YOU ARE HERE: LAT HomeCollections


A Secure Niche in the Net

Communications: Many companies are switching to 'virtual private networks' to transmit information because of price and flexibility. Some experts raise reliability questions.


Security has always been paramount to Rockwell Semiconductor Systems, which swaps new designs and other sensitive information between its headquarters in Newport Beach and an engineer in Iceland, a marketing team in the south of France and manufacturing facilities in South Korea.

The Internet couldn't be trusted to keep such information secure, so for years Rockwell executives have paid millions of dollars annually for access to data lines that only they could use.

"Ours is a paranoid industry when it comes to security, but we need to be practical about costs," said Ashwin Rangan, director of information technologies for Rockwell. "We had to cut costs."

Slowly, the chip maker switched over to a "virtual private network," or VPN, for all its internal communications. Put simply, a VPN is a data-transmission technique that creates a "private" path within a busy public network, such as the Internet. Because VPNs are cheaper to use than dedicated lines, such virtual channels are becoming a popular means for companies to connect with their workers, suppliers and customers without breaking their budgets or flirting with hackers.

"A private data line between our Orange County office and a developing country in Asia would cost us $150,000 a year in operating costs," Rangan said. "A virtual line only costs us $20,000. You do the math."

From aerospace to the telecommunications industry, companies are turning to virtual private networks to save money and stay flexible.

Advocates believe a VPN's greatest appeal is its flexibility. An architectural firm can set up a connection between designers around the world for a short-term project, then dismantle it. A health-care organization can hook hospitals to an ever-changing collection of doctors' offices, so everyone can access the same database of medical information. And laptop-toting salespeople can access the corporate network by dialing into a local number, regardless of where they plug in their modems.

Despite these benefits, experts warn that some serious issues, such as the reliability of the transmission once the data jump into the public fray, remain unresolved.

"A VPN as a concept sounds really appealing," said Jim Bodio, a manager at Intel Corp. who tracks networking products. "It's the idea of finally finding a way, amid all of the hype of electronic commerce, to actually use the Internet to do business and save money. But everyone has their own idea of how that way should work."

VPNs use a combination of software and hardware to electronically separate each company's data from other traffic on the network. That way, a number of businesses can share the same bandwidth without worrying that their information is going to get lost or that strangers are peeking at it.

Software from giants such as Microsoft Corp. as well as emerging companies such as VPNet Technologies Inc. in San Jose encrypts the data, ensures that the person receiving the information is who he claims to be and confirms that both parties are using the same pre-selected key to unlock the data file. Hardware components from Intel Corp., Cisco Systems Inc. and 3Com, among many others, provide links between the network systems.

The concept has been around since the mid-1980s, when telephone carriers such as Sprint Corp. and AT&T Corp. began offering businesses with huge phone bills a way to cut their costs while retaining the luxury of private lines.

But for data transmission, the idea is relatively new; tens of thousands of companies still rely on expensive private networks.

One reason is the continuing popularity of an older technology known as electronic data interchange, or EDI, which is typically used over private lines. Long considered an e-commerce standard for automated transactions, EDI is notoriously pricey and complicated to set up, thereby cutting off smaller businesses that can't afford the cost.

As the demand to send electronic data grows, so does the need for a faster, more open platform.

Take On Command Corp., a San Jose company that handles all the in-room video entertainment for such worldwide hotel chains as Hyatt, Hilton and Marriott. This year, On Command decided to dump the private data lines it leased from Sprint because they were too slow and expensive.

In their place, the company switched over to a virtual private network from Concentric Network Corp., which moves data nearly 24 times faster than the previous network at the same price.

The new links allow On Command's field offices, numbering about a dozen, to log on to the corporate database and make changes right away. The outcome is a better-trained staff and improved customer service, executives said.

"Essentially, they're managing our wide-area network for us," said Jim Garcia, director of information technology for On Command. "We don't have to do much of anything, which is great. It also means I don't have to spend the money to staff up [information technology] personnel all over the country."

Los Angeles Times Articles