Managed services inside the WAN ‘cloud’

In our third and final newsletter in our series about managed services, we’d like to examine the nature of networking services inside your service provider’s network “cloud.”

Some view managed services as those that use the WAN for more than just the straightforward transport of packets.  Traditional WAN network services, from dedicated private-line offerings through Internet-based VPNs, rarely venture above OSI Layer 3 services.  Specifically, they don’t involve any actual processing tasks.  The reason has more to do with history and politics than what makes practical sense for the typical enterprise.

When the Bell System became deregulated in 1984, there were two dominant forces in the networking industry.  AT&T, a.k.a. “Ma Bell,” owned the telephony network, and IBM largely owned data processing.  As the Bell System was disassembled, severe regulatory restrictions were placed on service providers to thwart any aspirations they might have to offer data processing capabilities. 

In short, it was decreed in the U.S. that IBM could not enter the telephony business and that phone companies could not offer data processing.  These rules meant that, at one point, the regulated incumbent local-exchange carriers (the “RBOCs”) were prohibited from offering ATM-to-frame relay interworking because it involved data processing in the form of protocol conversion.

Fortunately, these restrictions have largely disappeared, and the service providers now have the option of offering a wide range of services.  Many of these options, from managed firewall services to network-based processing and application hosting, offer excellent value to the enterprise-and, increasingly, they are creeping up the OSI stack to add further differentiation, value and outsourcing options.