Next generations WANs industry context

A single technology is taking the networking world by storm. In just a year, Virtual Private LAN Service (VPLS) has moved from customer trials to large-scale adoption, driven by demand for faster, cheaper wide area networks.

Analyst group Forrester says such carrier Ethernet services are showing some of the fastest growth in the market for site-to-site networks, with adoption having leapt from 25% in 2007 to 42% in 2008. In contrast, the take-up of competing standards such as IP VPNs (see box) remained largely flat.

During its survey of over 2,000 businesses in North America and Europe, Forrester found that many large enterprises are buying Ethernet-based solutions “wherever they are available”, recognising the cost and performance benefits.

“Twelve months ago, leading carriers were pouring cold water on the idea that enterprise WANs with large numbers of sites could be built using carrier Ethernet services. Now, these carriers are building out networks to launch Europe-wide VPLS-based services as fast as they can,” says Forrester analyst Phil Sayer in a recent report.

Forrester expects VPLS-based services delivered over MPLS networks to become “the dominant means of delivery for Ethernet services over the next 24 months”.

Interestingly, the competitive environment among carriers in Europe is driving down prices, which has led the adoption of carrier-based Ethernet services in Europe to be ahead of deployment in America. The firm also noted rising adoption of Ethernet among small and medium-sized businesses, 38% of which claimed to have deployed it as a means of accessing either an MPLS network or the Internet.

Driving factors include price and performance – Ethernet-based networks are about 20% less expensive than an IP VPN – with further savings stemming from the elimination of IP addressing and routing in the service provider’s core network and the simplification and efficiencies of operating a LAN rather than an IP-based network. That in itself eliminates a major pain point for companies with distributed infrastructure.

Flexibility is another key driver. “If you’ve got clustered servers in a main data centre, you can literally power one off, truck it to your other site (which is now on the same LAN), power it back up and it doesn’t even know it’s been moved,” explains Adrian Hobbins, CTO at next-generation networking service provider Exponential-e. “Before, you needed programmers to go into it and change the IP addressing – a whole nasty project.”

Moreover, Forrester notes that the cost of Ethernet equipment is far cheaper than that needed to connect to a high-speed IP network – as much as one-tenth in some cases. Fellow analyst house Gartner observes another key benefit of VPLS: it furnishes independence from providers by allowing an organisation to manage its own routing, a privacy-led regulatory requirement for some organisations in the financial and legal sectors.

However, Gartner also offers several caveats: the number of VPLS providers is limited at this stage, as is geographical coverage, compared with many legacy IP-based services.

Furthermore, the analyst firm acknowledges that older technologies “offer more opportunities for service bundling and remote management because these are generally done on an IP level.” And it adds, “enterprises should ensure they do not get blindsided by expectations of more bandwidth; they should instead focus on the specific wide-area networking needs of the enterprise.”

Nonetheless, the benefits of VPLS that make it compelling are likely to drive its adoption from widespread to universal.

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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