Evaluating the Cost Effectiveness of WAN Ownership

In the WAN environment, the following usually represent fixed costs:

■ Equipment purchases, such as modems, channel service unit/data service units, and router interfaces

■ Circuit and service provisioning

■ Network-management tools and platforms

Recurring costs include the monthly circuit fees from the SP and the WAN's support and maintenance, including any network management center personnel.

From an ownership perspective, WAN links can be thought of in the following three categories:

■ Private: A private WAN uses private transmission systems to connect distant LANs. The owner of a private WAN must buy, configure, and maintain the physical layer connectivity (such as copper, fiber, wireless, and coaxial) and the terminal equipment required to connect locations. This makes private WANs expensive to build, labor-intensive to maintain, and difficult to reconfigure for constantly changing business needs. The advantages of using a private WAN might include higher levels of security and transmission quality.

NOTE When the WAN media and devices are privately owned, transmission quality is not necessarily improved, nor is reliability necessarily higher.

■ Leased: A leased WAN uses dedicated bandwidth from a carrier company, with either private or leased terminal equipment. The provider provisions the circuit and provides the maintenance. However, the company pays for the allocated bandwidth whether or not it is used, and operating costs tend to be high. Some examples include TDM and SONET circuits.

■ Shared: A shared WAN shares the physical resources with many users. Carriers offer a variety of circuit- or packet-switching transport networks, such as MPLS and Frame Relay. The provider provisions the circuit and provides the maintenance. Linking LANs and private

WANs into shared network services is a trade-off among cost, performance, and security. An ideal design optimizes the cost advantages of shared network services with a company's performance and security requirements.

NOTE Circuits often span regional or national boundaries, meaning that several SPs handle a connection in the toll network. In these cases, devices the subscriber owns (private) and devices the carrier leases to or shares with the subscriber determine the path.

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