Whether you call them vintage or simply outdated, legacy wide area network (WAN) connectivity options -- such as ATM and frame relay -- are finally falling out of favor as enterprises and small- to medium-sized businesses (SMBs) spend more on MPLS and Ethernet WAN services, according to a recent market forecast from In-Stat.
"There's a lot of turnover in the older technologies -- like ATM and frame relay -- as people move from those technologies to MPLS and Ethernet ... [because of their] ease of use and lower cost," said Greg Potter, an In-Stat analyst who recently published “U.S. Business Spending by Size of Business and Vertical, 2010–2015: Wireline Data Services.”
Suggesting a bigger migration to newer technologies, MPLS WAN connectivity spending is expected to reach $2.4 billion by 2015, up 144% from $985 million in 2010, Potter said. The biggest spenders will be in retail and healthcare, although the fastest growth will come from financial services and insurance, he added. This spending comes at the expense of more legacy WAN connectivity options such as frame relay, for which revenue is expected to drop by 55% over the same time period, according to In-Stat.
MPLS networks aren't objectively considered bleeding-edge WAN connectivity, but they are when compared to legacy technologies such as frame relay and ATM, which were developed in the 1980s to improve upon expensive point-to-point leased lines. MPLS improved upon that further by supporting multiple protocols, any-to-any connectivity and more efficient traffic management.
Ethernet WAN services have gained in popularity by offering WAN pros exponentially more bandwidth at lower cost. Ethernet spending totaled $11.6 billion in 2010 and is expected to grow about 8% each year through 2015, according to In-Stat. Cable data services are also expected to grow 34% by 2015 and replace legacy DSL connections in small businesses and home offices, Potter said.
WAN pros seek more advanced WAN connectivity options
Michael Vassallo, senior network administrator at Somerville, N.J.-based interior design firm Dancker, Sellew and Douglas (DS&D), uses a meshed MPLS WAN to interconnect his five branch offices and provide Quality of Service (QoS) for voice and data.
The underlying connection for each site varies, however. His smaller branches connect via copper-based T1 lines, while a disaster recovery (DR) site uses an Ethernet circuit. Vassallo connects his headquarters to the WAN using a fractional T3 connection over copper from a fiber optic multiplexer in the data center, where Ethernet is not available.
"I don't find it surprising that spending on MPLS, Ethernet and cable is expected to rise while less dynamic services will remain flat. Companies are looking for advanced services, and those services are found with MPLS, emerging with Ethernet access ... and expanding [with] cable provider offerings," Vassallo said. "While DSL, T1/T3 and ATM will still be utilized, it is in my opinion [that it will] be more due to a lack of availability of the other faster, more advanced service offerings."
WAN pros who have invested heavily in legacy types of WAN connectivity are sometimes reticent to replace them all with Ethernet, and instead adopt Ethernet gradually, according to Karen Schmidt, executive director of product management and strategy at Comcast Business Services, which entered the Metro Ethernet market earlier this year.
But businesses are dropping frame relay, ATM and point-to-point T1s because upgrading them is no longer scalable, Schmidt said.
"It's expensive and painful to try to upgrade -- buying more T1s and bonding T1s and DS3s -- and [IT] budgets aren't going up," Schmidt said. "The older legacy technologies were developed for a different time -- they were developed for the voice era."
"People are at different stages," she said. "In some cases, it's what they're used to when they have a whole network built around it. So we find some customers may start with our Dedicated Internet product, which is Ethernet based, so that they can try it out ... and others simply start using it as a backup [before they] get comfortable."
Let us know what you think about the story; email: Jessica Scarpati, Senior News Writer.