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MPLS/IP VPN Services Market Update, 2014

  • September 2014
  • -
  • Frost & Sullivan
  • -
  • 56 pages

This study presents an in-depth analysis of the key trends impacting the MPLS/IP VPN services market, and includes market revenue and ports forecasts, and market share analysis. Market forecasts are provided for the period 2013 to 2018. MPLS VPN services considered in this study are layer 3 VPN services that are provisioned for site-to-site connectivity, for which the service provider manages the routing tables.

Executive Summary
The U.S. multiprotocol label switching/Internet protocol (MPLS/IP) virtual private network (VPN) services market continues to grow in double digits, due to continued bandwidth demand from enterprises to converge applications, and increasing demand to securely connect to cloud-based applications. Market revenue exceeded $ billion in 2013, with the market growing at a rate predicted in Frost & Sullivan’s 2012 study.

The need to improve operational efficiency is driving enterprise initiatives on convergence. As customers realize the cost benefits (operational expenditure reduction) of moving their voice, data, and video applications to a single IP-based network, they are increasingly migrating to MPLS VPNs.

Also, as customers migrate to MPLS/IP VPNs to take advantage of the network’s ability to support traffic prioritization through class-of-service protocols, focus is growing on tools that monitor network and application performance. These tools are critical for successful MPLS/IP VPN implementation as customers make the move to a converged architecture, and demand more control over the applications they wish to run on the network.

Frost & Sullivan believes that the ongoing enterprise focus on converged business services, the growing adoption of cloud-based business applications, and the need to securely connect distributed users and data centers will continue to fuel market demand for MPLS/IP VPN services.
This study is an update of Frost & Sullivan’s “U.S. MPLS/IP VPN Services Market Update 2012” (NAFE-63). However, this year’s update excludes Canadian market analysis.

Market Overview—Definitions
In this research service, MPLS/IP VPN means VPN services enabled over a carrier’s private MPLS network. VPN service is a site-to-site connection, with the service provider managing the end-to-end network. A private IP VPN uses the infrastructure of one network provider. A public IP VPN (or Internet VPN) carries data across multiple and nonspecific IP backbone infrastructures. Because a private IP VPN carries traffic across a single infrastructure, the provider can deliver greater standardized security, manageability, and connectivity service than a public service that relies on disparate network infrastructures. Because traffic is fully managed end to end, private IP VPNs also can offer greater guarantees for quality of service (QOS), supported by service-level agreements (SLAs).

This study includes analysis and market forecasts for layer 3 VPN services that are provisioned for site-to-site connectivity, for which the service provider manages the routing tables. Traditional layer 2 VPNs—asynchronous transfer mode (ATM), frame relay (FR), and point-to-point protocol (PPP)—for which customers retain routing control either through rented or owned customer premises equipment (CPE), are not included in this analysis, as those services are declining rapidly, and do not support any-to-any connectivity. Ethernet-based layer 2 VPN services, such as Ethernet virtual private line (EVPL) and virtual private local area network (LAN) service (VPLS), are not included in the market size. Frost & Sullivan tracks the Ethernet services market separately; hence, the revenue that providers earn from these services is included in Frost & Sullivan’s Ethernet analysis. Also, revenue earned from sales of remote VPN clients is not included in this study.

Furthermore, this study does not include analysis of Internet VPNs that are provisioned on public IP networks using tunneling protocols, such as Internet protocol security (IPsec) or secure sockets layer (SSL). Interviews with service providers indicate that carriers do layer IPsec tunnels over MPLS networks to provide additional security for VPN services at a customer’s request. However, this study does not include revenue earned from this practice.

Table Of Contents

MPLS/IP VPN Services Market Update, 2014
Executive Summary

Executive Summary
Executive Summary—Market Engineering Measurements
Executive Summary—CEO's Perspective

Market Overview and Definitions

Market Overview—Definitions
Market Overview—Key Questions This Study Will Answer
Market Overview—Segmentation

Market Drivers and Restraints

Drivers and Restraints
Drivers—Impact and Duration
Drivers Explained
Restraints—Impact and Duration
Restraints Explained

Market Trends and Revenue Forecasts
Market Trends
Forecast Assumptions
Market—Revenue Forecast
U.S. MPLS/IP VPN Services Market Forecasts
U.S. Market—Percent Revenue by sub-segment Forecast Discussion
Pricing Trends Discussion

Market Share Analysis

U.S. Market Share, 2013
U.S. Market Share Comparison
U.S. Competitive Factors and Assessment

The Last Word

The Last Word—Three Big Predictions

Appendix

Partial List of Companies Interviewed
Table of Acronyms Used
Additional Sources of Information on BCS
Learn More—Next Steps
Market Engineering Methodology
Legal Disclaimer

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