Instant, Low-Cost VPNs: Just Add Users

OpenReach's service takes the pain out of setting up virtual private networks

Netscan iPublishing Inc., a legislative and regulatory information publisher on the Web, shuffles 10GB of data per year among its offices in Falls Church, Va., Exton, Pa., and Jacksonville, Fla. The company used to do it the old-fashioned way: via e-mail attachments and file transfer protocol across the Internet via T1, cable-modem and Digital Subscriber Line connections.

Since last summer, when Falls Church-based Netscan signed up for OpenReach Inc.'s TrueSpan service, its employees have been using a new method of exchanging data: sharing files over the company's virtual private network (VPN). For $99 per office per month, Woburn, Mass.-based OpenReach connects Netscan's three business offices over their existing Internet connections.


OpenReach Inc.

Location: 660 Main St., Woburn, Mass. 01801

Telephone: (888) 783-0383


The technology: A virtual private network service

Why it's worth watching: Provides an inexpensive, low-maintenance way to link branch offices and remote users

Company officers: Mark Tuomenoksa, CEO and co-founder; Dave Dingott, president and co-founder; Brion Shimamoto, chief technology officer

Milestones: December 1999: Company founded; June 2000: Service launched; October 2000: Version 2.0 released

Employees/growth rate: 85; 500% per year

Burn money: $21 million from Polaris Venture Partners and Clarity Partners

Services/pricing: TrueSpan 2.0, available for $99 per month, per location

Customers: Netscan iPublishing, Nebo Systems, A Better Chance Inc.

Partners: IRE Inc., Cobolt Networks Inc., Cable & Wireless PLC, Automatic Data Processing Inc.

Red flags for IT: The service is relatively new and has a limited track record. OpenReach markets to smaller customers with 6 to 15 sites, although it claims it can connect up to 2,000 branch offices.

"It was easy to install and runs reliably," says Harvey Golomb, Netscan's president. "The security seems to be excellent. And it's very cost effective."

Low-Cost Alternative

Ease of use and a low price were OpenReach CEO and co-founder Mark Tuomenoksa's goals. Hardware-based VPNs are pricey and difficult to manage, he says, especially for businesses that lack a highly trained technical staff. But by offering TrueSpan as a service, Tuomenoksa says, it can work with low-cost, low-maintenance devices such as PCs. Setting up the VPN requires dedicating a spare PC on the LAN as the gateway and installing a setup disk supplied by OpenReach, he says.

Tuomenoksa identifies the company's network operations center as the key technology foundation for TrueSpan. The network operations center not only drives the service, he says, but it also allows OpenReach to offer features that a dedicated VPN couldn't. For example, the center monitors the state of each client's network connection.

Another benefit of the network operations center, Tuomenoksa points out, is that it enables the TrueSpan service to work seamlessly with a company's existing Internet service provider connections.

For example, many businesses use a connection with a variable IP address. OpenReach's network operations center identifies clients by name, Tuomenoksa says, not by IP address. That lets the network operations center resolve the name to the assigned IP address, as well as reconcile among LAN environments in the various offices linked by the VPN.

At Nebo Systems Inc., an Oakbrook Terrace, Ill.-based health care claims processing and management service, the problem isn't with connecting branch offices; it's with creating a viable, cost-effective extranet. Since August, Nebo Systems has been using TrueSpan to link its central claims office and three client hospitals. TrueSpan was chosen for locations where an alternative - a leased or frame-relay line - would be wildly expensive, says Nebo's director of network administration, Andrew Yashchuk.

According to Yashchuk, Nebo Systems considered other VPN products based on firewall features but rejected them because their complexity put a burden on internal hospital IT people to build and manage the link.

The company couldn't ask its clients to shoulder too high a cost - in terms of time or equipment - of a dedicated connection to a single supplier, Yashchuk says. He even installed the TrueSpan software on a PC himself, then shipped the configured machine to one hospital, which had only to plug it into the LAN.

Furthermore, he says, Nebo Systems can get a TrueSpan connection running and start serving a client in a matter of days, rather than wait several weeks for a leased line.

Next Steps

Sam Alunni, president of Sterling Research Inc. in Sterling, Mass., says one of OpenReach's strengths is its personnel.

Tuomenoksa worked at the former AT&T Bell Labs, and key personnel at OpenReach have a deep understanding of communications networks, says Alunni. "They come out of a culture of thinking in terms of large back-end [network operations center] engineering investments that make things simple for the user," he says.

Tuomenoksa says that OpenReach's next steps are to add remote access for laptops and to offer a wider range of security choices. Once a solid communications framework is in place, he says, OpenReach also plans to offer ancillary services such as application hosting.

The Buzz: State of the Market

The Right Mix

Sam Alunni, president of analyst firm Sterling Research, says there's no other VPN vendor that offers exactly the same type of service as OpenReach.

Its features - a network operations center, Internet-based infrastructure and extremely simplified setup and maintenance - meet the needs of organizations that want to connect branch offices, says Alunni. It's also well suited to companies that want a straightforward way to link sites without requiring a lot of technical knowledge on-site.

OpenReach's vice president of strategic marketing, David A. Kelly, says the service is ideal for organizations with six to 15 locations.

Jeff Wilson, executive director at Infonetics Research Inc. in San Jose, says small and regional Internet service providers are the most likely rivals to OpenReach. However, those service providers trail in their implementations of VPN technology, he says. One good niche for OpenReach, he says, is to partner with these smaller providers, using their existing relationships to expand OpenReach's customer base.

OpenReach is in a booming market: Wilson forecasts that worldwide revenues for VPN services, including bandwidth and add-on services, will reach $36 billion in 2004. He says the following companies could become OpenReach rivals:

XO Communications Inc.

McLean, Va.

XO is the result of a merger between NextLink Communications Inc. in McLean, Va., and Concentric Network Corp. in San Jose. Concentric has historically provided VPNs. If XO keeps that focus, it could emerge as a competitor, Wilson says.

eTunnels Inc.


ETunnels also has a software VPN offering, says Wilson. But its VPN-on-Demand is being marketed more to Internet service providers than to customers.

InterNAP Network Services Corp.


Through its July acquisition of Inc. in Redwood City, Calif., peering provider InterNAP became a potential rival to OpenReach.

Johnson is a Computerworld contributing writer in Seattle.

Copyright © 2000 IDG Communications, Inc.

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