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Carrier spending habits changing

Carrier spending habits changing

Industry watchers say this year will mark a major milestone in IP networking: U.S. carriers will buy more routers for use in their private, premium-service IP backbones than for the Internet backbone.

Industry watchers say this year will mark a major milestone in IP networking: U.S. carriers will buy more routers for use in their private, premium-service IP backbones than for the Internet backbone. By doing so, carriers will become less dependent on the hacker-prone Internet for their IP service infrastructure. As a result, customers can expect IP services that boast service level, security and availability parity with data services such as frame relay and ATM, but that support a wider range of applications.

Carriers' new spending habits also indicate that they think they can make money in IP services -- or at least more than they can offering ordinary Internet access. More profitable services should translate into more broadly available offerings, experts say.

"The Internet is becoming an application of IP and not the infrastructure itself," says Thomas Nolle, president of consultancy CIMI, which has called attention to the carrier spending trend. "If service providers are going to build IP infrastructure, they're going to build it to earn (an ROI). WorldCom proved that you can be the biggest Internet provider in the world and you still can't make money at it."

Nolle says this year 53.6 percent of the US$5 billion in sales of non-access routers to the top 27 U.S. service providers -- the Big 7 RBOCs and interexchange carriers, and the top 20 ISPs -- will be for public IP applications not connected to the Internet.

AT&T Corp.'s Concept of One IP backbone, for example, carries Internet traffic but only in partitioned routes. Essentially, Internet traffic is an application riding a non-Internet IP infrastructure.

Such offerings signify a maturation of IP as an infrastructure and service that can carry business traffic reliably, securely and profitably, Nolle says. Until now, carriers acquired routers to support an Internet service or application; now they're buying them as the foundation for a variety of services and applications.

BellSouth Corp. unveiled its regional private IP backbone -- the BRIB -- 18 months ago to offer RFC 2547 Multi-protocol Label Switching (MPLS) VPNs, VoIP and metropolitan Ethernet services within its region, yet with ISP peering arrangements for out-of-region applications, says Mark Kaish, BellSouth vice president of next-generation services. It's less expensive to build and keep traffic on a private IP backbone, he says.

"What you're really trading off is the cost of (Internet) transit and peering vs. the cost of bandwidth to keep it all on your own network," Kaish says. "Since the telecom crash, the cost of bandwidth has been dropping like a rock.

"It's giving customers the confidence to move from frame relay and private line to IP services," he adds.

Business demand is on the rise for services such as Layer 3 MPLS VPNs that rely on private IP infrastructure, says Mark Bieberich, an analyst at The Yankee Group. Yankee recommends that companies migrating from frame relay or ATM to IP VPNs with VoIP consider private IP network-based services for their security capabilities and service-level agreements.

Another option, though, is a new breed of VPN service that Yankee calls "Public 2547" offerings. These ride on the Internet and are secured via MPLS-explicit paths. Public 2547 VPNs are aimed at customers constructing their own customer premises equipment-based VPNs that use the Internet for transport and encryption for security.

"Most enterprises believe that service providers have to have a private IP infrastructure today to ensure the security of their services," Bieberich says. "But vendors and service providers are working together to break down some of those barriers to having to provision private services over a separate backbone." -- Network World (US)

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