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What Is a Virtual Private Network?

What's New in Technology

February 2003

What Is a Virtual Private Network?

“A VPN (virtual private network) is a way to use a public telecommunication infrastructure, such as the Internet, to provide remote offices or individual users with secure access to their organization's network.” (WhatIs.com)

In a sense, VPNs are similar to wide area networks (WAN) or a securely encrypted tunnel, but the key feature of VPNs is that they are able to use public networks like the Internet rather than rely on expensive, private leased lines. At they same time, VPNs have the same security and encryption features as a private network, while taking the advantage of the economies of scale and remote accessibility of large public networks.

A VPN is an especially effective means of exchanging critical information for employees working remotely in branch offices, at home, or on the road. It can securely deliver information between vendors, suppliers, and business partners, who may have a huge physical distance between them. Since companies no longer have to invest in the actual infrastructure themselves, they can reduce their operational costs by outsourcing network services to service providers. VPNs can also reduce costs by eliminating the need for long-distance telephone charges to obtain remote access, as clients can connect into the service provider's nearest access point.

How does a VPN work?

For years, voice, data, and just about all software-defined network services were called "virtual private networks" by the telephone companies. The current generation of VPNs, however, is a more advanced combination of tunneling, encryption, authentication and access control technologies and services used to carry traffic over the Internet, a managed IP network, or a provider's backbone.

The traffic reaches these backbones using any combination of access technologies, including T1, frame relay, ISDN, ATM or simple dial access. VPNs use familiar networking technology and protocols. The client sends a stream of encrypted Point-to-Point Protocol (PPP) packets to a remote server or router, except instead of going across a dedicated line (as in the case of WANs), the packets go across a tunnel over a shared network.

The general idea behind using this method is that a company reduces the recurring telecommunications charges that are shouldered when connecting remote users and branch offices to resources in a corporation's headquarters.

Using this VPN model, packets headed towards the remote network will reach a tunnel initiating device, which can be anything from an extranet router to a PC with VPN-enabled dial-up software. The tunnel initiator communicates with a VPN terminator, or a tunnel switch, to agree on an encryption scheme. The tunnel initiator then encrypts the package for security before transmitting to the terminator, which decrypts the packet and delivers it to the appropriate destination on the network.

Conclusion...

VPN is a perfect solution for small businesses who do not want to invest in dedicated or leased lines and enables businesses to setup secure connections to users out in the field. Since VPN is a growing, changing, technology, the best place to start for setting up a VPN is with your current ISP (Internet Service Provider). Many ISPs are now offering VPN services that can be bundled with your current internet access plan.

Now that you know how to secure your data and extend your network, we hope you have a terrific February.
 

These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact their CPA regarding the topics in these articles.

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