Enterprises move to hybrid WANs with Ethernet services and MPLS IP VPNs

As frame relay, ATM and other legacy WAN architectures fade away, enterprises are moving toward hybrid WAN networks that consist of both Ethernet services and MPLS IP VPNs. It all depends on the nature of the enterprise and how much control it wants over WAN routing.

As legacy data transport technologies like frame relay, ATM and private lines decline, enterprises are increasingly deploying hybrid wide-area networks (WANs) that include both MPLS IP VPN and Carrier Ethernet services

In a recent research report, "The State of WAN Services Adoption in North America 2009," Forrester Research principal analyst Phil Sayer noted that enterprises are migrating to Ethernet services and MPLS IP VPNs simultaneously. About 67% of enterprises are migrating to MPLS, and between 45% and 88% are moving to Ethernet-based services.

For now, few enterprises want to deploy Ethernet services throughout their WAN.
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While enterprises are actively deploying Layer 3 MPLS IP VPNs, they are selectively replacing some of those MPLS connections with Layer 2 Carrier Ethernet services, according to Sayer. Most commonly, they are deploying Ethernet services for data center interconnections and connections between data centers and corporate headquarters while keeping MPLS connections in place for branch offices.

"One of the prime reasons [for deploying Ethernet services] is cost," Sayer said. "For high-performance networks, they almost always work out to be cheaper than MPLS IP VPNs. And the other reason is that a lot of firms have been used to configuring their … IP routing themselves. If they have had legacy networks like ATM or frame relay and owned and configured their own routers on top of that, they can still do that on Ethernet networks. They have control over security. They have more control over their own destiny."

Control over WAN routing, a key feature of Carrier Ethernet services, remains an important consideration for enterprises that are migrating from frame relay and ATM networks, said Jim Poore, vice president of transport product management for Global Crossing. Few enterprises want to manage routing across hundreds or thousands of branch offices, however.

"When you get to very large distributed networks that are branch office oriented, with 300 or 400 branch offices out there, the ability for IT management to deal with that just isn't viable," Poore said. "That's where Layer 3 VPNs really play a strong position."

Carrier Ethernet has a place, but not throughout the entire WAN

For now, few enterprises want to deploy Ethernet services throughout their WAN. Only 3% of U.S. enterprises have such plans, according to Forrester's survey data. Sayer said large enterprises with thousands of branch offices that have requirements for T1-level speeds will be content to stick with MPLS IP VPN connections at those branches. Upgrading to Carrier? Ethernet services in those branches will offer no economic benefit. As bandwidth demands increase and enterprises look to expand their use of technologies like telepresence video conferencing out to smaller branch offices, however, they will gradually replace MPLS connections with Ethernet connections.

"There really is a home for both solutions out there," Poore said. "Application-wise, we see a lot of customers in the enterprise space leveraging Ethernet between data centers and key hub points for video content delivery, disaster recovery and storage, with the ability to manage routing as they see fit."

In some cases, enterprises have held onto legacy network architectures likes ATM and frame relay at key hub points and between data centers in order to meet the security and WAN routing requirements that MPLS IP VPN technology just can't provide them. Carrier Ethernet services have matured, and migration of legacy networks is becoming more realistic for them.

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"In my discussions with customers, there are still a number of enterprises that have deployed Layer 3 VPN networks that are working well for them [in branches]," Poore said. "But they still have legacy private line, frame relay, ATM and some other older architectures in their networks that they just haven't transitioned from, as a result of Layer 3 VPN not satisfying the specific requirements for those types of applications or traffic."

Jeff Schwartz, manager of global Ethernet products for Verizon, said some enterprises have connections between data centers with very specific routing protocols in use that are not mainstream. These enterprises need their IT staff to have hands-on control of the routing in these environments, which requires the Layer 2 connections in Ethernet services, but that same enterprise may have hundreds of retail locations that need only point-of-sales processing run over a WAN link. In those cases, a Layer 3 MPLS IP VPN connection will suit them just fine, and the enterprise is comfortable with letting the service provider manage the routing.

Sayer said that enterprises that do adopt hybrid WAN networks should try to get both WAN services from the same carrier if possible. First of all, this allows enterprises the flexibility of switching locations from one type of connection to another without dealing with cancellation fees. Also, it makes the WAN much more manageable, with the entire network on a single contract, on the same bill and with everything visible through the same service portal.

Let us know what you think about the story; email: Shamus McGillicuddy, News Editor

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