Despite the turmoil wracking the global telecommunications market, the sector has fared relatively well in the Asia-Pacific, chalking up 20 percent growth in 2001 and keeping on track for a 12 to 15 percent compound annual growth rate over the next five years.

Speaking at the Asia-Pacific Telecom Forum 2002, Piyush Singh, managing director of IDC Asia-Pacific, said the total revenue of telecommunication companies (telcos) in the Asia-Pacific added up to "close to US$130 billion" in 2001.

Of this, more than half came from the developing markets of China ($56 billion) and India ($10 billion).

China Mobile increased its revenue by 54 percent in 2001, SK Telecom by 8 percent, and in the more established markets, incumbents like PCCW, Telstra and Singapore Telecom grew their revenues by 1 to 2 percent.

According to Singh, a key telecom driver in the region is the increase in wireless and IP (Internet protocol) services. IDC projects 64 percent growth in IP services in 2002, with a compound annual growth rate of 57 percent.

One reason for this upbeat forecast is the large installed base of fixed and mobile IP, said Singh. As at the end of 2001, there were 94 million Internet users in the Asia-Pacific (excluding Japan). And the number is expected to surpass that of the United States in 2005 and reach 300 million by 2006. In terms of the mobility matrix, about 13 percent of these users currently access the Internet via mobiles, and the proportion is expected to grow to 22 percent.

Sandra Ng, vice president of Communications and Peripherals Research at IDC Asia-Pacific, said one IP service that is gaining momentum among corporates is wide area network technology IP VPN (IP virtual private network).

"When implemented correctly, IP VPN is a powerful platform to facilitate collaboration through effective connectivity," she said.

The key value proposition of IP VPN is its portability, she added. "It allows virtual connections between different enterprise business units."

But chief information officers have to take into account the service provider's coverage, said Ng.

"Does the carrier's presence map onto your global network? It is important to take note of this because if you can't find a perfect match, you must understand the impact and the costs involved in plugging the gaps."

According to preliminary findings of an IDC survey covering companies with at least 100 employees per location, about 20 percent of respondents deployed IP VPN across the region. Australia, Korea and Taiwan had the highest rate of adoption, with over 50 percent of the IP VPN adopters using the technology for branch-to-branch connectivity and remote access.

According to Ng, IP VPN offerings available today include a CPE-based (customer premises equipment) solution and a network-based one.

A CPE-based IP VPN is generally targeted at large companies because it involves the installation of equipment at the branches and is generally more expensive. However, it provides end-to-end security and control with self-managed services.

Network-based IP VPNs, on the other hand, offer cost savings through economies of scale and the convenience of carrier-managed services.

One company that has gone with a CPE-based implementation of IP VPN is painting and coating manufacturer Jotun NOF, which rolled out the technology under a corporate directive about two years back.

The Norwegian company has a turnover of about US$65 million a year and has about 120 employees here.

The IP VPN, with Internet access provided by a local Internet service provider, was used mainly for remote access and intranet applications.

Over the next 12 months, the company will be looking to rolling out e-commerce over the network, and to move to a network-based IP VPN because it did not require end-to-end control globally.

According to Ng, conversations with the company's CIO revealed at least 30 to 40 percent savings in long-distance tariffs with the IP VPN implementation.