InformationWeek

August 28, 2000

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New VPNs For A Global Economy

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IP-based VPNs--which currently total just $29 million in revenue--will grow 900% to $2.6 billion in revenue in 2005, Miller estimates. Analysts attribute the growing interest to the fact that the Internet allows easy and inexpensive network configurations of any point to any other point, eliminating the complex architectures of point-to-point private lines. This trend is the result of a remotely based and traveling workforce that generally uses IP-based VPNs for transmitting data, such as E-mail, that isn't time-critical. In general, these employees are dialing in to the company via toll-free numbers. Hennessy says all of PeopleSoft's traveling workers have Toshiba computers with 56-Kbps modems, and most dial in to a toll-free number. "Just having local points of presence for employees to dial into can save PeopleSoft millions of dollars a year," he says.

Companies are reluctant to rely on IP-based VPNs today simply because service levels are hard to guarantee when traffic moves from a VPN vendor's owned or leased lines to the public Internet or another carrier. Hennessy says that when traffic leaves a remote computer and heads over the Internet, the traffic's route is redetermined at each network transfer, or peering point. But the route may not be the shortest path, simply the most available. So a message from Australia might go to San Francisco before it's routed to Tokyo, leading to latencies of up to half a second--and that's not acceptable for anything more critical than E-mail.

The big global VPN players are extending their networks through private peering arrangements and international indefeasible rights of use for transoceanic cable that can guarantee bandwidth. Such guarantees, the carriers say, will mean priority data has a better chance of getting through even when Internet traffic is heavy. Also being deployed are online network-monitoring tools that let customers see performance to the circuit level as well as issue and view repair orders.

In early August, UUnet unveiled what analysts say may be the industry's most feature-rich managed virtual private network service, UUsecure VPN Total Access. The service offers both dial-up access for remote users and dedicated lines. UUnet's service includes a bandwidth-management feature that lets IT managers prioritize traffic based on available capacity. They'll also be able to add a broadband connection to their data on servers in UUnet Web-hosting centers.

UUnet, which supports dial-up access to its 2,500 network entry points, offers dedicated service in Boston, Chicago, Dallas, and Los Angeles. By year's end, such access will be available throughout the United States and in 17 other countries. Other telecom companies are expected to follow suit; analysts say Genuity Inc. and Sprint are planning similar offerings.

Perhaps the greatest promise for bandwidth prioritization lies in the emergence of Multiprotocol Label Switching. MPLS moves streams of associated data packets on pre-determined routes over public or private networks, effectively creating long freight trains for streaming data such as video, or express trains for higher-priority data. There's almost unanimous agreement among vendors and analysts that MPLS will shrink the quality-of-service gap between the Internet and frame relay and ATM backbones. But while there's a vendor-led work group within the Internet Engineering Task Force working to standardize MPLS, each carrier's version is slightly different, which could derail a unified effort.

WorldCom's Business Class IP service employs MPLS to assure greater quality of service, the vendor says. Both AT&T's IP ATM and IP Frame Relay services use MPLS, according to the company.

Earlier this month, Concert Communications unveiled a host of IP data, voice, and wireless services for multinational organizations. Concert IP is a line of services that includes IP VPNs, which provide companies with voice, data, and multimedia support over Concert's integrated IP network. There are three services within IP VPNs: IP Equip, available in October, includes off-the-shelf products for small and midsize companies; IP Select Standard, an entry-level private IP VPN for midsize and large companies that includes one service level; and IP Select Premium, a high-end VPN service for companies that require more extensive service levels.

IP Select will support MPLS, the company says. IP Select is available now with coverage in 44 countries and 600 cities. Concert says Novartis Pharma AG, a multinational pharmaceutical company based in Switzerland, will test the service.

Companies, however, still say they're having a hard time trusting a single source for VPN services--even though that's the message most of the big carriers are pushing. Hennessy says he uses WorldCom, UUnet, Telstra in Australia, and KDD in Japan for his VPN and private network in addition to Concert, WorldCom, and Vnet for global voice communications. "The more you go globally, the less one player can do it all," he says. "And it's more than putting pipe everywhere. Customer service is key."

Ray Ng Maintaining a global VPN is a full-time job for Evelyn Margolin, director of North American operations for Cognizant Technology Solutions Inc. in Teaneck, N.J. The software consulting and application management company has a VPN linking nine offices in India, two in Europe, and six in the United States, as well as 50 client end points. Few single-service options can handle Cognizant's multinational operations, Margolin says, adding that she has yet to find a carrier with end-to-end managed services everywhere Cognizant works. Instead, Cognizant uses Global One in some parts of the world, Sprint in others, and the company has direct relationships with VSNL, India's state-owned and regulated long-distance telecommunications company. But even with Margolin's headaches, the company says it's worth it.

"We save about 40% domestically and 70% internationally by using the VPN," says Francisco D'Souza, senior VP of Cognizant.

Although the carriers have been aggressively pursuing expansion of their global presence, it's not always easy. Partnerships such as Global One's alliance of Deutsche Telecom, France Telecom, and Sprint have dissolved into limited internetworking agreements, and the potentially giant alliance of Global Crossing's worldwide fiber backbone and Equant's widespread network of data facility locations has stalled. "The ideal situation is to use one provider, which isn't necessarily the cheapest decision. But then you have to hope it will grow where you need it," says Jim Slaby, an analyst at Giga Information Group.