The Resurgence of Frame Relay [Good news for ASND]
telecoms-mag.com
Once upon a time, frame relay deployments in Europe were limited to trans-Atlantic connections for US-based
corporations. Frame relay has come a long way since then. It is now the technology of choice for European
network managers looking to deploy a reliable, high performance, cost-effective data communications network.
Many market analysts, who as recently as a year ago predicted the death of frame relay in Europe before the new
millennium, have had to reassess their position in the wake of frame relay's strong growth in all regional markets.
Jean-Charles Fahmy and Ronald Cornelisse
July 1998
The evidence is unequivocal. According to the Vertical Systems Group, the
worldwide frame relay service market doubled in size in 1997 to US$ 4
billion. Europe continues to represent the largest frame relay market outside
North America, accounting for about US$ 672 million, an increase of 125
per cent from 1996 and a staggering 475 per cent compared to 1995.
This growth is expected to continue unabated for the foreseeable future. In
the year 2000, worldwide frame relay service revenues will approach US$
10.9 billion, while in Europe the market will grow to US$ 2 billion (Figure 1),
which represents a compound annual growth rate of over 60 per cent from
1996 to 2000.
In 1996, the frame relay market reached an important milestone when service
revenues outpaced equipment revenues for the first time. From 1997
onwards, the service market has, and will continue to grow faster than the
equipment market, to the point where services will account for 75 per cent of
total frame relay revenues in 2000. This trend is an important reflection of the
increasing life cycle maturity of the frame relay market, and bodes well for the
ability of frame relay service providers to offer a full-featured, economical
service to their end users.
As in the US, the deployment of frame relay in Europe has been mainly as a
cost-effective leased-line replacement. The majority of today's frame relay
networks are still targeted at LAN interconnect applications. Yet, despite all
its successes, frame relay has yet to fulfil its potential in Europe and achieve
the same level of market penetration as it has in North America. The most
important reason for this is that the extent of deregulation in the US has
created an ultra-competitive environment for service providers, which in turn
has led to increasingly feature-rich and cost-competitive offerings for end
users.
Nevertheless, the frame relay market is now in the process of a significant
transformation in Europe, and is poised to build significantly on the growing
successes of the last couple of years. There are three major forces at play to
explain this change: deregulation; an evolution in frame relay's potential
customer base; and changes in the technology itself.
A European Transformation
Before deregulation, European PTTs, worried about losing leased-line and
X.25 revenues, had no real incentive to promote the growth of frame relay.
Ports were sold on a per-request basis, mostly to multinationals looking to
connect to the US. Deregulation and the ensuing increased competition are
the changes that are the catalysts for the wider transformation of the frame
relay market. The introduction and strengthening of various alternative service
providers in many European countries, notably France, Germany, Spain, and
Italy, to name a few, is putting pressure on the incumbent PTT.
In turn, the incumbents are starting to respond. This cycle of competition will
certainly continue to bring down frame relay prices in Europe, and will also
force all service providers to strive to differentiate their services on factors
other than price, thus bringing more value to end-users.
At the same time, there is an important shift in the needs and expectations of
frame relay's potential customer base. The first phase of the life cycle of any
technology is the acceptance by innovators and early adopters, people and
companies who typically are technology competent and somehow want to
get a jump on their competition.
The second phase in the life cycle, one that most western European countries
are now in, in varying degrees, for frame relay, targets what is characterised
as the `early majority'. This customer base, much larger and attractive to
service providers, is looking for productivity improvements with an evolution
(not revolution) from existing ways of doing things. This has profound
implications for frame relay service providers, who will have to begin offering
frame relay based on services, not technology. This might mean offering a
LAN interconnect service, a voice service, or something bespoke. It also
means that competition will become less and less based on price, but on
value-added offerings to end-users, such as service level agreements (SLAs),
or managed services.
This leads to the final force which is now moulding the frame relay market:
the evolution of the technology itself. While frame relay was initially
considered suitable strictly for LAN interconnection, it can now do much
more. There has been a significant amount of standardisation work done in
various bodies, like the Frame Relay Forum and the ITU, and also by
vendors, to allow frame relay to better support delay-sensitive applications
such as voice and SNA. Specifically, the Forum has ratified the FRF.11
Voice Over Frame Relay implementation agreement (IA), as well as the
FRF.12 Fragmentation IA which describes how frame relay traffic should be
divided into smaller frames so that less delay and latency is incurred by
delay-sensitive applications.
There is also work underway to standardise frame relay QoS mechanisms
and better define SLA parameters. The ITU is currently leading the QoS
efforts with the assistance of the Forum, which is also poised to ratify the
FRF.14 Service Level Definitions IA. The aim of FRF.14 is to offer a
common understanding of how to measure the main elements involved in
SLAs, such as delay, availability, and delivery rate.
The combined effects of deregulation, changes in customer needs and
expectations, and the evolution of the technology are that while basic LAN
interconnection will remain the main frame relay application for the
foreseeable future, the next wave of growth will come from new applications
and services.
