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Service Providers See Green in SSL

Virtual private networks based on Web-based SSL technology are gaining in popularity. And carriers want a piece of the action.

Today, Aventail Corp., one of two leading SSL startups, announced that Bell Canada (NYSE/Toronto: BCE) will be using its EX-1500 appliance to deliver a managed-SSL VPN service (see Bell Canada Secures With Aventail).

Bell Canada already offers an IPSec VPN service, targeted for site-to-site applications. David Joyce, senior director of managed security solutions at Bell Canada, says he sees synergies between the two services.

“SSL is very complementary to what we’re already delivering,” he says. “IPSec has its niche and so does SSL. I don’t really see SSL replacing IPSec. In fact, some customers will use both for different applications.”

IPSec, which requires client software to be deployed on every device accessing the VPN, is often complicated and expensive to implement and manage. By contrast, because most SSL encryption technology is already built into Web browsers, SSL VPNs don’t require a heavy client to be downloaded. Because it gives any user with an Internet connection the possibility for remote access, carriers, like Bell Canada, can sell the service to a much larger set of potential customers.

Specifically, Joyce says IPSec will be used for static applications like connecting branch offices together. The SSL service will likely be used by highly mobile employees or clients, who still need to access some of their company files while on the road or working from home.

“These might be people who don’t have the technology wherewithal to deal with a big client-based application,” notes Joyce. “Really the customers’ needs will dictate which technology we’ll use, and not the other way around.”

Bell Canada seems to be onto something. Managed VPN services in general are growing in popularity. According to an Infonetics Research Inc. report published earlier this year, North American service provider expenditures for network-based products for VPN and security services are expected to grow to $931 million in 2007, and European, $382 million (see VPN/Security Market Grows Strong). While IPSec should continue to be the dominant technology used to deliver these new services, the number of enterprises using SSL will likely double between 2003 and 2004.

Other service providers are getting into the SSL VPN act, too. Earlier this month, Neoteris Inc., Aventail’s closest startup competitor, signed a deal with Fiberlink Communications Corp., which provides managed VPN services (see Fiberlink, Neoteris Team on SSL).

Aventail has in the past sold its product as a managed service. Early this year, it changed its strategy and is now selling an appliance to enterprise customers, as well as service providers. AT&T Corp. (NYSE: T) has been private labeling the company’s SSL VPN service for several months.

“A year ago these service providers would have perceived us as competitors,” says Tom Claeys, senior director of strategic alliances at Aventail. “Now we’re partnering with them.”

Unlike AT&T, Bell Canada isn’t interested in reselling Aventail’s service. But Joyce says that Aventail’s experience as an SSL VPN service provider has been helpful during the sales and deployment process.

Until recently, Aventail and Neoteris were the biggest names in the SSL VPN market, but that is all changing (see SSL Players Get Feature-Happy ). Bigger equipment players are now scurrying to add features to their products. Some are even making acquisitions...

With the big boys emerging on the scene, it will be survival of the fittest among the startups.

“Aventail and Neoteris have demonstrated in different ways that they’re building successful channel partners,” says Michael Suby, an analyst with Stratecast Partners. “They’re still investing in technology. But once you’ve got Cisco, Nokia, and Nortel all in the market, it’ll be the smaller startups that will really suffer.”

— Marguerite Reardon, Senior Editor, Light Reading

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