Now that it is in the final stages of unwinding its Concert joint venture with AT&T Corp., U.K. telecommunication operator British Telecommunications PLC (BT) is getting ready for a renewed push for its IP (Internet protocol) VPN (virtual private network) managed services through its BT Ignite division.
Specifically, the company is looking to roll out additional VPN services based on technologies such as IPsec (Internet Protocol Security), MPLS (Multiprotocol Label Switching) and CoS (Class of Service), as a way to prioritize and manage traffic in a network, said Steve Brady, vice president of data & IP services for BT Ignite at a news briefing Wednesday.
"We expect Concert to be fully dissolved by the end of the first quarter of this year, though of course, I can't make any firm promises about that in blood. But once that is done, we will use the Concert capabilities we will inherit to bring IP VPN services to 30 countries across Europe, with AT&T continuing to be one of our biggest customers," Brady said.
Last October, BT and AT&T agreed to disband their loss-making Concert joint venture and return the assets to the parent companies.
BT Ignite offers a variety of IP services to corporate and wholesale customers throughout Europe, with customers including American Express Co., McDonald's Corp. and Visa International Inc., and is looking to become more of a presence in Europe now that it is freeing itself from Concert, Brady said.
"We already have between 800 and 700 IP VPN customers in the U.K. alone. We have found IP VPN to be one of the most buoyant markets we've seen in a long time. In fact, demands in the last nine months are the strongest we've seen for any IP product in the last six years," Brady said.
A VPN is a private network that uses the Internet to send secure, encrypted packets of data and allows access to a corporate network as if the user were on a LAN.
Mark Jaffe, ICT (information and communication technology) and quality manager for Concorde Logistics Ltd., decided to hire BT Ignite about two years ago after having first looked at the IP VPN offerings from Equant NV and Global Crossing Ltd. (which since July have merged).
Concorde Logistics stores and supplies parts for technical equipment and medical equipment throughout the U.K. and because its engineers have a two- to four-hour response time from when a customer sends a request over e-mail to delivery, working over a dial-up connection wasn't fast enough for the company, Jaffe said.
"We started looking at IP VPNs around October 1999 because we needed to get the spare parts out to the engineers faster. We decided to go with BT because of the pricing plan and the ease of the fully managed network infrastructure," Jaffe said.
"The consolidation of the VPN network allowed us to have effectively one router per site while still having seamless connectivity to the end user. And in terms of pricing, what I like about BT is that there is a single price for your connection and it doesn't matter where your customer is geographically, it's still a single price," Jaffe said.
BT sees IP VPNs as a way to help customers to run their business more efficiently and effectively, Brady said. "Our MPLS network allows a number of VPNs to share the same network with tight security, as security is designed into the basic fabric of the network with MPLS. It allows for sharing the network and also brings good quality of service as well as cost effectiveness," Brady said.
Additionally, BT Ignite uses IPsec technology to create a defined and secure tunnel through the Internet and offer the benefits of pan-European connectivity, Brady said.
"We see MPLS and IPsec as a very powerful combination, and we expect MPLS with CoS to be very effective. Most of our customers, once they've gotten IP, ask us 'When can you give us class of service?' Well, we'll start taking orders at the end of April," Brady said.
CoS will actually become available in the U.K. around the end of May, and BT plans to roll out CoS throughout Europe in the 12 months after that, Brady said.
Though BT Ignite would not reveal its pricing plan for CoS, there will be an additional costs for the service. "We've bounced our pricing plan off of a number of clients and it's judged to be reasonable," said Steven Carter, manager of BT Ignite's EquIP and metro product division.
"CoS is an alternative to just buying a bigger access pipe because it manages traffic better. CoS automatically classes the priority of the packet -- be it voice, data or video -- and assigns it a level of importance from one to three. The network reads the packet headers to determine which class it is, making the network more application aware. CoS gives a much more user-orientated approach to IP networks," Brady said.
BT will also couple CoS with directory services and other applications that can then be tailored to different departments in a company as well as different users. "It has a number of benefits, such as when a new employee comes to the company, or leaves for that matter, a business can add or delete that employee's connection through one directory structure," Brady said.
Currently, BT Ignite's VPN business is still smaller than its frame relay business, though Carter wouldn't say just how much revenue VPNs are generating for BT. "It's in the millions of pounds, I can say that, and we do expect it will grow exponentially," Carter said.
Carter expects that about 20 percent of BT Ignite's current customers will opt to pay extra for CoS though "after talking to users, our sales guys tell me that it's going to be 80 percent," he said.
Because Concorde Logistics doesn't use voice over IP, Jaffe doesn't believe that his company will opt to pay more for CoS, though he does see the benefit in it. "Right now we are using just e-mail in the form of Exchange and Outlook, as well as Telenet sessions on Unix and IBM (Corp.) servers. But if we do at some point start using multimedia, I may rethink CoS then because it seems that it would be more user efficient. Who knows, multimedia may be something that we'll simply have to look to in the future," Jaffe said.
Farther out, BT Ignite will also look to optical Ethernet technology to bring more services to customers, Brady said. "We've seen increasing interest in the U.K. and across Europe. What we're most interested in is using optical Ethernet as another access medium into IP VPNs. It will be very important to large corporate sites and for bringing multimedia to their sites," Brady said.