Release Details

Launch of the IP VPN project

November 5, 2002
5th November, 2002


Bezeq and Cisco to cooperate in setting up
infrastructure for providing IP-VPN services

Ilan Biran, CEO of Bezeq: "Launch of the IP VPN project is a milestone
for Bezeq in consolidating its status as a quality and advanced
communications provider specializing in innovative services"

Bezeq and Cisco signed a joint venture agreement today for setting up
an advanced communications infrastructure for providing IP-VPN
services to the business sector in Israel.

Under the agreement, the two companies will set up a new
communications network in MPLS technology - one of the most
advanced in the world. . The network, which is separate from the
public Internet network, will be used to provide virtual private
network services on an IP infrastructure for the entire business
sector in Israel. Binat Communications has been selected to supply and
support Cisco equipment for the project.

The infrastructure will provide businesses and organizations with
communications between their branches and will connect them to
suppliers, customers and employees who are outside the organization,
in a secure link on a united IP communications infrastructure. This
innovative infrastructure will enable the provision of advanced
services adjusted to the customer's needs, which will lead to an
improved business model and a considerable decrease in the
organization's operating expenses. In the future, Bezeq will also be
able to offer its customers telephony and video-file transfer services
on the same network.

Ilan Biran, CEO of Bezeq, said that the agreement with Cisco is an
important milestone in the company's activities in adopting advanced
technologies and upgrading services which it offers its customers,
particularly the business sector. "The integration of IP-VPN in
Bezeq's systems will strengthen the status of the company as a
provider of quality and advanced communications that strives to offer
its customers solutions and applications which meet their various
requirements."

Michael Ganzer, Senior Vice President at Cisco EMEA and in charge of
communications operators, said that the agreement with Bezeq is an
important part in a series of business successes at Cisco in Europe
involving the upgrading of services offered by veteran communications
providers such as Bezeq.

"Cisco sees Bezeq as a long-term strategic partner. Signing this
agreement is an important step for Cisco in deepening its hold in the
Israeli business market," said Gary Drotin, the CEO of Cisco in
Israel.

"For us, this innovative network is a big engineering challenge,
which will bring front-line technology to Bezeq services. IP-VPN
technology will enable us to provide our customers with a complete
solution of new, high-speed services on IP - which is the
natural protocol for them," said Paul Weissbach, Deputy CEO and Vice
president for Engineering and Planning at Bezeq.

"IP-VPN services will enable Bezeq to provide a comprehensive
solution for the business customer, while increasing bandwidth and
offering various levels of service. The new service will ensure
optimal flexibility for network expansion, both within customer
branches all over the country and between the customer and its
customers and suppliers. IP-VPN also means linking the network to the
homes of employees, and all at low cost," said Pnina Shenhav, Vice
President for Sales and Marketing.

About IP-VPN
IP-VPN services in MPLS technology came into the communications world
about three years ago, and since then has been in the fast track as
the leading technology for providing complete and advanced
communications services for businesses.

According to the survey carried out by Infonetics Research in May
2002, the size of the global IP-VPN market (equipment + services) is
expected to increase from about 23 billion dollars in 2002 to about 35
billion dollars in 2003 - an annual increase of 50%.

The technology grew out of an aim to combine the advantages of two
communications worlds: ATM and frame relay, which supports service
quality for the customer but is somewhat lacking in the connection to
end applications; and IP, which does not guarantee any service quality
but excels in operational simplicity and provides natural support for
almost all business end-applications. The result is a united IP
service, easy to use, which supports a range of needs of all end
applications.

The technology enables service providers all over the world to offer
their customers a flexible service managed according to their needs,
while making a commitment to Quality of Service and support of all
types of applications (voice, video, for data bases, file transfers,
etc.). The service to the customer is provided by means of a single
communications line that supports all the properties required for
providing the entire range of service features.

About Bezeq
Bezeq is the largest communications company in Israel and one of the
world's leading companies in advanced customer services, which are
based on a digital technology infrastructure.

Bezeq and its subsidiaries offer a range of services, from domestic
and international communications, data transfer high-speed Internet,
Intranet for the business market, mobile telephony, and advanced
services and communications equipment.

About Cisco
Cisco Systems ( www.cisco.com is the leading supplier for interconnect
products and providing end-to-end communications solutions. Cisco,
established in 1984 by a small group of computer scientists from
Stanford University, has grown into a vast corporation with 38,000
employees, with its products currently making up 88% of the world's
Internet infrastructures. Its revenue in 2002 amounted to
approximately 20 billion dollars. In 1997 Cisco set up its Israeli
development center in Netanya. The center works in full cooperation
with Cisco's European office, which is responsible for the company's
marketing activities.

