Frame relay durability: frame relay continues to provide carriers with positive margins and will be around for many years to come, despite the emergence of IP VPNs - The Carrier/Corporate Relationship

Telecommunications International, Sept, 2002 by Matthew Secker

Frame relay is one of the few network services to have prospered during an overall downturn in networking. Why? Frame is tried and tested, has a large and established customer base, provides more coverage than any other technology and is normally sold to enterprises under long-term contract agreements.

But that's not all. Carriers have spent billions of dollars developing and deploying frame relay networks, and can't necessarily afford to deploy lots of IP nodes around the world--especially in the current economic climate. And enterprises are also unwilling to waste their substantial frame relay investments.

Frame targets low speed--T1 (1.5Mbps) and below--applications, which for the majority of enterprise locations today (especially non-US) is mostly sufficient. It is also capable of transporting applications in a multi-protocol environment.

Plus--although the number of new frame relay customers is reaching saturation paint--overall revenue is still increasing at a healthy rate. This is because enterprises don't immediately come online with 100 per cent of their sites up and running.

Finally, some enterprises are also finding that low speed lines that may have been deployed five years or even one year ago, are no longer sufficient at providing adequate bandwidth for their needs. This leads to frame part upgrades and more revenue for carriers.

Because of these reasons, frame remains the main seller for many carriers. According to Vertical Systems Group--a telecoms consultancy specialising in WAN technologies--this is set to continue. For example, Figure 1 shows that total worldwide frame relay revenue is projected to increase by a CAGR of 19 per cent from US$10.7 bn ([euro]10.9 bn) in 2000 to US$21.0 bn in 2004 ([euro]21 bn).

Meanwhile, BT Ignite's frame business grew by 30 per cent last year and according to Mark Logan, head of VPNs for the carrier, this rate of increase is set to continue. "Frame still accounts for 80 per cent of our interests today," he says. "But our IP VPN business did increase by the 100s of per cent last year and this pattern will only persist."

Eventual IP VPN dominance

Frame relay still has the potential to provide carriers with impressive margins but it will slowly start to lose out to IP VPNs as the underlying protocol for transport in the corporate WAN market. "It's really just a question of when this will happen, asserts BT Ignite's Logan.

Nevertheless, it could be argued that frame will remain the dominant force until we see a full economic recovery as enterprises and carriers will struggle to have the necessary financial resources to replace existing legacy systems.

But why make the change? According to Erin Dunne, director of research services at Vertical Systems, frame can often be expensive to use every time an office comes online for the first time because the carrier has to backhaul a line to the new location. Frame also doesn't deal well with multiple classes of service on an end-to-end basis. And frame can be cumbersome when it comes to full-mesh internet connectivity.

But BT Ignite's Logan points out that very few companies have or need full-mesh internet connectivity. "In this topology, frame is still the best to have as it can adequately and cost-effectively support customer requirements and this will remain the case for some time."

IP VPNs will eventually surpass frame but it will continue to play a pivotal role as an access technology--primarily due to the investments that carriers and enterprises have made in it, and it's effective and extensive means of access.

"Enterprises deploying additional sites to their networks essentially have three options open to them today," says Vertical Systems' Dunne. "They can either use frame relay, a hybrid IP VPN or IP enabled frame relay. This means that frame will still play a part in most cases.

Frame's capability to transport not just IP but most other protocols as well--such as systems network architecture (SNA) and internet packet exchange (IPX)--is another important reason why it will live on. In the present networking environment, 80 per cent of global traffic over frame is IP with the remainder spread between other protocols.

ATM--a frame complement

It is considered by experts (and carriers) that ATM will not be forgotten as we increasingly enter into a brave new world of P VPNs because it can serve as a complementary access technology to frame.

According to Vertical Systems' Dunne, there are a number of hybrid frame/ATM networks operating today. In such an environment, ATM runs in corporate headquarters that have high-speed (up to 622Mbps), multi-protocol and QoS requirements. And frame is deployed in sales offices or satellite locations, and can cost-effectively serve low speed (typically 128Kbps to 256Kbps with a maximum of 2Mbps connections).

"Frame relay and ATM serve hand in glove," says BT Ignite's Logan. "ATM is expensive and should only be used sparingly, while frame complements it perfectly as it's simple, flexible and can be delivered at a good price."