Dedicated VPN services on the rise

This newsletter often talks about projected healthy growth for VPN equipment but a recent study is also pointing to healthy growth for the dedicated VPN services market in the U.S.

Until 2007, the average growth per year for dedicated VPN services is projected to be 29%, according to “Emerging Networks Service” by Vertical Systems Group.

The number of sites with dedicated connections to VPNs in 2002 was fewer than 100,000, but that is projected to grow to 345,000 by the end of 2007, says Erin Dunn, director of research services for the Dedham, Mass. firm.

Just to make clear what the study is talking about, Vertical defines a dedicated IP VPN as “a virtual private network service that securely transports IP packets over always-on broadband access connections (i.e., private lines, DSL, etc.) to enable any-to-any interconnectivity among a predefined set of geographically dispersed business establishments based on standard IP addresses.”

These VPNs use either the public Internet, a single carrier IP or MPLS network as a backbone and include access lines.  These services are also managed by the provider and include hybrids that connect to customer sites as frame relay, but that run over MPLS networks, such as AT&T’s IP-Enabled Frame Relay, MCI’s Private IP and Sprint’s IP Express Frame Relay.

The study doesn’t include VPNs that businesses set up themselves, nor does it include dial-up VPNs in which a single PC dials an ISP to access the Internet and log on to a VPN.

Vertical breaks down dedicated IP VPN services into two categories: network-based and site-to-site. The first uses a single carrier’s IP or MPLS network. The second runs over the public Internet and is managed by a single ISP. Network-based IP VPN services are projected to grow at 34% per year, while site-to-site is projected to grow 19% per year until the end of 2007.

The study also includes data on revenues for these services and the speed at which sites are connected to VPNs. “The Emerging Networks Service” report is available on the Web for a fee. To find out how to get access go to http://www.verticalsystems.com and click on “ENS Subscription.”