What is a wide area network (WAN)?

The largest and best-known WAN is the internet, which is a collection of many smaller networks around the globe.

First implemented in the 1950s by the US Air Force, WANs have evolved over the years by leveraging advances in modern communication technology like asynchronous transfer mode (ATM), packet switching, software-defined networking (SDN) and eventually, the modern internet. Today, WANs are critical to the functionality of most modern enterprises, helping companies with a global footprint exchange information and resources across time-zones, continents and even oceans.

WANs are made up of a series of smaller, interconnected networks that are, in turn, made up of computers and other smaller devices known as local area networks (LANs).

A local area network, or LAN, is a system that enables devices like computers, mobile phones and more to share data and information securely across a small geographic area. While they can cover only a fraction of the geographic area of a WAN, LANs are both easier to maintain and more cost effective. LANs typically require only a single network technology to function like Ethernet or wifi (while WANs often require many).  

Wide area networks (WANs) function by connecting a series of LANs across a geographical area, enabling devices using the LANs to exchange information and resources through a service provider. WAN architectures are designed according to Open Systems Interconnection (OSI) modeling, a set of rules that effectively standardizes all modern telecommunication.

WANs rely on different networking technologies that operate on different levels, or layers, of the network, enabling it to function. At its core, WANs rely most on data exchanges involving three key components: data packets, routers and endpoints.  

• Data packets: Data packets are small units of information that are transmitted over a network (such as the internet) containing both the data itself as well as information for the router, such as its source and destination.

• Routers and routing: Routers can be both physical devices and logical components that direct data packets on paths across a network in a process known as “routing.” Routers rely on information contained within a data packet to determine the best route to send it on. 

• Endpoints: Endpoints (also known as end nodes) in a WAN are physical devices connected to a network that can be used to exchange data. Typically, this is a computer, laptop, smartphone or server. 

WANs are typically categorized as either switched WANs or point-to-point WANs based on how they are connected to endpoints.

Switched WANS: Switched WANs connect to devices by using a shared network infrastructure, such as a cell tower in a cellular network. In a switched WAN, LANs utilizing multiple components share network resources that are managed by a switching exchange—essentially a central hub that directs data traffic across the network. Switched WANs depend on a technology known as asynchronous transfer mode (ATM) that sends data packets over a network in fixed sizes, as opposed to variable ones. 

Switched WANs are ideal for high-speed, reliable data transfer with relatively low latency—precisely the kind of data transfer that is required by many modern, real-time applications.

Point-to-point WANs: In a point-to-point WAN design, two LANs are connected via a leased line—a private connection, usually leased from a telecom provider—that gives an organization exclusive, private use of a dedicated, internet connection. Perhaps the best known example of a point-to-point WAN is the original, dial-up internet connections that relied on phone lines. Today, modern enterprises typically use point-to-point WANs to ensure private, high-speed, fixed bandwidth connections between offices in different physical locations.

Point-to-point WANs rely on a technology called point-to-point tunneling protocol (PPTP) to function. PPTP is a protocol, or rule, that helps establish a verified private network (VPN) for users. PPTPs enable users to transfer data from a remote client (endpoint) to a server by using transmission control protocol/internet protocol (TCP/IP) a widely used standard for sending information over a network.

Organizations seeking to leverage a WAN for business purposes typically rely on a third-party provider for network connections and internet services because it is too costly and resource intensive to build their own network infrastructure. Here are some of the most common types of connections that power WANs.

• Leased lines: Many WANs depend on leased lines, a direct connection that links two LAN endpoints, for their connectivity. Internet service providers own both physical and virtual connections that they lease out to organizations seeking to leverage their network infrastructure for a WAN.

• Tunneling: Tunneling—moving encrypted data packets over a public internet—is another common way for WANs to connect LANs in different physical locations. A leased line costs more because it provides a dedicated private connection with its own guaranteed bandwidth, while tunneling simply provides a way to secure data traveling over an existing, public network. Tunneling is typically used only to connect remote users to a secure network, while leased lines are used to connect entire organizations.

• Multiprotocol label switching: Multiprotocol label switching (MPLS) is a routing method that improves security and scalability when sending data across a network. MPLS lets organizations route critical data through a network on a shorter, faster path, improving network performance. MPLS helps organizations create a unified network on existing network infrastructure, such as ATM, Ethernet and frame relay (a widely used WAN standard based on OSI technology). MPLS enables some organizations to more efficiently manage large, complex networks with multiple routing domains.

• Software-defined WAN: A software-defined wide area network (SD-WAN) is simply another application of MPLS technology for the purpose of reducing costs and increasing flexibility. In an SD-WAN, the MPLS technology is applied to a broadband internet connection, as opposed to a fixed connection. Unlike a traditional WAN, an SD-WAN relies on a centralized controller to manage traffic on the network, allowing for more customizable routing of data to serve specific application needs and changing network conditions. SD-WAN is frequently used to provide fast, efficient and reliable connections to resource intensive, cloud-based software as a service (SaaS) applications, which can be slowed down by traditional WAN and MPLS connections. SD-WAN is one of the fastest-growing kinds of WAN technology. With a market size of nearly USD 4 billion, it's expected to grow at a compound annual growth rate (CAGR) of 32.5% over the next 5 years.¹

Like any other network, WANs function on a rules-based set of principles known as protocols that govern the way data and resources are shared. Here are some of the most important protocols that control WANs. 

