Network managers have a wider choice of technologies but need to compare costs.
The residential market for broadband is the main source of growth for digital subscriber line (DSL) technology, but DSL is set to transform corporate networking, too.
Most businesses run their private networks and Internet connections over dedicated leased lines, or low-end technologies such as ISDN (integrated services digital network). The arrival of ASDL in Europe, the US and Asia is filling the gap between ISDN and leased lines and providing new options for companies - even those with substantial bandwidth needs.
DSL is particularly attractive when used together with the virtual private network (VPN) technology that allows private data to travel securely over the public Internet.
"The combination of a VPN and DSL might not have enough capacity for all applications," says Mark de Simone, vice-president of technology solutions at Cisco Systems. "But it is an important leap from a leased line in both economy and simplicity." Current variants of DSL technology offer bandwidth of up to 2 megabits (million bits) per second (mbps), which meets the needs of most mid-sized businesses.
And services offering up to 8mbps are available in some markets, particularly Asia, and in development elsewhere. "The SME market has not been well served by leased line technology," says Nico Veraleuwe, vice-president of worldwide business development at Alcatel, the telecoms equipment company.
"The traditional leased line costs more than euro 500 a month. The payback period of switching from leased line to DSL can be just four to six months." Alcatel estimates that "business" DSL accounts for around 10 per cent of the corporate data services market, but Mr Vernieuwe predicts that this could rise to more than 40 per cent within the next four to five years. At the same time, spending on leased line connections is set to fall.
Forrester Research predicts a decline in corporate network spending of between 8 and 11 per cent a year. Switching to cheaper technologies, based around the public internet, is a quick way for CIOs to make their networking budgets go further.
According to Jim Slaby, a Forrester analyst, one company with a 70-site frame relay network was able to save some 25 per cent of its networking costs, or some $7.5m, over five years by moving to alternative technologies. The company was also able to increase its bandwidth.
Not all companies will be able to switch to DSL. The most obvious drawback of the technology - a maximum speed well below that of a leased line - is not the most practical barrier. "Quite a large number of corporations are covered by the 2mbps speed of current DSL technology," says Peter Linder, technical director for broadband access at Ericsson.
Developments such as ADSL2, which will offer up to 3mbps upstream and downloads of 7.5mbps, will bring even more businesses within reach of DSL networks. But raw bandwidth is not the only consideration when it comes to running a corporate network over DSL.
The majority of DSL connections are asymmetric, favouring download speeds over upload speeds. And, with a few exceptions, most DSL connections share bandwidth between users, a process known as contention. Leased lines, on the other hand, are uncontended and offer identical upstream and downstream speeds. Business users tend to prefer symmetric networks, but as long as upstream data speeds are sufficient for their needs, an asymmetric connection need not be a barrier.
"E-mail is perhaps the most symmetrical application, but business applications can be quite asymmetrical," says David Stansell, a communications specialist at PA Consulting. "In a database application, you might only be entering text upstream, but you will be downloading graphics from the application."
Contention could be a more serious issue for companies switching to DSL. Most business DSL connections have lower contention ratios than services aimed at residential users. But early adopters still enjoy 'free" additional capacity as usage ramps up. The problem comes when that extra capacity is no longer there, and the business needs to upgrade to maintain a similar service. Companies will avoid capacity problems if they make a careful comparison between their leased line service level agreements and the service offered for DSL.
Making like-with-like comparisons is vital, as the headline bandwidth figures might mask high contention ratios. Network managers also need to consider the full, end-to-end solution rather than just the carrier technology. Although contended DSL can suffer from capacity problems, most businesses will use DSL alongside VPN hardware or software.
In the last few years, VPN performance has improved markedly, and this gain will offset some of the performance issues of DSL. Mr Slaby at Forrester says that VPNs have gone from three nines to four nines in reliability (99.9 per cent to 99.99 per cent uptime).
And economic factors are prompting network managers to think again. "The idea of sacrificing some network quality to reduce costs or in return for more bandwidth has more appeal than it had," be says.
Nor is DSL the only technology challenging the hegemony of leased lines in corporate networks. Fibre technologies might be associated with the largest companies, but an overcapacity of fibre in some metropolitan areas, as well as developments such as single-node fibre and fibre to the building, are bringing down costs.
FastWeb, a service provider operating a fibre-optical network covering Italy's main cities, brings fibre to the building and then uses cheaper Ethernet technology to connect homes or businesses. Similar networks are being developed in other parts of Europe.
In the US, fibre is the strongest competitor to conventional leased lines. The business districts in most large US cities are now served by fibrerings, and companies are able to connect at speeds up to 155mbps at relatively low costs. The biggest disadvantage of fibre is its limited geographical scope: move outside the large cities and there is very little available.
In practice, this means that most corporate networks will mix and match technologies for some time to come; companies might even retain some leased lines for applications such as running web servers or large, online databases.
The change is that most connections will be IP-based, if not part of a full virtual private network.