IP-VPN-TECHNOLOGICAL REVIEW

About IP-VPN
IP-VPN (Internet Protocol - Virtual Private Networks) based on
MPLS technology (see below, under "About MPLS") penetrated the world
of communications about three years ago, since then it has been on the
fast track as the leading channel for providing complete and advanced
communications services for businesses.

According to the survey carried out by Infonetics Research in May
2002, the size of the global IP-VPN market (equipment + services) is
expected to increase from about 23 billion dollars in 2002 to about 35
billion dollars in 2003 - an annual increase of 50%.

The service grew out of an aim to combine the advantages of two
communications worlds: ATM and frame relay, which supports service
quality for the customer but is somewhat lacking in the connection to
end applications; and IP, which does not guarantee any service quality
but excels in operational simplicity and provides natural support for
almost all business end-applications. The result is a united IP
service, easy to use, which supports a range of needs of all end
applications.

Unlike frame relay or ATM, which provide connectivity between
predetermined and fixed end points, IP-VPN service provides "any to
any" connectivity between all the end points defined in a VPN. The
connectivity is achieved by means of MPLS technology, which creates a
communications platform in a connectionless architecture in layer 3
(of the 7-layer model), which gives the solution flexibility and
scalability. In addition, on the basis of the customer's requirements,
the service includes an built-in ability of securing and supporting
QoS (Quality of Service) depending on the type and needs of the
application.

MPLS-based IP-VPN services differ from the earlier generation of
IP-VPN services, which are provided on the public Internet
infrastructure and are based mainly on an encoding technology used in
the terminal equipment.

IP-VPN service allows service providers all over the world to offer
their customers a flexible service managed according to their needs,
while making a commitment to Quality of Service and support of all
types of applications (voice, video, for data bases, file transfers,
etc.). The service to the customer is provided by means of a single
communications line that supports all the properties required for
providing the entire range of service features.


About MPLS
MPLS - Multi protocol Label Switching is a standard technology
that grew out of a number of proprietary technologies: Cisco's Tag
Switching, Toshiba's CSR (Cell Switched Router) and IBM's Aris.

In an MPLS network, a label is attached to every data packet the
moment it enters the network. The label provides information and
instructions for the routing and handling of the packet as it flows
through the network. With this method, there is no need to open the
packet (as was the case with the classic routing technologies), merely
to look at the label. This method cuts down the delay significantly in
every switch or router along the way, making much higher speeds
possible for data transfer.

QoS - Quality of Service is made possible by managing different types
of traffic by means of advanced techniques of traffic and queue
management. It enables different handling (both in routing and in
prioritizing for transit in the network) for several Classes of
Service (CoS).

Data packet transfer routes in the world of MPLS are called Label
Switch Paths (LSPs), which are generated by service providers for
various purposes, such as meeting QoS targets, load by-pass routing in
the network, or creating tunnels for private IP networks for the
service's customers. There is no great difference between an LSP and
the Virtual Connections from the world of ATM or frame relay, but the
main difference is that LSP is not dependent on the Layer 2 technology
which supports it.

MPLS technology has two main advantages:

Traffic Engineering - The ability to determine a certain route
according to the different types of traffic, so as to support a range
of applications with different needs (CoS), such as video, voice, link
to data bases, file transfer, e-mail

VPN - Service providers can set up IP tunnels in the service
network for their customers, without need for special terminal
equipment at the customer's site and without needing to use encoding
abilities in the network.

MPLS-based IP-VPN
Because of MPLS's ability to create tunnels for IP traffic, it is only
natural to use then to create virtual private networks (VPN) for
customers. A number of standards have been set for providing
MPLS-based VPN service, the most widespread of which, among the
service provider, is RFC 2547.

Is MPLS-based IP-VPN secure ?
IP-VPN traffic on the MPLS network is isolated by using a unique label
which defines the particular type of traffic. This class of separation
is the same for ATM- or frame relay-based service networks. However,
as part of the service, advanced security abilities can be added, such
as identification, protection and encoding to the end stations, as per
customer needs.

IP-VPN CoS (Class of Service)
One of the most significant abilities of MPLS-based IP-VPN service is
support of a number of CoS, in accordance with the requirements of the
various applications. IP-VPN service enables support of all types of
customer applications, which can usually be divided into three main
types:

Real time- such as voice and video, which are sensitive to delay and jitter.
Mission critical - such as CRM and ERP, which are sensitive to delay.
Non-critical - such as file transfer and e-mail.

All three types of CoS to the customer are supported by means of a
single access line, which greatly facilitates the provision and use of
the service.

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