Service providers plug into network-based IP VPNs

Network-based IP virtual private network (VPN) services are one of the important growth areas in business networking services, according to a report from In-Stat/MDR.

The analyst firm reported that worldwide sales revenues for network-based IP VPN equipment in 2003 reached $267m. Edge routers accounted for just over half of total sales, and multi-service switches and IP services switches had similar market shares.

Network-based IP VPN services, including MPLS-based offerings, virtual router and network-based IPSec services, moved VPN intelligence to the edge of the network, doing away with traditional customer premises equipment systems.

Most leading service providers offer at least one network-based IP VPN service for their business customers, according to Henry Goldberg, a senior analyst with In-Stat/MDR.

"Network-based IP VPN services enable service providers to achieve economies of scale by serving multiple customers from equipment at an edge Pop, and to substantially reduce operational costs of provisioning, management and maintenance," he said.

"MPLS IP VPN and virtual routing over ATM services also allow service providers to earn incremental revenues by offering classes of service for different priority applications, and enable end users to reduce costs by converging all their voice/data/video traffic onto a single service."

In-Stat/MDR noted key trends appearing in the way this equipment is being used to offer network-based VPN services, including how service providers are selling DSL access lines to small/mid-sized businesses and branch offices as a lower-cost alternative to traditional leased lines.

The analyst also found that customers using DSL access lines to connect to network-based IP VPN services require broadband subscriber management services, and a number of vendors offer such services on the same platform as their VPN services.

To meet the growing demand from businesses to outsource security, In-Stat/MDR's research indicated that edge router, IP services switch and other vendors are layering on more security services into their products, in addition to supporting IP VPN services.