The MPLS IP VPN services market is poised for high growth as several enterprises are expected to incorporate these networks to harness various benefits offered by them such as performance maximization and cost minimization. Even though the VPN market has considerably matured over the last five years as majority of enterprises have implemented some or the other form of VPN, managed network-based MPLS IP VPN services that exhibit appreciable growth potential.
Global MPLS IP VPN Services market by service (USD Million), 2012 - 2020
The declining ATM/frame relay market is expected to buoy the MPLS IP VPN Services market growth throughout the forecast period. Enterprises migrating from packet have implemented layer 2 and layer 3 MPLS IP VPN Services, with the latter generating a major proportion of the revenue. MPLS IP VPN Services helps enterprises in prioritization of applications such as Voice over Internet Protocol (VoIP) by class of service (CoS), creation of disaster recovery infrastructures and reducing complexity to simplify network management. Ability to provide scalable bandwidth and convergence of voice, data and video from multiple platforms on a single platform is expected to encourage incorporation of MPLS IP VPN Services. The technology considerably helps meet increasing traffic requirements where additional capacity is required.
Due to decreasing bandwidth costs and growing concerns pertaining to IT costs and network security, organizations have increasingly started adopting a cloud-based approach, which necessitates addition of more locations in their network along with inter-network connectivity. With its ability to easily support multipoint full-mesh connectivity, MPLS is more suited to meet the aforementioned requirements. MPLS IP VPN Services also is well-equipped to address the security issues faced as more and more enterprises move data to the cloud. Cloud-based services accessed via IP VPNs are expected to play a pivotal role in market growth throughout the forecast period.
As compared to L2VPN, Layer 3 VPNs (L3VPN) are ubiquitous and available with a majority of service providers, as a result of which enterprises can plan and implement a network globally with relative ease. Additionally, several equipment vendors provide equipment such as VPN dialers, firewalls, and Integrated Access Devices (IADs) which help enterprises build layer 3 MPLS IP VPN Services themselves. Enterprises which opt for layer 3 MPLS IP VPN Services services typically have more than 20 corporate locations which require bandwidth of 10 Mbps or lower. The IT departments of such enterprises prefer outsourcing their networking and routing decisions.
L2VPN services have started gaining considerable traction to address the demand for enhanced security which is required in several applications where data integrity is of utmost importance such as banks, government agencies and defense. Several prominent carriers such as AT&T and BT have deployed L2VPN solutions globally, whereas a few regional service providers have also strengthened their offerings. Enterprises opting for L2VPN services generally have fewer than 20 corporate locations, which need bandwidth of more than 10 Mbps. The IT departments of such enterprises are usually sophisticated and desire to maintain firm control of their networking and routing decisions.
Video conferencing is expected to emerge as a key application area owing to high quality of service (QoS) offered by MPLS. Networks need to ensure a high QoS in order to run apps such as VoIP for video conferencing as they are intolerant to latency and other irregularities. MPLS IP VPN Services offers significant bandwidth between the service provider network and user’s site to satiate the requirements of VoIP. Audio conferencing is projected to be a lucrative and a fast growing application sector. Small and medium-sized businesses (SMBs) using broadband and LTE wireless access present a favorable growth potential for the MPLS IP VPN Services market.
IT managers in organizations usually have to take decisions pertaining to the deployment of hardware or software VPNs. As compared to their software counterparts, hardware VPNs provide enhanced security to the enterprise. Software-based VPNs share a server with other operating systems and applications, making them more prone to attacks thereby compromising their security to a certain degree.
Asia Pacific and North America constituted the key regions of the MPLS IP VPN Services market in 2013 and are expected to exhibit high growth throughout the forecast period. U.S.-based providers Verizon Business, Sprint, Global Crossing, AT&T have extensive national networks, with MPLS PoPs in several major U.S. and Canadian cities along with second tier U.S. markets. There has been a significant influx of international carriers in the MPLS IP VPN Services market such as BT, Reliance Globalcom, Orange Business Services, Telstra International, and Telefónica in North America over the last few years to serve their existing MNC clients having offices in the region.
VPLS is widely available in the U.S. through in-region providers Verizon Business, Global Crossing, and AT&T and also through Tata Communications and Reliance Globalcom. Asia Pacific is characterized by a plethora of service providers rolling out MPLS IP VPN Services services. Tata Communications and Telstra are key regional MPLS IP VPN Services service providers. International carriers such as Verizon, BT, and Sprint have diversified into the lucrative Asia Pacific market through their own MPLS IP VPN Services offerings.
Prominent international operators in the MPLS IP VPN Services market have competitive offerings suitable for MNCs with a smaller international network footprint. Service providers direct their investments towards building backbone networks for supporting MPLS IP VPN Services after penetrating major U.S., Asia Pacific and European markets. Generally, a majority of operators have network sites in a single geographic region. For extending service availability, they establish network-to-network interface (NNI) relationships with local operators in the U.S., India, and China. NNIs and technical support partnerships with a high degree of emphasis on flexible service offerings and customer service are critical success factors for smaller global MPLS IP VPN Services market players.
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In order to ensure business continuity amidst the COVID-19 crisis, business organizations, especially in highly affected countries are allowing their employees to work from home. The increase in people working from home has led to a surge in demand for online video viewing, downloading, and communication through video conferencing, all of which are leading to increased network traffic and data usage. COVID-19 shall accelerate the demand for agile and flexible work styles and further push the adoption of communication services that tend to improve work-life balance. On the flip side, telecom regulators worldwide have postponed their plans of 5G spectrum auction amidst the global pandemic. This is expected to have an impact on the commercialization of commercial 5G standalone deployments and revenue generated through 5G services. The ongoing pandemic has forced telecom operators worldwide to test their network resiliency and revisit their planned investments, especially in 5G technology. The report will account for Covid19 as a key market contributor.