A modern trend: The rise of new private networks

A modern trend: The rise of new private networks

By Zatni Arbi

PHUKET, Thailand (JP): Back in mid-1987, when I was taking
some courses in management information systems and data
communications, the concepts of local-area networks and wide-area
networks were the topics du jour.

Today, we take networks for granted but back then, they were a
really big thing.

That is not surprising because in those days, networks were
still very difficult to set up and even more difficult to manage.
If you knew how to make the computers talk to one another and
keep them on speaking terms, you would have had a very high
paying job and a healthy savings account in no time.

In the beginning, LANs and WANs were used to organize company
data and put them under the administration of the management
information system department.

This would include data from the sales department, accounting
department and so on.

The WANs, which covered a wider area, as the name indicates,
were constructed to connect remote offices and branch offices.

They also provided remote access to data so that a salesman at
a customer's premise would be able to check whether the goods his
customer wanted to order were indeed in stock.

Remote access would also allow him to get the latest updates
on volume discounts that he could offer the customer he was
visiting. At that time, the WANs connected the LANs via dedicated
lines leased from public network providers.

There were also talks about strategic information systems, a
system that put the companies that used it in a very strategic
position.

One of most used examples was an international bank that
placed terminals on the desktop of their major customers. This
enabled customers much more control over the management of their
funds.

These terminals were considered part of the bank's strategic
system, since it help lock in its customers.

At that time, when computer literacy was not as pervasive as
it is today, the executives had to spend a fair amount of their
precious time learning to use the system.

So, when the bank's competitor approached them with a more
user-friendly system or better rates, they would be hesitant to
migrate.

Well, just last week we talked about Internet banking. Banks
have interfaced their internal systems with Internet and put
their services online, much like the bank did.

However, the services are accessible to everyone, not only to
the executives. With Internet banking, the banks can easily serve
hundreds of thousands of clients instead of just a dozen. What is
happening?

Virtual

"We are now moving from private networks to virtual private
networks," said Desh Deshpande, the executive vice president of
the California-based Ascend Communications company.

He was addressing a roomful of executives of ISPs and carriers
from the Asia-Pacific region last week, organized by his company
here in beautiful Phuket.

In the past, LANs and WANs were built and managed by the
internal management information system departments. But as many
big corporations have long found out, managing the networks could
become very costly and very challenging.

Many of these organizations ended up having to shed a huge
amount of dollars and employ personnel for maintaining the wide
area networks. Worse, the investment would immediately multiply
as the number of sites to be connected increased.

In the last 18 months or so, Desh observed, there has been a
profound change.

Thanks to the proliferation of the Internet, people have
suddenly found a better way to build corporate internal and
external networks.

Subsequently, we now hear the word Intranet and Extranet.
Intranet refers to a network that is internal to an organization
but uses Internet technologies, including Internet browsers.

The Extranet, as you would easily guess, connects the Intranet
with the suppliers, customers, business partners and remote
workers, also using the technologies of the Internet.

Why the move to Internet?

First and foremost, it provides an opportunity to build a
virtual private network that causes companies fewer headaches and
costs less, said Desh,

Internet service providers in the U.S. and other advanced
countries have found out that it is also more profitable to serve
big businesses than just individual subscribers.

With the advent of the Internet, the older protocols such as
Internetwork Packet Exchange (IPX) have been gradually abandoned
and Internet Protocol (IP) has been adopted.

That is why we are also seeing convergencies between carriers
and ISPs. One of the clear examples has been WorldCom, a company
that provided frame relay and ATM services and operated
infrastructure.

Horrendous

WorldCom then merged with UUNet, an ISP with quite a sizable
subscriber base.

By relying on the Virtual Private Networks, in which segments
of the private networks are safely and securely shared with other
users of the same infrastructure, companies can free themselves
from the horrendous task of managing their own WANs.

The network service providers (NSPs), use the latest
technologies, including frame relay and Asynchronous Transfer
Mode (ATM), as the infrastructure for transmitting data, thereby
providing efficient services to their customers.

It's understandable if you have never heard of Ascend
Communications.

Ascend is not a consumer brand, and, therefore, not many
people know about them despite the fact that they have actually
been in the Indonesian market for two years.

One of their leading products is the Max. To explain what this
particular box does, envision for a moment the bulletin board
systems that were so commonplace back in late 1980s.

Each of these basement-based systems would consist of servers
and stacks of modems.

In the beginning, each of the modems handled one connection,
and to be able to accommodate 10 subscribers at the same time, 10
modems would be required.

Now, with a Max, such as Max 4000 used by three of the leading
Indonesian ISPs, up to 72 subscribers can be handled at the same
time.

Last July, Ascend acquired Cascade Communications, a company
that made frame relay, ATM and IP switching products, and
strengthened its position in the ISP and carriers market.

There were several important messages that we could bring home
from the forum in Phuket.

First, it is becoming more obvious that the public network
providers in every country should now be prepared for a shift in
the way people communicate.

As the accompanying chart that I obtained from the forum
shows, the amount of international data traffic is going to
exceed the amount of international voice call traffics.

While the amount of voice traffic will continue to increase at
3 percent to 4 percent rates, the data traffic will increase at
an exponential rate.

In some countries, carriers have even confirmed that the point
has been reached and passed. Although this will not necessarily
mean that telephone services will die, it will certainly mean
that the stronger growth will not be in the voice calls, but data
traffic that may also carry voice as well.

One of the technologies currently being pushed by Ascend is
Voice over IP, and we've been hearing more and more about
Internet telephony.

Therefore, our own public network providers should also be
aware that soon people will be using the Internet as the pathway
for their calls instead of the conventional telephone networks.

New technologies such as the Voice over IP will enable
Internet users to make phone calls through the Internet, where
costs will be much lower than conventional calls.

Another important piece of news was that Ascend intends to
setup their representative offices in Thailand, Indonesia and the
Philippines but has not succeeded in finding the right person to
man these offices.

They've been looking for a capable person in Indonesia for six
months to no avail. The importance of this fact is not that you
can apply for this highly paying job, but rather that, today,
it's no longer sufficient just to be good at building and
maintaining LANs and WANs.

Today, you also need to know a lot about the Internet, data
communications, public networks and the latest technologies in
telecommunications.

If you happen to be a student majoring in computer
engineering, you should do your best to enrich your portfolio
with the knowledge in these areas as well.

As many insiders have told me, the industry is, at the moment,
strangled by lack of qualified engineers with up-to-date
expertise in the new public networks. If you can fill these gaps,
you'll be guaranteed an extremely extraordinary salary.