Can business broadband provide a low-cost IP VPN alternative?

12 Feb 2015

While business broadband lacks the security and service guarantees of MPLS IP VPN service, data from TeleGeography’s Business Broadband Research Service reveal that replacing VPN with a comparable business broadband plan can provide meaningful cost savings for some enterprises.

IP VPN prices reflect not just the service provider’s port charge, but also the cost of local access, which significantly raises the cost. For example, the median price of a best efforts 10Mbps IP VPN port in New York City is USD537 per month, while local access is an additional USD1,162. The total price of USD1,699 is at least 15 times greater than that of a 10Mbps-to-20Mbps business broadband plan anywhere in the United States. Similarly, in Germany, the median 10Mbps IP VPN price of USD626 per month in Frankfurt plus the access price of USD638 is 28 times higher than the USD45 monthly cost of comparable business broadband service. In Tokyo, the median price of a VPN port plus local access is 42 times higher than business broadband.

Price differences in emerging markets are even more pronounced. For example, the median price of a 10Mbps VPN port plus access is USD2,938 per month in Sao Paulo and USD10,186 per month in Johannesburg. These prices equate to 57 and 58 times the median price of a 10Mbps-20Mbps business broadband plan in each country, respectively.

‘Business broadband is certainly not a perfect substitute for MPLS IP VPN service,’ said TeleGeography analyst Janice Shon. ‘However, business broadband provides access to the public internet and enterprises can use IP Sec VPN tunnels for secure access to their corporate WAN. The great cost savings can make business broadband a particularly attractive alternative for small sites that do not have latency sensitive requirements.’

TeleGeography’s Business Broadband Research Service is a database of more than 770 broadband service providers in over 110 countries, and their business internet service packages and prices.

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