New Edge, MCI find IP boom

Two very different service providers are ringing in the New Year by touting significant growth in IP-based networks.

New Edge Networks today said it is projecting a broadband network binge by small to mid-sized companies, particularly in the retail sector that it has been specifically courting since fall. A day earlier, MCI Communications announced that it had tripled the number of customers for its Private IP service, now the fastest growing service in its portfolio.

Such announcements signal a growing trend, as business customers realize the cost and flexibility advantages that IP-based networks have over legacy services such as frame relay, ATM and, for smaller companies, dial-up, said Brian Washburn, analyst for Current Analysis.

"There are a couple of different trends that are all coming together," he said. "More companies are moving away from hub and spoke architectures to more of a mesh. One reason a company might want to do that is if they are trying to run VoIP as an application. You don’t just want to communicate from satellite to headquarters, but communicate among different offices."

IP-based virtual private networks offer a distinct advantage when building a mesh because each end point can be connected into the IP network, and separate connections between each site are not required.

That’s one of many savings that moving to MCI’s Private IP has meant for credit risk management company Euler Hermes of Owings Mills, Md. Dave Kozlowski, vice president of technical service for the firm, said moving from frame relay to the Private IP service enabled his company to get twice the bandwidth for the same price.

"If you use the managed service, MCI tells you when you have problems," he added. "Plus, it’s a cleaner mesh--with frame relay, other traffic can be part of the frame. In Private IP, you are part of a virtual network that is secure from other traffic."

The savings have gone up for Euler Hermes with its adoption of VoIP. The company has been able to eliminate separate tech support for voice networks and reduce the cost of moves and changes significantly, said Kozlowski.

New Edge customers "can get three times the bandwidth for half the cost of their frame relay networks," said New Edge President and CEO Dan Moffat.

"We’ll put in an IP VPN line for $100 to $120 a month, including a dial backup," he said. "That’s a savings over frame relay circuits that cost $250 a site for 56 kilobit per second service."

New Edge saw orders surge by 50% in the fourth quarter of 2004, when it began or completed work on more than 135 multi-location broadband networks. About half of that growth came from the retail sector, a market New Edge began targeting last fall with a national road show.

"Every business needs a network," Moffat said. "The retail market is just the low-hanging fruit."

MCI has had a Private IP network offering for five years but it wasn’t until 2004 that the service "really started to hit its stride," said Michael Marcellin, senior director, MCI Data Products.

MCI is now expanding the service into India, China and the Middle East and adding new access to its MPLS-based VPN with satellite connectivity and offering new firewall capabilities with the service.