Asia Wan market to hit $18bn as VPN takes over

Corporate wide area networking (Wan) customers in Asia are rapidly discarding expensive old-fashioned technologies in favour of newer and cheaper internet-based services, recent research shows.

However, falling prices mean that overall Wan service revenues in the region will grow slowly, at less than one per cent per year through the end of the decade, according to analysts from research consultancy Frost & Sullivan. 

"IP virtual private networking (IP VPN) has gained significant momentum as it offers similar functionalities to legacy services at a more competitive price in a more flexible manner," said Frost & Sullivan industry analyst Krishna Baidya.

"With technological maturity and security concerns being addressed, IP VPN is increasingly driving the migration of subscribers from legacy data services such as frame relay and ATM."

IP VPN services, which open an encrypted communications channel over public or semi-public internet links, accounted for 31.4 per cent of the total Wan services revenue last year.

The technology's share will leap to almost 52 per cent by 2012, Frost & Sullivan predicts. VPN's use of existing internet technology allows customers to benefit from the economies of scale generated by the internet's popularity.

The shift to IP VPN will be accompanied by a fall in Wan service prices, most notably in the more mature markets of Japan and Hong Kong, Baidya predicts.