Old WAN services never really die

Nikki Matkovits, Analyst

Thinking back, the only data technology to have gone extinct is the Morse telegraphy, even the old Telex data service is persevering in some markets. Likewise, neither Frame Relay nor ATM services show signs of going the way of the dots and dashes of the Morse code anytime soon, despite the considerable interest in both Internet VPN services and MPLS-based VPN services.

Amid the enterprise data services landscape rich with options, both ATM and Frame Relay services are still holding tight to the reigns. Recent research carried out by IP-Enterprise@Ovum concludes that the ATM service has a further life span of at least 2 years, possibly 3 years depending on the region, until its decline is forecast to set in. ATM is not just maturing and enduring, it has even reported increases in revenue, by as much as 10%, in one particular Asia-Pac region. Why, because of ever increasing pricing pressures - 30% reported in 2003 and an amazing 60% expected in 2004. Key growth areas have been identified and many enterprises with heavy data traffic requirements and clients/server traffic patterns between a central data centre and distributed branch offices see no compelling reason to make changes to their currently tried and trusted data service.

Similarly, Frame Relay is not only persevering, it is gaining enhancements – incrementally higher speeds, interoperability with other services and additional access options such as DSL and remote wireless access. Despite its maturity and the competitive promises of newer IP products and services, many carriers remain committed to further investments to their Frame networks. Equant for example is enhancing both its global Frame Relay and IP VPN offerings, indicating that Frame still has as much clout as its newer IP VPN option. Infonet has recently launched its Frame based FlexiVPN product, for those clients reluctant to migrate fully over to IP based services.

Enterprises, who are sticking to Frame Relay, typically have static site configurations and are still to be convinced on network reliability and security. They are more then often risk-averse. Hybrid Frame Relay/IP VPN services, such as Infonet’s recently launched FlexiVPN product, have been developed to provide an IP migration path for enterprises that want IP site-to-site, meshed connectivity without giving up their frame relay expertise. Most major service providers now offer their own versions of the Frame/IP hybrid service.

Of course the current ATM/Frame Relay perseverance won’t last forever. Business customers are increasingly adding new types of WAN (Wide Area Network) connections as their applications mixes shift and as new sites without legacy equipment join their networks. Convergence of voice and data is set to be the biggest killer to such legacy services. However, enterprises still need a good reason to make big network changes and the business case for IP applications is in not yet there for many enterprises. For those with large volumes of secure data traffic to shuttle around, it seems those legacy Frame / ATM services are doing the job just fine for the time being, thank you very much.

To find out how Ovum can help your organisation understand these issues, see IP-Enterprise@Ovum. Or contact Nikki Matkovits on nsm@ovum.com.