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VPNs offer network managers several ways to reduce the overall operational cost of wide area networking as compared to the conventional Point-to-Point links.

Reduced Bandwidth Cost

  • Pay for Use: Companies can control their networking spend by using VPN instead of Point to Point Leased Line Links. The overall distance is reduced from an inter city leased line (PtP link) to a local last mile on Leased line or wireless which extends to the service provider's backbone operating on technologies like MPLS, IP or Frame Relay. If a company implements a private WAN using many long distance T1/E1 leased lines though the requirement is a fraction of the high-speed link. Companies can utilize VPNs by paying only for the bandwidth that they use thus unlocking a lot of value. Studies by Enterasys have found that an intranet VPN can reduce the cost of leased line connections considerably.

  • Typically, VPN carriers provide a leased-line feed by contracting with a traditional carrier company. Since leased lines often have a distance-related cost structure, connecting to a local POP will provide savings compared to a direct long-distance link.

  • Cheaper backup: In times of the last mile failure, companies will need to dial out to the local POP for ISDN backup thus saving on long distance dial out calls in case of Point to Point WAN.

  • Cheaper high bandwidth over last mile & Quick Upgradability: As last mile links are cheaper than intercity Point to Point links, remote sites can be provisioned with the links that can be upgraded without any change in hardware at very short notice thus saving companies of long wait periods that are needed for procuring Point to Point links.

  • Flexible Bandwidth: Companies can upgrade bandwidth capacity as desired without any change in the last miles or hardware. This is not possible over traditional Point-to-Point WANs as the bandwidth is limited to a set value.

  • For Dialup Users: Companies can reduce telecom costs as users start dialing into the network through local calls to ISPs rather than through direct long-distance calls to the company for sites that do not justify the use of a Lease Line as the last mile (Typical requirements of 16 - 32 Kbps with 2-3 users working for 3-4 hours in a day).

  • Better utilization of bandwidth at the enterprise or central site: In the Point to Point WAN approach, each user is typically allocated fixed bandwidth. Most remote working sessions have very low overall utilization of the reserved bandwidth allocated. Also, with a circuit switched approach, there are a fixed number of users who can be supported before new users are completely blocked. With a VPN approach, it is possible to fully utilize the available bandwidth; as the number of connected users increases, the service to each user gradually decreases, but is not completely blocked. Users equipped with high-speed local access services may also take advantage of any spare capacity more easily.

Reduced Hardware Cost 

  • While designing a Point-to-Point "hub and spoke" network, the routers at the hubs need to be sized to handle multiple links from the remote sites. This makes the routers complex and configuration is also cumbersome. The VPN design is different to the "hub and spoke" design. The remote offices directly connect to the Central Site, thus rather than maintaining multiple high-end routers at the hubs, companies can use lower end and thus cheap routers at these sites.
  • Less upgrading needed to the equipment at an enterprise or central site. As modem technology improves, and new local loop services become available, new hardware would be required at a "modem pool" site. In VPNs, this problem is handled (and paid for) by the VPN carriers.
  • Rather than maintaining a remote access server (RAS), modem banks and ISDN terminal adapter pools for remote access as well as a router for Internet access, a VPN can combine all of the traffic over the connection used by the router for Internet access. Instead of the burden of managing multiple RAS devices, modem banks and ISDN terminal adapter pools, network staff now manage a higher-performance router that offers VPN services. In the case of an outsourced VPN service, the ISP or carrier, possibly reducing the cost even further, can also manage the router.
  • According to Forrester's research, the cost savings of an Service Provider based dial VPN solution compared to a traditional RAS approach are staggering.

Reduced Manpower Cost 

  • The VPN service provider takes care of the end to end running of the network through a shared pool of dedicated and highly qualified manpower. Thus companies do not need to invest in the manpower to manage a multi location network.
  • The VPN provider interacts with the telecom companies for the best fit solution for the company at all the sites.

Better Data Rates 

  • Because long-distance VPN users connect to a local modem at the VPN carrier's office, the data rate achieved by the modem should be better than for a long-distance or direct lines/ call.


  • VPNs based on IP tunnels, particularly Internet-based VPNs, also allow greater flexibility when deploying mobile computing, telecommuting and branch office networking. Many corporations are continuing to experience explosive growth in the demand for these services. VPNs provide a low-cost and secure method of linking these sites into the enterprise network. Due to the ubiquitous nature of ISP services, it is possible to link even the most remote users or branch offices into the network.
  • Flexible Bandwidth: Companies can upgrade bandwidth capacity as desired without any change in the last miles or hardware. This is not possible over traditional Point-to-Point WANs as the bandwidth is limited to a set value.
  • VPN Solutions can be easily customized for companies in terms of Bandwidth provisioning, Last Mile (Wireless, Leased Line , DSL, PSTN, ISDN etc), Mobile Users and QoS based on sites, time of the day/month, upgrading the bandwidth.


  • Upgrading the bandwidth is as easy as "Plug & Play"
  • As sites connect to the local POP of the service provider, the enterprise locations can be scaled up very quickly
  • The sites can be seamlessly upgraded to carry Voice, Video and Data.
  • Partnership access with customers, partners and suppliers (extranets): Rather than arrange for one-off solutions each time a new partner needs to be linked to the corporate network, VPN networks provide a common technology to reduce the complexity and expense of adding new partner network links.


  • VPNs are carrier, vendor and access-agnostic - that is, the service providers procure the bandwidth (Backbone and Last Mile), and equipment and other requirements from any telecom provider best suited to their client's needs and overlay this network with its solutions. The telecom service providers usually rely on their own network, they cannot easily move to the least congested routes, or the best available rates. For companies this VPN advantage translates into a "built-in" failure recovery.

VPNs are the current trend because of the reasons given above and more companies are deploying VPN as compared to any traditional form of connectivity.

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