a phased geographic approach and Virtual1 will focus on three key groups during this period: Existing partners in these areas will be contacted by Virtual1 as they come online and offered support to help them take the enhanced proposition to their customer bases; awareness will be raised in the geographies where Virtual1 has a low density of partners with an intent to recruit more; and the company will look to provide Layer 2 services to other UK network providers and international carriers wanting to grow their UK footprint.
"We have also geographically aligned our channel sales and accounts team to focus on specific regions and provide closer and tailored support in those defined geographies," explained O'Hagan. "They are responsible for helping existing partners as well as reaching out and growing our channel in those target regions."
O'Hagan's viewpoint on the 'inflexible' state of the traditional carrier supply chain is predicated on the maxim that partners must have more central accessibility and control of their orders and the service they provide to customers, which demands an agile business model beyond the reach of the bigger players. An agile feature of Virtual1's new network is that it is software defined, which, says O'Hagan, opens a cornucopia of benefits for partners.
Over the last 18 months Virtual1 has focused on making its network fully software defined through its SDN platform. By introducing templates and standardisation across the network Virtual1 has given partners the access required to do many of the configuration changes that were traditionally out of their reach and undertaken only by the carrier. These include bandwidth changes and VLAN resizing or QoS. "In giving partners access to perform these changes themselves in real-time they can define the SLAs they pass on to their customers and make it happen immediately," added O'Hagan. "Through our automation we expect to be highly competitive in areas where there has been little in the way of commercial competition. We know what pricing is available and how we can directly benefit our channel partners. We will also be creating a marketplace for higher bandwidth services which has traditionally been underserved."
According to O'Hagan, agility is 'absolutely Virtual1's advantage' when disrupting a market of large legacy network providers. "We are able to roll out our network in record time," he stated. "We are the first to release SDN as a platform for the channel, which with our smart automation will emphasise our differentiation. We can achieve this advantage because we are not hamstrung by legacy technology and infrastructure. The automation and SDN also means that we need far fewer resources to provision, deploy and manage a national network. This is a much smaller cost base versus our competitors and therefore the costs that we will take to the channel will be disruptive. The technology will empower our partners to enhance and differentiate their propositions to their customers."
Automation will bring to life the promise of software defined networks and handing control to partners, stated O'Hagan. "That's why we are not calling ourselves a carrier," he added. "We are something new with a dramatically different service proposition to the traditional players. We're a Digital Service Provider."
Trends like data mining, analytics and SaaS are where O'Hagan sees the opportunity to provide the infrastructure that partners need to deliver innovation in these areas. "We have started to strike up partnerships with the likes of ShoreTel and Avaya (through ScanSource) where they are spinning up their solutions on our infrastructure," he added. "In our hyper-connected world, businesses are using a vast ecosystem of solutions and also connecting with customers in ways that weren't possible just a few years ago. Companies need an infrastructure to build those business models upon. That's our niche.
"Automation and interoperability are at the heart of making the future of business work and deliver real scalability. That's why we have been so fast to adopt both the technology and methodology. We see it as a way to disrupt the market and empower the channel to help their customers gain a competitive advantage."
O'Hagan is long experienced in building channels having worked in the comms industry for 17 years. He started his career at PSINet, one of the first ISPs in the world which was ultimately acquired by Telstra where O'Hagan excelled and relocated to the US to set-up and run the firm's channel business. He returned to the UK in 2007 and quickly set about establishing Virtual1, selling his house to raise the funds required to build two points of presence that got the company going. O'Hagan operated his one-man business from his kitchen for 18 months before moving into an office and employing staff. The acquisition of the software company behind 1Portal was also a turning point and a key foundation of Virtual1's initial differentiation and automation strategy. Now, the company has a headcount of 80-plus, £21 million turnover and a trophy cabinet that houses various industry and business awards.
Observers of Virtual1's growth and progress to date know that O'Hagan's ambition should not be underrated. We have watched the company grow from the kitchen table from where he first served London towards national carrier status, and there is more to come. "Covering London proved that my long-term strategy was the right direction to go," he said. "The launch of the national network is a culmination of that vision and it will be a highly significant change to our business model which now more closely resembles a Digital Services Provider."•