• Frame relay: Frame relay is a method of packaging data so it can travel across a network between frame relay nodes—essentially, switches that pass data along between points on a network. Frame relay moves data between switches and routers belonging to LANs in dispersed geographical locations, connecting them into a larger WAN and facilitating fast, secure, data and resource exchanges.

• Asynchronous transfer mode: Asynchronous transfer mode (ATM) is a technology that powers ATM network devices that rely on WAN technology to format data into 53-byte cells to be transmitted to another destination or node. When ATM cells reach their destination node, they are reassembled into their original format so they can be read. In the late 1990s, many ATM networks were replaced with Ethernet connections due to their lower costs and higher speeds.

• TCP/IP: The Transmission Control Protocol/Internet Protocol (TCP/IP) is one of the most widely used protocols in computer networking and is primarily responsible for how data moves across the internet. The TCP/IP sets out rules for how data is packetized, addressed and sent between nodes around the globe. It has had many versions over the years, its most recent is IPv6 (Internet Protocol version 6).

• Packet over SONET/SDH (POS): Packet over SONET/SDH (POS) is an important WAN communication protocol that describes how point-to-point communication can take place in networks relying on optical fiber (fiber optics), such as internet service or cable television providers. POS enables the efficient transfer of large volumes of data packets at high speeds via fiber optic cables. 

Since their invention in the 1950s, WANs have been at the forefront of advancements in digital technology, leveraging cutting-edge innovations like cloud computing, wireless technology and even artificial intelligence (AI) to improve performance. Here are three ways modern enterprises are optimizing WAN performance.

• Protocol acceleration: Protocol acceleration is a widely used method of WAN optimization that improves the way data is transmitted across the network. Using data compression and intelligent handling of protocols, protocol acceleration can streamline data communication between nodes in widely disparate locations, reducing latency and even lowering bandwidth usage.

• Setting rate and connection limits: Another way modern network administrators improve WAN performance is by reducing bandwidth and the number of open internet access links on a network. By setting rules that define how a WAN can be used—for example, by restricting video streaming, gaming or other resource-intensive activities—they can increase bandwidth and availability for business applications.

• Traffic shaping and network segmentation: Traffic shaping and network segmentation are modern network administrator tools that help improve security and performance across a WAN. Traffic shaping prioritizes what kinds of data packets can flow across certain faster routes in a network, allowing a network administrator to prioritize data flow for critical applications. Network segmentation divides a network into separate zones, allowing administrators to more closely control traffic within those zones and making it more difficult for cyberattacks to spread from one zone to another. 

WANs provide enterprises whose offices span large geographic areas with secure, fast and efficient ways to communicate and share resources. Using a WAN, organizations can connect remote workers with branch offices and headquarters and run critical applications in multiple locations at the same time. Here are some of the most common enterprise benefits of WAN architecture:

WANs securely connect workers and applications across large geographic areas, sometimes hundreds and even thousands of miles apart. For example, a team in Asia working overnight to meet a deadline can use the same application as a team in New York that will be presenting their work in the morning. They can both be communicating, collaborating and sharing resources in real-time.

WANs are constructed in a way that allows them to be managed and maintained from a single, central location. IT leaders can deploy updates and problem solve by using a SaaS framework, keeping employees on the latest versions of critical applications and monitoring and optimizing performance remotely.

WANs offer fast, secure applications to remote workers, wherever they are located. On a WAN, employees can access and share important files, collaborate on work and use critical applications wherever they are. Additionally, modern WANs incorporate the latest security technologies like firewalls and encryption to protect sensitive data being shared by employees. 

Modern WANs allow for seamless scalability of applications and workforces by enabling companies to easily add or remove network connections regardless of their location. By using the latest in cloud solutions and wireless network technology, enterprises deploying WANs can expand or contract their network as needed without overhauling their existing IT infrastructure.

WANs are widely used by many of the most successful organizations in the world, from governments and fortune 500 companies to universities, banks and hospitals. Here are some of the most popular WAN use cases.

Government agencies, such as the Federal Bureau of Investigation (FBI), the Treasury Department and the State Department, rely heavily on WANs so employees can share resources and access critical applications remotely. WANs’ speed, flexibility and security enable key capabilities like sharing confidential, time-sensitive information in a secure environment. 

WANs connect bank branches and online banking services across the globe, ensuring real-time financial transactions are fast and secure. SD-WANs have helped speed and simplify account transactions and the sharing of financial records with their increased flexibility, which allows them to utilize different kinds of connections, including MPLS, LTE and broadband.

Hospitals use WANs to share highly confidential and often time-sensitive patient information securely and safely, and they give doctors access to advanced applications. In the healthcare industry, WANs help healthcare providers access electronic health records (EHRs) and collaborate on treatment plans remotely.

Retail chains like clothing stores and home electronics stores that have locations in different countries depend on WANs to connect their inventory systems with their warehouses, alerting them when items need to be shipped. Additionally, WANs power advanced analytics applications that provide real-time information on customer preferences and trends, helping managers anticipate when certain items will be in high or low demand.

In the manufacturing industry, WANs connect factories with business operations, helping managers more efficiently monitor business processes and spot inefficiencies. Additionally, WANs power applications that provide real-time information on supply-chains and inventory, helping managers make more informed decisions about products and innovation efforts.