IP-based virtual private networks (VPNs) may be the light at the end of the telecom downturn, but there's a roadblock ahead -- one that's only just starting to be addressed.

Here's the problem: While experts see availability of high-bandwidth Internet connectivity for business customers as key to telecom recovery (see The Bright Side of 2003), many companies and their service providers are unwilling to part with their Frame Relay, ATM, and TDM-based links.

Indeed, it's common to see organizations facing a growing array of disparate services. They look wistfully at IP VPNs as a way to consolidate it all, increase bandwidth and configuration flexibility, and streamline management and operating costs. But they live with the pain, because they trust those old links. And it's easier, given the sluggish economy, to postpone any major overhauls or buildouts. The goal may be an all-packet world, but getting there seems expensive and complicated.

Happily, carriers are looking harder at ways to make the VPN crossover more workable. A growing number are introducing "in between" services, that give users of legacy services a way to migrate to universal Internet Protocol (IP) step by step. This week, for instance, Sprint Corp. (NYSE: FON)announced new services geared to ease the transition from Frame Relay and private line to IP VPNs, via Layer 2 tunneling (see Sprint Touts Layer 2 Services). Sprint customers with existing legacy connections can link their Frame or TDM networks to Sprint's IP backbone and get them managed like IP services. Sprint says four customers have signed on so far.

Here's a sampling of other carriers' transition solutions:

Proponents of these kinds of transition services say they'll serve the purpose for lots of customers that might otherwise not make the move. Speaking of Sprint's offering this week, Max Smetannikov, analyst with Current Analysis, says: “This makes an eventual migration to IP VPNs a bit more feasible. Practice shows that [getting customers to migrate to IP] is not a simple one-step process… [Sprint] is getting IT managers to change their mindset one [service] at a time… It makes sense to have many stepping stones.”

Proponents of the transition services say they won't cost more than existing legacy ones. Indeed, Sprint says pricing will fall 15 to 30 percent lower for the transition services than for plain-vanilla Frame Relay ones. AT&T says circuits in its IP-Enable Frame Relay/ATM service may be "a bit more expensive," but for high-bandwidth customers, the carrier is careful to keep prices equivalent.

Not everyone is enamored of the transition services. Equant (NYSE: ENT; Paris: EQU) and Qwest Communications International Inc. (NYSE: Q) offer both IP VPNs and traditional legacy services, but nothing in between. "We're not convinced that there's justification," says Gopi Gopinath, head of data and IP services at Equant. And Qwest spokespeople say they think transition services complicate matters.

Other issues may be at work. Some carriers still haven't worked out the economic benefits of moving customers from one service to the other, and others may fear cannibalizing certain legacy revenues, according to input from sources.

The issue is a complex one, which Light Reading will explore in depth in several ways. Watch for a report expanding on the topic of transition services in the next two weeks.

— Mary Jander, Senior Editor, and Eugénie Larson, Reporter, Light Reading