Baseline 500: Old Pipes, New Pipes

By Kevin Fogarty Print this article Print

American States Water and other Baseline 500 companies find that leased-line wide-area networks are sometimes more reliable and secure—and less costly—than the public cloud.

In the age of cloud computing and software as a service, some people think that private leased-line networks have gone the way of copper wire and dial-up modems. But that’s not true for many Baseline 500 companies, which prefer—and continue to build—wide-area networks (WANs) for core operations.

Take American States Water, for example. This luminary of the 2006 Baseline 500 will spend nearly two-and-a-half years building a network that uses the Internet for only the most fringe networking responsibilities.

Rather than building a virtual private network (VPN) to link its growing network of dozens of locations nationwide, the California-based provider of water and electricity services is spending tens of thousands of dollars per month for a leased-line network provided by a host of local and regional telecoms.

Why would American States Water—which built a frame-relay network when that technology was new, then moved to an asynchronous transfer mode (ATM) network when only the most demanding companies were willing to risk the complexity and expense of that migration—stick with private networks? Why not use the public Internet with encrypted point-to-point tunnels as a transport mechanism? There are three reasons: security, reliability and, surprisingly, cost.

“Security is one of the main issues, but by the time you get 10 or more people in each of more than 60 offices, it’s probably a lot cheaper to do it this way, because we would have to pay for a hefty network connection for those offices even if we used the Internet for most of it,” says David Hefler, the company’s IT manager. “In the long run, once the installation is done, the cost won’t be that high by comparison.”

Despite keeping Internet connections at arm’s length, American States Water isn’t downgrading its technology. Instead, it’s moving from an ATM network based on Nortel equipment to one based on Multi Protocol Label Switching (MPLS) and Cisco Systems equipment.

MPLS consists of networking protocols and techniques that allow one router to add a label to a data packet identifying it by destination, content or other factor, and then manage it differently based on that label. Voice and video traffic might get a higher priority and less delay than data traffic, for example. MPLS provides a capability Hefler says is important for a company that relies on teleconferencing to reduce travel and save money.

American States Water isn’t the only company sticking with leased lines or private networks. Winnebago Industries, which manufactures recreational vehicles, is staying with its private frame-relay WAN and is expanding its capacity to support voice traffic and to consolidate its separate voice and data lines into a single connection, according to Dave Ennen, director of management information systems at Winnebago Industries and a 2007 Baseline 500 honoree.

“I’ve pushed our networking people in the direction of Internet connections and VPNs, but I get feedback that it can be problematic on the performance front” because they have to push through the other Internet traffic, Ennen says. “They have security concerns, too. And going that way, they wouldn’t be able to just call their trusted telecom company when there was a problem.”

This article was originally published on 2008-03-31
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