IP VPN, Ethernet Preferred WAN Services Finds Frost & Sullivan

IP VPN (Internet protocol virtual private network) and Ethernet WAN (wide area network) services are increasingly popular as companies seek flexibility, simplicity, scalability and high bandwidth for their data communication needs.

This is especially so for corporations that need to manage site-to-site connectivity across multiple regions.

“IP VPN and Ethernet also address security concerns, making them the preferred choice for WAN services,” says Frost & Sullivan Industry Analyst Shaker Amin.

He adds that legacy technologies such as frame relay (FR) and asynchronous transfer mode (ATM) prove to be complex and costly when supporting a large network of branch offices, as virtual circuits need to be configured manually between each site.

Amin however believes that ATM and FR are not likely to be phased out completely as some enterprises still prefer ATM and FR for their higher quality, and justifying the cost of a full migration to IP-based solutions is tricky.

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New analysis from Frost & Sullivan (communicationservices.frost.com), Asia-Pacific WAN Services Market – covering 13 Asia-Pac countries ex-Japan – finds that IP VPN is a dominant technology in the Asia-Pacific WAN services market, accounting for 28.1 percent of the total revenues last year. The segment is expected to grow at a CAGR (compound annual growth rate) of 17.8 percent from 2009 to 2014. By the end of 2009, IP VPN is estimated to account for 31 percent of the region’s $11.5 billion WAN services market, and half of the international routes.

Leased-circuits (LLC), however, are still more widely used for domestic WAN services, which make up the bulk of the region’s WAN connectivity needs, although continue to lose ground to IP VPN.

“Most users of WAN services have tended to be large enterprises, as traditional networks such as frame relay and ATM have been prohibitively expensive for smaller businesses,” Amin says. “As IP VPN gains more traction as a cost-effective alternative however, more SMEs are expected to adopt data services.”

Both the domestic and international WAN services segments are growing rapidly, fuelled by huge growth markets like India and China.

“Relatively smaller Southeast Asian markets, such as Malaysia and the Philippines, are also expanding briskly, as favourable conditions are attracting considerable foreign direct investments into these markets,” notes Amin.

“Simultaneously, home-grown enterprises are seeking global expansion, driving the demand for data connectivity,” he adds.

Still a very young but promising technology, Amin expects international Ethernet services to see rapid uptake due to its affordability and flexibility, growing at a CAGR of 47.9 percent from 2009 to 2014.