To understand the changing demands on the service provider's network, it is first necessary to understand the enterprise and residential drivers for IP–based services.

The issues and challenges facing the enterprise include the following:

• need to offer IP–based networks such as intranets and extranets in a cost-effective and secure manner
• need to do more with less—demand is increasing but IT budgets are staying relatively constant
• need to reduce WAN capital and operating costs
• need for new private network alternatives that use the public Internet infrastructure but are secure and reliable; the industry term for this is virtual private networks (VPNs)
• want flexible billing options in customizable bandwidth increments
• need for deterministic SLAs so enterprise customers can be assured that services based on the provider's network will be available when required

On the residential side, end users want the following:

• faster access to the Web for personal use
• faster access to the corporate network for work use
• low-cost access (primarily a personal issue)
• new multimedia-application services (corporate and personal)