MPLS to dominate in Europe by 2020

The European MPLS/IP VPN market has earned $7.02 billion (£4.67bn) in 2014, and it is estimated that the market will grow to $14.63 (£9.73bn) in 2020, seeing a compound annual growth rate of 13 per cent.

Those are the results of a new analysis from Frost & Sullivan, entitled Analysis of the European MPLS/IP VPN Market.

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

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.

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).