CompuServe's virtual LAN plan

In this age of the Internet, one of the fastest growing areas of interest for telephone companies and Internet service providers is the virtual local area network-you know, the kind of technology that allows big corporations to link their remote computer users to the computers at headquarters more easily.

If virtual LANs are part of your business plan, get ready for competition to heat up this summer. CompuServe, which now boasts some 8 million subscribers, is just wrapping up a beta test of its own virtual LAN offering that will provide companies with low-cost, secure access for telecommuters.

Many corporations already use CompuServe for this intercompany e-mail service and as their on-ramp to Internet mail. Now marketers of on-line service are expecting to leverage this presence in corporate America to offer further value-added LAN access services that will directly compete with many current telco and ISP services.

Under CompuServe's plan, companies using its dial-based IP Link and IP Link+ will soon be able to sign up for authentication for remote users dialing in.

A growing number of virtual LAN offerings from telcos and ISPs offer a level of security, including simple password protection and even encryption. But these security precautions without authentication are just half measures, some security experts say. "Without authentication, these approaches are like passing out checks blindfolded," says John Muir, president of Enigma Logic Inc., a Concord, Calif.-based security firm that developed the authentication software that CompuServe will use.

With Enigma Logic's SafeWord AS network authentication server, CompuServe's IP Link will provide businesses with a secure dial connection to their TCP/IP-based host environment, while fully isolating their traffic from the Internet, says Jason Comstock, manager of CompuServe's IP/Internet services.

Under the plan, SafeWord AS will reside on the customer's corporate LAN and will control access to the LAN through a "dynamic" password system, which means that each time users log in they must use a different password.

This one-time password is obtained through a "software token," a piece of Enigma Logic software that resides on the laptop or remote PC.

"Now that corporate users have less expensive connection options [via cheaper T-1s, ISDN or the Internet] for linking their customers to corporate LANs, the real key to growing the virtual LAN business is security," says Carl Allen, president of InfoCore Inc., a security consulting firm based in Highland, Utah.

"By verifying that these users are who they claim to be through Enigma's SafeWord AS, combined with CompuServe's inherent four levels of network security, we can offer customers even more peace of mind," Comstock adds.

To do this verification, users will have to assemble a database of corporate users and will most likely have to set some access control policies.

The Safeword AS (SofToken version) will be commercially available this summer for $600 a month and will include a Berkeley Unix machine and a 100-user license. Don't be surprised if large discounts are available for corporations.

Should customers want to outsource most of their Virtual LAN system, CompuServe's premium IP Link+ includes the housing of point-to-point protocol servers and routers inside CompuServe's facilities.

CompuServe's jump into the virtual LAN market comes at a time when similar offerings by telcos or "private Internet" services from AT&T and IBM haven't really taken off. Although these services have attracted a lot of interest from corporations, they just haven't generated a lot of revenue.

It may be too early to say exactly why these services are still hunting for big revenue numbers, but CompuServe's entry may help us pinpoint some of the answers.

For many mid-sized corporations, CompuServe may offer a package that is cheaper, easier to implement and secure enough to let corporate computer managers sleep at night.

I won't predict here that CompuServe will send telco and ISP virtual LAN marketing masterminds back to the drawing board-but it bears watching how corporate managers react. It may turn out that CompuServe's ability to expand the market overshadows any hazard it might present as a competitor.

Vance McCarthy is a Foster City, Calif.-based freelance writer. His e-mail address is mccarthy@batnet.com.