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Issue of June 2005 

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Never a case of too much

Prices are on a downward spiral, and network traffic keeps getting heavier. It is not an easy task to quench an enterprise’s thirst for bandwidth. by Anil Patrick R

The crucial links that connect the blocks which build an enterprise or hook it to the Internet are still leased lines for the greater part. VPNs are being snapped up by Indian businesses for inter-office connectivity, and these are the next most popular options.

Executive Summary
Never a case of too much

Falling bandwidth prices and the resulting options have been offset by increased enterprise application traffic. Hence, Indian enterprises are demanding additional bandwidth.

Power pill

Leased lines lead when it comes to Internet access. However, the race is on between leased lines and VPNs when it comes to inter-office connectivity.

Apparently, there is never a case of too much since more than two-thirds (68 percent) of respondents believe that they will require more bandwidth during 2005-06. The percentage of organisations investing in bandwidth and connectivity during this fiscal (71 percent) is less than that of the previous year (79 percent). The IS 2005 figures show that 90 percent of Indian organisations have already made bandwidth and connectivity investments in the past. Therefore, the focus now is more on upgrading and maintaining existing bandwidth and connectivity. Because most existing locations are already connected, investments in new links are largely limited to new or hitherto unconnected locations.

The demand for more bandwidth can be attributed to increased business growth across verticals. According to M C Raisinghani, Vice-president - Technology, Birla Sun Life Insurance, “Increase in bandwidth is primarily due to rising business volumes, especially in the BFSI segment. In our case, the industry is new and the volumes generated are resulting in a need for more bandwidth.”

Next come the reduction in bandwidth tariffs. Enterprise wide applications churn out ever-increasing amounts of data that has to be carried across overburdened networks. Sunil Kapoor, CIO, Fortis Healthcare, believes that today’s enterprise users demand information and it has to be accessible across units. “Sharing the information repository across the organisation is critical. People also need information internally to make informed decisions. Online connectivity (Internet access) is also de facto now,” he says.

Bigger pipes

Understandably, the telecom sector leads the race with all surveyed organisations expecting to consume more bandwidth this fiscal. The BPO and services verticals follow with 92 percent and 77 percent of organisa-tions foreseeing increased bandwidth requirements in this fiscal.

Of these organisations, 20 percent expect a jump of 1.6 to 2 times in 2005-06. Another 20 percent expect an increase in bandwidth usage by 1.1 to 1.5 times.

Means of Net connectivity

More than 70 percent of organisations have invested in leased lines. ISDN comes next with 50 percent followed by DSL at 32 percent.

BPO is the biggest user of leased lines for Internet connectivity with 96 percent using it. 83 percent of telecom organisations use leased lines followed by 77 percent in services. Pharmaceuticals/chemicals happens to be the biggest user of ISDN with 61 percent having opted for it. DSL penetration is highest in the services sector with 45 percent of organisations having invested in it. Auto and auto components follows with 39 percent favouring DSL.

54 percent of organisations that have or plan to invest in bandwidth are going to opt for leased lines. ISDN follows with 27 percent and DSL comes third with 22 percent. Telecom leads with the entire vertical having leased lines on their minds. Second in line is BPO with 88 percent. Then comes auto and auto components with 66 percent.

We can expect DSL adoption to pick up, especially among medium enterprises and regional offices of large ones. This is due to the recent entry of heavyweights such as BSNL and MTNL with cost-effective corporate ADSL offerings.

The inner circle

Research highlights
  • 68 percent of organisations are foreseeing additional bandwidth requirements in 2005-06.
  • In this fiscal, 71 percent of businesses will buy more bandwidth.
  • Leased lines (38 percent) and VPNs (37 percent) are having a neck-to-neck race when it comes to inter-office connectivity.

On the inter-office connectivity front, leased lines have a marginal lead over other options. 38 percent of organisations use leased circuits; VPNs follow closely with 37 percent, while VSATs tot up 34 percent.

VPNs have been employed innovatively by Indian organisations. MPLS VPN technology is used for remote connectivity. For instance, Fortis Healthcare uses VPNs over DSL lines to link locations.

On the LAN side, gigabit Ethernet (GbE) is picking up with 19 percent of organisations already having deployed this technology. Explains D S Nagendra, Country Sales Manager, PremisNet, ADC Krone, “Organisations are looking at gigabit Ethernet to the desktop since switches are available. BPO and corporates are most interested in gigabit Ethernet.” IS 2005 confirms this trend with BPO leading the gigabit Ethernet brigade with an adoption rate that’s almost double the average at 35 percent. Services and oil/power follow with adoption rates of 26 and 23 percent respectively. When it comes to WLANs, the adoption rate is still low with 17 percent of organisations using them. The telecom sector leads in WLAN usage with 66 percent using this technology.

Network this year

Leased lines and VPNs are head-to-head with 29 percent of organisations planning to invest in these technologies during this fiscal. VSATs follow with 22 percent.

Birla Sun Life uses leased lines for inter-office connectivity. It will add 11 locations this year, and it plans to connect these to the existing network using new leased circuits.

VPNs are a hot favourite for the BPO segment this fiscal with 54 percent of organisations planning to invest in them. Pharmaceuticals/ chemicals and telecom follow with adoption rates of 33 percent.

Steady growth seems to be on the anvil for WLANs with 16 percent of organisations planning to deploy them this fiscal. 33 percent of telecom companies plan to include this technology in their IT budget for 2005-06.

NM recommends
  • It is the right time to go for leased lines—with the substantial drop in prices.
  • VPNs are a good option for inter-office connectivity and remote access.
  • It is better to restrict the use of VSATs to specialised applications or remote locations.
  • Deploy ADSL for Net access in branch offices or for backup links.
  • Gigabit Ethernet investments make sense if you are setting up a new LAN.
  • Adopt the faster 802.11g instead of 802.11b when going in for WLANs.

Anil Patrick R can be reached at

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