Demand Grows for MPLS VPNs

Carriers at MPLS conference report growing user demand for Layer 3 IP/VPNS

May 20, 2003

2 Min Read
Demand Grows for MPLS VPNs

NEW YORK -- MPLScon -- Vendors have long promoted IP/MPLS virtual private networks as the natural successors to today’s Frame Relay services, and now some major carriers appear to be singing the same tune.

In a panel discussion at the MPLScon conference today, representatives from AT&T Corp. (NYSE: T) and British Telecommunications plc (BT) (NYSE: BTY; London: BTA) said demand for Layer 3 IP/MPLS VPNs based on RFC 2547 is coming straight from customers.

“In Europe right now there isn’t an RFI [request for information] out there that doesn’t include MPLS,” said Mark Logan, head of VPN products at BT, during his presentation. “I’d probably fall out of my chair if someone asked for Frame Relay.”

British Telecom’s Frame Relay and ATM businesses are also growing, but that growth is slowing. For the first time ever, Logan said, growth of Frame Relay deployments and revenue dipped into the single digits. Conversely, he added that BT's IP/MPLS VPN service grew 50 percent in terms of both revenues and ports connected in 2002. But Logan admitted that it will be at least a couple of years before MPLS will truly outpace Frame Relay and ATM deployments in terms of total revenue and ports connected.

AT&T reported a similar trend, albeit at a slower pace. Rose Klimovich, vice president of managed Internet access services at AT&T, said that AT&T’s Frame Relay and ATM businesses are still strong. But she added that there has been much more demand and interest for IP MPLS VPNs in the last six to nine months.

Panelists, who also included Bruce Davie, a Cisco Systems Inc. (Nasdaq: CSCO) Fellow and one of the leading engineers behind many of the early MPLS standards, went on to discuss some of the reasons why IP/MPLS VPNs are attracting interest from users. The key benefits they pinpointed are:

  • Ease of Provisioning IP/MPLS VPNS are relatively easy to deploy. New sites can be added without affecting the rest of the network. This is particularly useful in applications like VOIP where new users are added, removed, or transferred on a regular basis throughout the network.

  • Cost Layer 3 IP/MPLS VPNs offer customers more features for the same price they’d pay for a Layer 2 Frame Relay service. “The major challenge for enterprise IT managers is that they are adding new applications, but their IT budgets are remaining flat. That’s what has given rise to the IP VPN. The enterprise is trying to add more applications without actually spending more.”

  • Outsourcing IP/MPLS VPNs allow carriers to outsource more complicated functions like traffic engineering and quality of service.

At the end of the day, Logan said he is a strong supporter of IP/MPLS VPNs, albeit in a rather mordant fashion: “20,000 lemmings can’t be wrong,” he joked.

— Marguerite Reardon, Senior Editor, Light Reading

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