Trend

The application-centric network

IP VPN is gaining acceptance in the Indian market. Priya Jain on the technology that is seen as the foundation of application-centric network

IP VPN (Internet Protocol Virtual Private Network) has moved out of the shadows of being a substitute to communication technology such as leased links. Earlier, IP VPN was perceived as a tool to connect various locations. Today it is viewed as the foundation of an application-centric network.

With enterprises needing to integrate their applications with the network, adoption of IP VPN seems an obvious choice. At the broader level, data currently dominates about 90 percent and voice accounts for the rest. However, the pattern is likely to change in favour of voice. With more verticals embracing IP VPN the result will be an increase of 20 percent in voice traffic by the end of 2009.

It is all the more true with regulatory bottlenecks fading away. The Department of Telecommunications has recognised the potential of IP VPN in India. The Telecom Regulatory Authority of India in a recently published consultation paper has predicted at least 30 percent year-on-year growth for the Indian IP VPN market over the next three years.

In 2005, Multi-Protocol Label Switching (MPLS) has driven the IP VPN market, largely due to its capability to offer Frame Relay features at a lower cost.

Full speed ahead

Players like Sify, Nortel and D-Link among others are gunning for this market. Frost & Sullivan’s latest research on the IP VPN market states that it grew 24.1 percent in 2004. The year 2005 is expected to be better with the MPLS factor coming into play. The acceleration is expected to taper off in 2006 as the market stabilises. Overall, F&S has predicted a compounded annual growth rate (CAGR) of 31.6 percent between 2003 and 2009. Argha Basu, General Manager, Strategic Businesses, Sify informs, “Our IP VPN business has grown by 40 percent.”

Demand for IP VPN is largely determined by enterprises having multiple locations within and outside India. With MNCs setting up facilities directly or through subsidiaries, the need for IP VPN has increased.

K V S S S Gunneswara Rao, Director, VoIP, D-Link says, “Rapid and unstructured network installations, equipment heterogeneity, new equipment and multiple location business growth are all contributing to IP VPN’s popularity.”

Malur Narayan, Director, Wireless Solutions, Marketing, India, Nortel believes that Indian enterprises are increasingly leveraging IP VPN services due to the productivity improvement and cost saving that they offer, combined with the ease of deploying the technology enterprise-wide. He stresses on IDC’s prediction that revenues from IP VPN services are likely to cross Rs 1,100 crore by 2008 up from Rs 230 crore in 2003.

The BFSI segment is the biggest consumer of this technology, followed by manufacturing, engineering and pharmaceuticals.

Moreover, Basu says, “The fact that the RBI has made it mandatory for cooperative, public and private sector banks to implement core-banking solutions and maintain a connected environment has led to a huge demand for IP VPN. With hundreds of branches, banks need to build networks across geographies. Likewise public sector insurance companies like LIC and New India Assurance are present across 200 locations. It is mandatory for them to provide online services to customers.”

Narayan is of the view that although the market is propelled by telecom, BPO, BFSI, manufacturing and education sectors, SMBs are becoming a focus segment for equipment and service vendors. According to experts, both BPO and healthcare are segments where data and voice are intrinsic to the business. These have witnessed strong growth in the last three to four years. “They are competing in the global market and to sustain growth and ramp up operations, huge investments are being madein network infrastructure. IP VPN is the most cost-effective, robust and reliable means of connectivity for such customers in India,” adds Narayan.

Payback with MPLS

The basic applications that are accessed over an IP VPN link are e-mail, Web browsing, remote database access and the intranet. The capabilities of IP in large-scale VPN implementation can be extended by enhancing the core networks by deploying MPLS technology.

MPLS integrates layer 2 information about network links (bandwidth, latency and utilisation) into layer 3 (IP) within a particular autonomous system or ISP in order to simplify and improve IP-packet exchange. MPLS gives network operators the flexibility to divert and route traffic around link failures, congestion and bottlenecks. MPLS blends the intelligence of routing with the performance of switching and enables service providers to extend the capabilities of IP to large-scale VPN implementation.

Rao feels, “Heterogeneity in the network equipment, employee mobility, business growth management, service to remote customers and better ROI are the main benefits of IP VPN.”

Basu believes that IP VPN provides a three-tier advantage to the user segment such as the ability to create any-to-any connectivity i.e. it simplifies the topology; for every location there is one single pipe connecting to the service provider’s network. As compared to private networks, IP VPN is cheaper by 30 to 35 percent and it brings in the capacity to add a number of value-added services and facilities like VoIP, bandwidth on demand and upgradability of links.

IP VPNs also present a number of advantages over building networks using leased lines or VSATs. The complexity of building and managing a leased line network increases as the enterprise network becomes more complex. VSATs require major infrastructure investment and time and resources to install and manage them. It is here that IP VPNs prove to be the ideal solution. This is because the VPN service provider already has a sophisticated network infrastructure in place which a company can leverage to build its enterprise network quickly by connecting to the nearest Point-of-Presence of the VPN service provider.

Common concerns

Though everything sounds great about the technology there are a few concerns. Most of them are related to security. The most common being the security of the connection (or the lack of it). Users continue to perceive that there is a low level of security and data integrity.

Analysts feel that this lack of faith will decrease once there is a high level adoption of IP VPN services. Frame Relay features on response time delay (RTD) and layered security make an IP VPN service connected over Internet secure and robust enough for certain business functions.

For Rao, converged voice, data, video, bandwidth, security and network robustness are the main challenges in addressing a reliable IP VPN implementation. Basu adds, “For the presence of IP VPN across India, adequate and robust infrastructure is required such as laying fibre and availability of electric supply.”

Narayan mentions some limitations, especially in the manufacturing sector. Often, organisations build their manufacturing facilities in far-flung areas for tax benefit. Some of these locations have poor telecom infrastructure, so in order to serve these customers, service providers increase their footprint by acquiring additional network coverage on a wholesale basis. Another significant issue is that the current IP telephony guidelines allow the domestic IP voice communication only in a Closed User Group (CUG), thereby limiting the usage of VoIP applications.

There are other challenges for the IP market, which have been highlighted by the F&S report. These include linkages with the legacy system, quality of service, interoperability with PSTN and other networks and platform independence of applications.

priya@expresscomputeronline.com