Special Feature
WAN Services in the U.S., Europe and Japan:
Differences in Rates of Technology Uptake and Business Cultures
NTT Com offices around the world agree they can best support their clients with innovative ICT (information and communication technology) solutions by combining diverse WAN (wide-area network) technologies while leveraging NTT Com's global tier one carrier infrastructure and its dominance of telecommunications services in to and out of Asia-Pacific.
NTT Com offers a full range of WAN technologies to help clients interconnect their physically separate LANs into single, private and secure wide-area data (including voice) networks.
In addition to providing the underlying bandwidth services, NTT Com adds a layer of value-added network-management solutions—such as QoS (Quality of Service) packet prioritization and other WAN acceleration techniques—that it uses to meet its clients' demanding price-performance and quality benchmarks.
According to the company's WAN specialists in Japan, the U.S. and Europe, while their mission—designing and implementing solutions to their clients' data-management-related business issues—remains the same around the world, trends in WAN technology uptake vary from market to market because of differences in technological infrastructure and business cultures.
Legacy Support and Advanced WAN Solutions
NTT Com is a global leader in providing WAN solutions based on cutting-edge technologies, and is at the forefront of development of NGN (next generation network) services. For example, it currently runs the world's largest tier one IPv6 (Internet protocol version 6) backbone.
It is also firmly committed to meeting its clients' ongoing requirements for support of their existing leased line, frame relay and ATM (asynchronous transfer mode) networks.
Leased lines are the most enduring WAN technology. They provide a genuinely private network based on dedicated, full-time circuits for the sole use of individual enterprises, and they remain the favored solution of large financial institutions in Japan, the U.S. and Europe. Offering ultra-high reliability (fixed bandwidth and constant latency) and security (end-to-end physical connection, with no sharing of or access to the line), NTT Com's Arcstar Global Leased Line Service will remain the solution of preference for many clients for years to come.
The high cost of reserving fixed bandwidth spurred development of the first generation of VPN (virtual private network) technologies, which allow the capital costs of infrastructure to be shared by many users. The demand for frame relay and ATM has collapsed in NTT Com's domestic market. However, the rate of decline is slower elsewhere, and they remain an important part of the company's international service offering.
Demand for frame relay is declining even more rapidly than for ATM, and here the dominating issue for clients is making a seamless transition to an IP (internet protocol) network. For example, one of NTT Europe's clients, a French trade-finance specialist, has a rapidly growing Asia-Pacific operation that was taxing its existing NTT Com frame-relay network. The client required increased bandwidth for additional services—while maintaining the high-quality VoIP and high-level security it had come to expect from its frame-relay WAN. NTT Europe took six weeks to put in place an MPLS IP-VPN connecting seven LANs (each with at least one back-up access line) in five countries. The transition was made with no interruption to network services, and has delivered increased bandwidth at lower total cost.
Ethernet
Optical fiber cable is widely available in Japan's densely packed cities, especially Tokyo, where commercial buildings usually have fiber to the curb. Japanese IT managers, intimately familiar with Ethernet technologies incorporated in the LANs under their control, were quick to interconnect these networks via Metro Ethernet. During the last few years, the general trend has been for increased use of both IP-VPN and Ethernet. However, Ethernet has been increasing at a faster rate than IP-VPN.
The situation in the U.S. and Europe has been somewhat different. Over the last few years, U.S. local exchange carriers have invested mostly in SONET (synchronous optical networking) infrastructure on top of fiber, which does not make Ethernet the most economical service for them to support. Although Metro Ethernet is now more widely available, IP-based solutions are currently the preferred approach in Europe and the U.S. as well as Japan.
Currently, the most interesting developments in this space are hybrids of IP and Ethernet. For example, NTT Com has pioneered Global Super Link, its next-generation Ethernet service using MPLS technology that allows enterprises to create an exceptionally fast and flexible global VPN without needing to purchase any additional equipment for their LANs. It is safe to predict that demand for newly developed, next-generation hybrid technology such as this will trickle down from the most bandwidth-intensive enterprises, for example Internet broadcasters, and that this approach will gain increasing market share as the demand for international transfer of multimedia data soars.
IP-VPN
NTT America and NTT Europe both see strongly increasing demand for IP-VPN based on MPLS due to the significant cost advantages it offers in comparison to non-IP technology (i.e. leased line, frame relay and ATM).
Fang Wu, vice president of customer solutions , NTT America
While cost is important, it is not everything. Fang Wu, vice president of customer solutions at NTT America, points to the issue of security: "We are tasked with supporting our clients' mission-critical network operations, and this requires solutions that utilize the most robust technology, which is MPLS-based IP-VPN."
