Analysis of the MPLS/IP VPN Services Market

This Frost & Sullivan research service titled Analysis of the MPLS/IP VPN Services Market provides market trends, revenue/port analysis, and market share analysis in the U.S. and Canadian multiprotocol label switching/Internet protocol (MPLS/IP) virtual private network (VPN) services market. In this research, Frost & Sullivan's expert analysts thoroughly examine the following markets: wholesale and retail in the United States and Canada.

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Market Overview

Convergence Continues to Drive MPLS Adoption in North America

MPLS’ Ability to Support Traffic Prioritization Attracts Numerous Customers

Enterprises are increasingly turning toward convergence solutions and consequently, MPLS VPNs, to improve their operational efficiency and reduce operational expenditure (OPEX). Customers’ realization that there are considerable cost benefits in moving their voice, data, and video applications to a single IP-based network has given a huge boost to the market. Private IP ably supports converged applications due to the inherent security built into the network, which allows service providers to apply multiple classes of service (CoS) to the bandwidth. In a stark contrast to the earlier model of using separate networks for different applications, currently, almost half of the MPLS customers have voice over IP (VoIP) enabled over their private VPN network. Instead of a private line for voice, frame relay (FR) for data, and asynchronous transfer mode (ATM) for video, just one connection to the private IP network is adequate to get quality of service (QoS) assurance.

While MPLS/IP VPN services are more cost effective than ATM and FR services, they often lose out to the cheaper IP VPN services by virtue of being a private IP network. “IP VPN services run over the public Internet network and lack traffic prioritization/CoS capability; thus they are available to enterprise customers at a lower cost than MPLS VPNs,” says the analyst of this research. Enterprises that need a secure VPN network but do not need bandwidth prioritization are drawn toward IP VPN services, owing to its support for IP security (IPSec) and secure sockets layer (SSL) tunneling for secure networking. However, enterprises that need support for traffic prioritization and the monitoring and management of network performance through self-service portals flock to MPLS VPN services. By applying CoS, service providers can tailor traffic prioritization to the customer’s need, enabling them to run multiple applications on a single network at low costs.

The market will also get a leg up from the emergence of Ethernet as a cost-competitive alternative to traditional access technologies, even while supporting higher access speeds. “MPLS adoption for converged applications, particularly real-time voice applications, had been limited in the past due to the unavailability of bandwidth in the last mile,” notes the analyst. “Now, Ethernet’s ability to support converged traffic and offer cost-effective bandwidth is driving the adoption of MPLS services.”

Market Sectors

Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:

• Wholesale
• Retail

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