Wide Area Networks (WANs) are reaching their capacity, and will be replaced by cheaper IP VPNs (Virtual Private Networks)

That's the conclusion of a survey of 400 UK and Dutch businesses conducted by research firm IDC, which revealed that four out of 10 UK businesses, and slightly more in Holland, see IP VPNs as the way forward for their data communications infrastructure.

Only one in ten respondents to the survey use IP VPNs today, while around two in three use WANs to cover their telecoms needs. However this balance will change as companies upgrade the capacity of their networks and replace traditional WAN technologies such as Frame Relay with IP VPNs and other Internet technologies.

The survey, commissioned by managed IP services firm ipulsy, indicates that firms see IP VPNs as a middle ground between the insecurities and low bandwidth of the public Internet, and the dedicated pipes at premium prices used in conventional Wans.

Eric Owen, research director at IDC, said: "IP-based services offer more flexibility from both a cost and capacity perspective. Given the abundance of IP already in the enterprise, the transition to IP VPNs should be a relatively easy one."

The IP VPN market is expected to be worth $2.9 billion by 2004 and the number of connections will grow to 3,623,000, IDC forecasts. ®