Which WAN services reign?

Snippets of reports from telecom researcher Vertical Systems Group over the past few months indicate that IP VPNs, DSL, and Ethernet services have some growing up to do.

Here’s a summary of Vertical’s latest calculations into WAN service use:

* IP VPNs

The researcher expects the number of dedicated IP VPN sites in the U.S. to grow from fewer than 100,000 in 2002 to almost 345,000 by the end of 2007. This growth represents a compound annual growth rate (CAGR) of 29%.

In the category of “dedicated IP VPNs,” Vertical includes sites that use network-based VPNs (those that encrypt across the WAN “cloud” only, not in the access network); those that use frame relay in the access network but IP and/or Multi-protocol Label Switching service in the WAN cloud; and Internet-based site-to-site VPNs. This last type of service encrypts at customer locations for security across both the access network and the public Internet cloud.

* DSL

Vertical projects that worldwide DSL connections have now surpassed 50.3 million. U.S. and non-U.S. connections account for 16% and 84%, respectively.  The vast majority of DSL installations support broadband Internet connectivity for residential customers.

A side note from us: The line between business and residential users is blurring. Part-time telecommuters might purchase residential services for their families, for example, and use encryption to occasionally connect to the corporate VPN.

However, be advised that some ISPs are beginning to block traffic encrypted with IPSec, presuming that anyone using it is a business user and should thus pay business-class rates for Internet service. This is a shady area. If you work at home for a couple of hours in the evening, should your whole family be penalized?

One opt-out: Secure Sockets Layer encryption, which is embedded in all browsers and, as such, makes it indistinguishable to ISPs from consumer traffic.

* Ethernet services

These should generate a cumulative total of $4.2 billion from 2002 through 2007 in the U.S. Revenue in this timeframe will grow at a CAGR of 36%, from almost $300 million in 2002 to nearly $1.3 billion by 2007, Vertical says. 

The firm has based its Ethernet projections on subscriber port installations of commercially available Ethernet services sold to enterprise customers. These include Ethernet-based metro-area and long-haul private-line services, Ethernet-based Internet access and metro LAN (a.k.a. “transparent LAN”) services.