Stephen Bloom, vice president of business development for NTT America, points out that: "Most large financial institutions continue to use dedicated leased lines, although we now see increasing interest in MPLS IP-VPN. There has already been major adoption of MPLS-based IP-VPN solutions among manufacturers. IP-VPN's big advantage for them is that it's an any-to-any network, so it offers great flexibility for extending networks geographically, as well as adding capacity or enhancing functionality."
Stephen Bloom, vice president of business development, NTT America
A recent example is a major global wholesaler and distributor that engaged NTT America to design and implement a WAN solution that would improve the performance of its applications. In addition to providing a hybrid network using both IP-VPN (MPLS) and Internet-VPN (IPSec), NTT America provided the client with collocation services, as well as a fully hosted ASP email service (NTT Communications Hosted Exchange email solution) with more than 1,500 individual accounts.
Internet VPN
Japan saw IP-VPN usage peak a couple of years ago, and now the largest market segment is Internet-VPN—that is, using the IPSec protocol over the open, public Internet—due to its greater flexibility and lower cost.
However, NTT America's and NTT Europe's customers express a clear preference for the higher security of IP-VPN using MPLS and running over the closed NTT-controlled network. "For some of the largest global customers, a mixture of leased circuit and IP-VPN is the preferred method of building an enterprise backbone network. This allows the companies to easily expand their network topology not only within the U.S. but also within their growing Asia-Pacific operations," says Bloom.
Light VPN
Currently, the fastest-growing sector of the Japan WAN market is an Internet-VPN variant that can be considered "Light-VPN." This approach continues to rely on the public Internet and IPSec, but has more entry-level and do-it-yourself characteristics. Smaller Japanese enterprises—encouraged by widespread broadband access and the world's lowest data-transfer rates—have begun to build their own (largely domestic) VPNs, and they choose to make minimal demands on carriers for value-added network-management services.
Adoption of the Light-VPN approach depends on solving the last-mile problem, and so it has not gained traction in the U.S. or Europe.
Michel Faltz, general manager of German sales at NTT Europe, Frankfurt branch
Furthermore, as Michel Faltz, general manager of German sales at NTT Europe, stresses: "Many clients who highly value NTT America's and NTT Europe's core differentiator—its ability to provide the highest quality point of entry into Asia-Pacific—are less attracted to the trade-offs in cost, security and network-management associated with the Light-VPN model. NTT Europe's customers require the security offered by end-to-end use of NTT Com's dedicated, closed network to reach from their domestic operations through European gateways into Asia."
Similarly, Wu points out that "NTT America's clients often are looking for solutions to complex problems, so typically they require more than just bandwidth from a network operator."
Fixed-Mobile Convergence
Japan, already boasting the world's most sophisticated mobile market, will be the first country to achieve widespread use of dual-mode (cellular and WiFi) handsets and fixed-mobile convergence.
Faltz says that an essential part of his job is to understand the Japanese market in terms of its leading-edge mobile offerings and rapidly approaching fixed-mobile convergence, not because it leads to immediate sales, but rather because it enables him to advise customers about possible options to consider in planning a path for their business's technology-upgrade.
Telecom Gateway to Asia-Pacific
In the U.S. and Europe, many clients have operations spreading not only across their respective continents, but also into Asia-Pacific. Both NTT America and NTT Europe are particularly well equipped to serve the needs of enterprises with WANs extending their reach into Asia-Pacific, as NTT Com is the natural telecom gateway to Asia-Pacific.
NTT Com's core competence is its ability to connect any computer network in Asia with one in the U.S. or Europe. The company offers unprecedented capability for bridging the physical and technological gaps between such networks.
Given its dominant position in its home market, it is the natural choice for Japanese multinationals extending their domestic VPNs into Asia-Pacific and beyond.
This logic also applies to foreign enterprises with a major Japan component in their businesses. For example, some of Europe's most prestigious brands generate upwards of 30% of their total profit from retail shops in Japan, so their headquarters require strong, secure data and voice connections with these profit centers. Multiple retail outlets around Japan have interlinked inventory and communication systems, and these in turn are linked with Japan, regional (business is booming in Singapore and Greater China as well), and global management systems, all ultimately feeding into headquarters in, say, Paris or Milan. In Japan the NTT Group provides both local access and the enterprise backbone.
Outside of Japan, NTT Com partners with local access providers who provide the capital-intensive infrastructure needed to link individual enterprise networks to NTT Com's backbone. In the context of the U.S., "Many U.S. high-tech companies are on the West or East coast, while we also see manufacturers scattered across the Midwest. We manage network access to meet our geographically dispersed clients' needs and to bring them onto our network as quickly as possible, where we can demonstrate our market-leading quality of service," says Bloom.
A local access provider will offer last-mile connectivity outside of Japan, but the entire network—between the clients' LANs on one continent to its LANs scattered around Asia-Pacific—is under the management of NTT Com.