Networks Telecom: VPNs still set to fly high

While the downturn in the network industry continues, virtual private networks (VPNs) are growing, though the growth rates are not so colossal as was predicted a couple of years back, says Californian research company Infonetics Research. Virtual private networks set up tunnels between end-user sites across the public Internet, letting companies create wide area networks much cheaper than building them with dedicated leased lines, so users wanting to get better value are moving towards them. Most VPNs use encryption to ensure that each user's traffic only reaches its intended destination. Worldwide end-user VPN product and service revenues will grow 117 percent over the next four years, until 2006, says the company's study, User Plans for VPN Products and Services, the US/Canada edition of which has just been published. Cost savings are driving the growth, says Jeff Wilson, Infonetics' executive director, as well as the growth in second-generation VPN types (MPLS and SSL). "Rollout of MPLS services and SSL-based VPN products will help the VPN market maintain solid growth through 2006, said Wilson. "US/Canada continues to lead in end-user expenditures for both VPN products and services, but deployments around the globe are becoming more common, and by 2004 the rest of the world overtakes the US/Canada in end-user expenditures for both VPN products and services." Despite the current parlous state of most international telecoms service providers, Infonetics believes that the services they provider are the main avenue for VPNs, rather than networks managed by user companies themselves. Managed VPN services are expected to grow by around 200 percent before 2006, while unmanaged services decline by 8 percent. MPLS, which service providers can use to separate VPN traffic on the network, without the need for encryption, is set for 800 percent growth, says Infonetics. However, this figure may well be optimistic. MPLS is still almost unknown on live service provider networks, so the actual growth in capacity terms could be small even on this figure -- and the continued hard times mean that service providers have little money to invest in such new technologies.

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