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Enterprises embrace IP VPNs: new products and improved services spur growth - Netcom Update - Industry Overview - Statistical Data Included

Communications News, Jan, 2002 by Morris Edwards

Could 2002 be the year for IP virtual private networks? An increasing number of companies are deploying IP VPNs, and using them in a greater percentage of their sites, either to interconnect the sites or to provide telecommuters and mobile workers with remote access to the corporate LAN.

In a recent survey of 400 WAN managers at large and midsize companies, IDC found that 47.5% were already using IP VPNs, and a further 23.3% were planning to do so within 12 months. The survey also confirmed that the companies were using their IP VPNs for more purposes.

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In another bullish sign, carrier IP VPN services continue to expand and mature. More business-focused carriers are offering IP VPN services, and are including a greater number of features and options than a year ago. Several carriers have multiple IP VPN implementation offerings, including firewall-, router- and network-based versions, as well as services based on customer premises equipment.

Additionally, several vendors and noncarrier IP VPN providers have developed new IP VPN products and services, or improved earlier versions during the past year. IP VPN functionality is no longer just an add-on to a firewall. More tightly integrated, software-based IP VPNs are being implemented on a variety of hardware and software platforms, including PCs.

Admittedly, the economic slowdown curbed the growth of IP VPNs during 2001. IP VPNs generally provide long-term savings, but the startup fees and equipment costs can be significant, and many deployments planned for 2001 were delayed.

As a result, IDC expects a spike in the growth of IP VPNs during 2002 and 2003, with steady growth thereafter. Specifically, IDC forecasts that spending on IP VPN products and services in the U.S. will climb from $5.4 billion in 2001 to $6.2 billion in 2002, rising to $14.7 billion by 2006, a compound annual growth rate of 22%.

SECURITY FIRST

IP VPNs take their name from the fact that they provide secure transport of private traffic over the public Internet or shared IP network. They do this by combining tunneling protocols with encryption, authentication and access control technologies to provide dedicated, secure and authenticated paths, or tunnels, through the shared IP network infrastructure. Typically, the tunnels are created when needed and torn down when left idle to conserve network bandwidth for active connections.

Of the three popular tunneling protocols, the most comprehensive is the IP security protocol (IPSec), which is backed by the Internet Engineering Task Force. IPSec includes specifications for the two essential VPN functions: encryption for data security, and tunneling for establishing a virtual circuit over the Internet or IP network. In addition, IPSec has provision for user authentication, key management and compression.

IPSec works by encapsulating the original IP data packet into a new one that is fitted with headers so the remote end can authenticate and decrypt the data. Since it does not specify a proprietary way to perform authentication and encryption, it can work with many systems and standards, enabling interoperability among different vendors.

Microsoft's point-to-point tunneling protocol (PPTP) creates tunnels for transporting multiprotocol traffic over the Internet, but its capabilities are more limited than IPSec's. Vendors, however, have combined PPTP with a similar protocol--Cisco Systems' Layer 2 forwarding protocol--to create L2TP, which supports multiple, simultaneous tunnels for a single client. Microsoft also supports IPSec in Windows 2000.

IP VPNs can provide considerable cost savings when used to replace leased lines for connecting sites, or to provide remote access to the corporate LAN for telecommuters and mobile workers. In addition, since IP VPNs use Internet standards and technology, organizations can readily use them to extend the reach of their corporate intranets or to create extranets for communications and sharing information with suppliers, customers or business partners.

In the WAN managers survey, security was by far the most common reason given for implementing an IP VPN. Almost 33% listed security as the primary motivation. A further 13.5% cited the lack of any other secure option as the prime reason for implementing an IP VPN.

Cost considerations were paramount for 22.7% of the respondents, while 19.6% cited the need for remote access as the principal driver. A surprisingly low 3.6% chose to implement their IP VPNs primarily to support new IP initiatives or applications.

STEADY MIGRATION

The growing popularity of IP VPNs does not mean that companies are ripping out frame relay and other WAN data services in large numbers so that IP VPNs can be put in place. Rather, there is a slow and steady migration to IP VPNs, with a growing number of companies using them as their primary WAN technology. Many of the larger companies employ several technologies in their WANs, utilizing IP VPNs to connect some sites, and frame relay and other data services to connect the rest.

Technology Industry

Enterprises embrace IP VPNs: new products and improved services spur growth - Netcom Update - Industry Overview - Statistical Data Included

Communications News, Jan, 2002 by Morris Edwards

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