A third and increasingly common WAN connectivity technique is known as packet switching. Unlike with leased lines, where customers pay for a dedicated link and consistent bandwidth, packet switching allows a service provider’s network resources to be shared amongst many customers, which in turn reduces costs. This makes packet switching a great choice for companies whose WAN traffic is variable or “bursty” in nature.
On a packet switching network, companies still connect to the provider network as they normally would, but instead of provisioning a dedicated circuit between locations, they share bandwidth will all other customers. The theory is that at any given time, a company will not be using its fully allocated bandwidth, based on the variable nature of data traffic. This allows other companies to make use of the available bandwidth, which in turn ensures makes more efficient use of the service provider’s network. Because the service provider doesn’t have to provision a physical end-to-end circuit for a packet switched customer, they are able to offer the service at a lower price.
A packet switched network provides a great example of the service provider “cloud” in action. When companies connect to the cloud, the service provider generally guarantees the minimum average bandwidth they will have access to, while allowing their traffic to “burst” to higher speeds if excess bandwidth is available on the shared network. On a packet switching network, individual packets are sent from one location into the “cloud”. These packets may take different paths to reach their destination, as per available bandwidth and network resources. When they arrive at their destination, they are reassembled in the correct order. In order to connect company offices, the service provider defines what are known as a “virtual circuits” between locations. Virtual circuits will be looked at in more detail later in the chapter. Common examples of packet switching WAN technologies include Frame Relay, X.25, and ATM.