Infonet sees demand for bigger, converged IP networks

Executives at top-tier global ISP Infonet are seeing several promising trends among U.S.-based multinationals that are swapping out aging frame-relay or leased-line networks for the latest IP VPN services.

Infonet officials say that their enterprise customers are demanding bigger IP networks than the frame-relay or leased line networks being replaced. For example, Nestle has hooked up more than 700 sites to its IP network.

“Companies want to have connections with every office,” says Jean-Noel Moneton, vice president of IP marketing for Infonet. “Very frequently now, we’ll see VPNs that reach 60 sites when we used to see more like 20 sites in frame relay. There is a very clear increase in the number of sites that companies want to hook up.”

In addition to bigger networks, corporations also want more flexible networks. The requirement for flexibility is what’s driving companies to IP VPNs more than cutting costs, Moneton says.

“If you have a traditional frame-relay network that you bought two or three years ago…when you renew that frame network or move to IP you will see some significant economies because prices have eroded over the last three years,” Moneton says. “But our customers aren’t so much focused on IP VPNs being less expensive than frame relay. They see it as being much more flexible. That’s what the customers want.”

In particular, enterprises want the flexibility to run their voice and video traffic over the same IP backbone as their data. New applications such as advanced teleconferencing and Web browsing via the telephone are among the applications driving companies toward voice over IP services.

“In the near future, [our focus] is mostly on enhancement of the voice and video services,” Moneton says. “That’s what we are concentrating on in the next six months.”

Analysts agree that Infonet needs to provide more features and better service level agreements for companies migrating their voice traffic to IP VPNs.

“Applications are driving VPN purchases,” explains Vijay Bhagavath, telecom analyst with Forrester Research. “It used to be the case that corporations wanted to save a few dollars over their frame relay networks. But now everyone is asking if their VPN can support voice and CRM applications.”

Bhagavath says Infonet is a top contender for corporate IP VPN business but that the ISP needs to differentiate itself with new technology and more targeted network-based services.

“These niche players like Infonet, Savvis and Equant have to have a real story in terms of the technology investments they have done or the services they offer to justify their niche position or they’ll end up fighting price wars with AT&T and MCI,” Bhagavath says. U.S. corporations are “the most demanding in terms of SLAs and service requirements and applications.”

Indeed, Infonet’s Moneton says that corporate network managers are asking for more control over the network services they buy from their ISPs. In response to that trend, Infonet is developing new provisioning services that will allow their business customers to assume more control of their IP networks in order to fine-tune the performance of key business applications in real-time. Moneton says Infonet’s customers are interested in bandwidth on demand, quality of service and virtual network operations centers that they can control.

Our customers “like the idea of having some level of control over their network or the ability to give us more control over their network for application performance,” he explains.

Moneton says Infonet will begin offering self-provisioning services by the end of next year.

“In my opinion, that’s the next battleground,” Moneton says. “The whole area of self-provisioning, monitoring and reporting beyond the network will become more important.”