European MPLS/IP VPN Market to Reach $14.63 Billion in 2020, Frost & Sullivan Predicts

Frost&SullivanThe need for secure, private, multi-site connectivity will create sustained demand for multiprotocol label switching (MPLS) virtual private network (VPN) solutions over the next five years, according to new research from Frost & Sullivan.

With most enterprises now desiring hybrid network deployments, service providers are designing and implementing networks that integrate MPLS, Internet and Ethernet. MPLS’ inherent compatibility with different access technologies such as digital subscriber lines (DSL), synchronous digital hierarchy (SDH) and Ethernet or fiber enables enterprises to easily connect to the core network using existing access technologies, at minimal cost.

New analysis from Frost & Sullivan of the European MPLS/IP VPN Market estimates this to reach $14.63 billion in 2020 – up from $7.02 billion in 2014. That reflects a compound annual growth rate of 13 percent.

MPLS has higher flexibility and scalability than other networking technologies. With MPLS, it is easier for customers to add new sites to their existing networks thereby enabling any-to-any connectivity.

Additionally, as MPLS/Internet protocol virtual private network (IP VPN) services are fully managed by the service provider, enterprises do not have to deal with the challenges of routing and managing complex networks.

“With customers migrating to MPLS VPNs, focus is increasing on tools that monitor network and application performance,” said Frost & Sullivan Digital Transformation Research Analyst Shuba Ramkumar. “These tools are critical for successful MPLS/IP VPN implementation as customers seek greater transparency over the applications they wish to run on the network.”

Although MPLS/IP VPN has proved a winning combination, the economic advantage offered by standalone IP VPN, along with the opportunity it provides to enable additional security, is expected to emerge as a competitive threat to MPLS VPN.

In locations where Ethernet is available, it is emerging as a viable option for enterprises’ any-to-any connectivity needs. Nevertheless, MPLS/IP VPNs’ ability to function using any kind of access technology—unlike virtual private local area network (LAN) services (VPLS) that require Ethernet in all locations—has been crucial in reducing the effect of VPLS on MPLS revenues. MPLS and VPLS will continue to co-exist in enterprise wide area network (WAN).

Meanwhile, enterprises have been accelerating the migration of mission-critical applications to the cloud, and this is intensifying the demand for MPLS/IP VPN connections. Service providers are capitalizing on the growing need for secure cloud connectivity by building secure MPLS-based network connections into internal or third-party data centers.

“Secure access to cloud services is central to ensuring reliable cloud environments,” noted Ramkumar. “Being a managed private network, MPLS/IP VPN is the preferred mode of cloud connectivity for enterprises.”

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