Switching Services
One of these new services which has been getting more attention in the last
year is frame relay switched virtual circuits (SVCs). While switches have had
the capability to support SVCs for several years, SVCs have not to date
enjoyed much popularity. This is changing. The most obvious reason to start
considering frame relay SVCs is that the networking environment is
constantly changing, and the reasons which initially rendered frame relay
SVCs less attractive are no longer valid.
The application mix that can be carried over frame relay has grown and now
includes applications which could benefit from SVCs. Network topologies
are also changing. While the star topology is still deployed in a majority of
networks, there is growing evidence that network managers increasingly
would prefer to mesh their networks, as this would more accurately match
their underlying traffic patterns.
Introducing frame relay SVCs would allow service providers to offer new
services to meet these user trends. Beyond these new revenue generation
opportunities, SVCs would also allow service providers to obtain greater
operational efficiencies resulting in cost savings. Finally, SVCs would allow
frame relay service providers to differentiate themselves in an increasingly
competitive market, and thus to get an important advantage over their
competitors. While MCI in the US is to date the only service provider to
unveil an SVC service, there is evidence, particularly in Europe, that many
others are considering following suit.
In Europe, the next big wave for frame relay will be the migration from X.25.
Active users of X.25 have become increasingly aware of -- and interested in
the advantages of -- frame relay, notably better performance, higher speeds,
QoS, and an evolution path to ATM through standardised frame relay to
ATM interworking. For their part, the incumbent PTTs are increasingly
promoting this migration to their X.25 customers for fear of losing them to
one of the alternative service providers. Beyond the value-added
characteristics of frame relay, a key element of the success of this migration
will be predicated on the service provider's ability to create a strong business
case for users to move away from X.25.
SVCs will play a key role in this migration. X.25 is a service that carries the
majority of applications, even LAN interconnect, over SVCs. SVCs enable
related offerings such as virtual private networking (VPN) and intelligent
networking, which X.25 users have come to expect from their service
provider. As X.25 users migrate to frame relay there is every indication that
they will not want to lose such functionality, and will expect their service
provider to offer these services as part of their new solutions.
In 1997, voice over frame relay (VoFR) began to satisfy commercial
expectations several years after its initial announcement. The number of
VoFR ports worldwide grew 74 per cent to over 28,500 and is expected to
surpass 110,000 by 2000, a CAGR of 61 per cent. The main attraction of
VoFR for network managers is the cost savings that can be realised.
However, greater acceptance for VoFR is also coming from the fact that
frame relay equipment on the market today can increasingly offer the voice
quality demanded by end users.
Although the majority of initial VoFR implementations were in private
networks, service providers are now jumping into the fray. They are starting
to realise that if they do not offer a VoFR service, either it will be offered by
a competitor, or the end user will implement it in a private, or overlay
network. Both alternatives result in lost PSTN revenues. For these reasons,
service providers are expected to take the lead in the deployment of VoFR,
and public VoFR ports are expected to account for 80 per cent of the total
by 2000.
VoFR is mostly implemented on PVCs today, deployment being limited to a
few point-to-point links in the network. Introduction by service providers of
a VoFR service based on SVCs would make it more attractive to users, as
SVCs are more suited to the behaviour of voice than PVCs.
The SNA market is still a very significant component of data
communications, as it represents approximately 60 per cent of all WAN
traffic. However, it accounts for less than 15 per cent of traffic carried by
frame relay. IBM has been one of the earliest and most enthusiastic
proponents of the use of frame relay in the evolution of SNA networks, and
supports frame relay directly on its front ends processors.
When running SNA/SDLC traffic over frame relay, performance and
availability is improved since the connections are of higher speed, the facilities
are almost always digital, and the end-points are terminated on the frame
relay network on a one-to-one basis. In most cases, a migration to frame
relay requires little modification to either hardware or software. From a
management standpoint, changes are transparent to the end users when using
frame relay. The price/performance ratio is an important contributing factor
as in many markets, analogue multi-drop facilities are more expensive than a
64 kbps digital facility.
Managed Growth
One of the developments which would certainly be welcomed by the new
breed of frame relay users is the wider introduction of managed services
based on frame relay, such as managed VoFR, managed SNA, or managed
LAN interconnect.
A further step that a service provider can take to bring added value to its
frame relay service is to offer a managed service providing full network
consolidation. By consolidating all of a user's traffic onto one managed
network, the service provider also greatly reduces the opportunity for
competitors to enter that account.
By all accounts, the next few months and years will be exciting for frame
relay. The technology, which has already established itself as a workhorse of
the datacoms industry, is poised to play an even greater role in the networks
of tomorrow. Even critics of frame relay agree that it has turned out to be a
lot more than what they thought. t
Jean-Charles Fahmy and Ronald Cornellisse are co-chairmen of the
Frame Relay Forum's European marketing, developmebnt and
education committee. |
