New Technologies to Lower the Cost of Private WANs

WANs (Wide Area Networks) are used by lots of corporations and organizations need connectivity between their offices located throughout a large geographic area. Many of these groups choose to set up private WANs, because they need to ensure a higher quality of connection than a public WAN (i.e. broadband connection can offer).

While it is not surprising how much more expensive a private WAN is, what is surprising is that a private WAN solution such as MPLS is so dramatically more expensive than broadband internet. A typical MPLS is priced at $450-$1,500/Mbps per month while the monthly price of broadband connectivity is only $3-$15/Mbps per month. Although an MPLS network does cost a bit more to provide than a public internet, the fact that it is a whopping 30-100x more expensive appears to be a bigger reflection on what the market will demand/bear than actual cost to the provider.

There are a few reasons why the market continues to pay such seemingly exorbitant prices for services like MPLS networks, while the cost of virtually every other technology decreases over time (example: look at the pricing of flat-screen TVs over the years). The first reason is that WAN buyers are very concerned with risk. A single incident caused by a cheaper, but less reliable WAN service can eat up an entire years worth of cost savings or more versus paying a premium for a reliable MPLS or Frame Relay service. Secondly, there is a bit of an oligopoly when it comes to credible vendors of Frame Relay and MPLS. Less competition means higher pricing. Lastly, public internet has never and probably will never be reliable enough to serve as a realistic alternative to private WAN solutions that offer up to ‘4 nines’ (99.99%) reliability.

Luckily for IT managers and businesses around the globe, new technologies that go beyond WAN optimization are emerging that are allow MPLS-like WAN performance while maintaining pricing that looks more comparable with broadband. This development is attributable to technologies like Adaptive Private Networking that essentially integrate a private MPLS network with the public internet, and use techniques such as traffic shaping and bandwidth management to maximize the use of broadband bandwidth, while retaining MPLS bandwidth to ensure network reliability.

Perhaps these developments will finally force telecom service providers to price their private WAN solutions more competitively.