How Virtual Private Networks Work

Introduction to How Virtual Private Networks Work

The world has changed a lot in the last couple of decades. Instead of simply dealing with local or regional concerns, many businesses now have to think about global markets and logistics. Many companies have facilities spread out across the country or around the world, and there is one thing that all of them need: A way to maintain fast, secure and reliable communications wherever their offices are.

Until fairly recently, this has meant the use of leased lines to maintain a wide area network (WAN). Leased lines, ranging from ISDN (integrated services digital network, 128 Kbps) to OC3 (Optical Carrier-3, 155 Mbps) fibre, provided a company with a way to expand its private network beyond its immediate geographic area. A WAN had obvious advantages over a public network like the Internet when it came to reliability, performance and security. But maintaining a WAN, particularly when using leased lines, can become quite expensive and often rises in cost as the distance between the offices increases.

As the popularity of the Internet grew, businesses turned to it as a means of extending their own networks. First came intranets, which are password-protected sites designed for use only by company employees. Now, many companies are creating their own VPN (virtual private network) to accommodate the needs of remote employees and distant offices.

Basically, a VPN is a private network that uses a public network (usually the Internet) to connect remote sites or users together. Instead of using a dedicated, real-world connection such as leased line, a VPN uses "virtual" connections routed through the Internet from the company's private network to the remote site or employee. In this article, you will gain a fundamental understanding of VPNs, and learn about basic VPN components, technologies, tunnelling and security.

Virtual private networks help distant colleagues work together, much like desktop sharing. Click here to learn more.

What Makes a VPN?

A well-designed VPN can greatly benefit a company. For example, it can:

• Extend geographic connectivity
• Improve security
• Reduce operational costs versus traditional WAN
• Reduce transit time and transportation costs for remote users
• Improve productivity
• Simplify network topology
• Provide global networking opportunities
• Provide telecommuter support
• Provide broadband networking compatibility
• Provide faster ROI (return on investment) than traditional WAN

What features are needed in a well-designed VPN? It should incorporate:

• Security
• Reliability
• Scalability
• Network management
• Policy management

There are three types of VPN. In the next couple of sections, we'll describe them in detail.

Remote-Access VPN

There are two common types of VPN. Remote-access, also called a virtual private dial-up network (VPDN), is a user-to-LAN connection used by a company that has employees who need to connect to the private network from various remote locations. Typically, a corporation that wishes to set up a large remote-access VPN will outsource to an enterprise service provider (ESP). The ESP sets up a network access server (NAS) and provides the remote users with desktop client software for their computers. The telecommuters can then dial a toll-free number to reach the NAS and use their VPN client software to access the corporate network.

A good example of a company that needs a remote-access VPN would be a large firm with hundreds of sales people in the field. Remote-access VPNs permit secure, encrypted connections between a company's private network and remote users through a third-party service provider.

Site-to-Site VPN

Through the use of dedicated equipment and large-scale encryption, a company can connect multiple fixed sites over a public network such as the Internet. Site-to-site VPNs can be one of two types:

• Intranet-based - If a company has one or more remote locations that they wish to join in a single private network, they can create an intranet VPN to connect LAN to LAN.
• Extranet-based - When a company has a close relationship with another company (for example, a partner, supplier or customer), they can build an extranet VPN that connects LAN to LAN, and that allows all of the various companies to work in a shared environment.

Analogy: Each LAN is an Island

Imagine that you live on an island in a huge ocean. There are thousands of other islands all around you, some very close and others farther away. The normal wa­y to travel is to take a ferry from your island to whichever island you wish to visit. Of course, travelling on a ferry means that you have almost no privacy. Anything you do can be seen by someone else.

Let's say that each island represents a private LAN and the ocean is the Internet. Travelling by ferry is like connecting to a Web server or other device through the Internet. You have no control over the wires and routers that make up the Internet, just like you have no control over the other people on the ferry. This leaves you susceptible to security issues if you are trying to connect between two private networks using a public resource.

Continuing with our analogy, your island decides to build a bridge to another island so that there is easier, more secure and direct way for people to travel between the two. It is expensive to build and maintain the bridge, even though the island you are connecting with is very close. But the need for a reliable, secure path is so great that you do it anyway. Your island would like to connect to a second island that is much farther away but decides that the cost are simply too much to bear.

This is very much like having a leased line. The bridges (leased lines) are separate from the ocean (Internet), yet are able to connect the islands (LANs). Many companies have chosen this route because of the need for security and reliability in connecting their remote offices. However, if the offices are very far apart, the cost can be prohibitively high - just like trying to build a bridge that spans a great distance.

So how does VPN fit in? Using our analogy, we could give each inhabitant of our islands a small submarine. Let's assume that your submarine has some amazing properties:

• It's fast.
• It's easy to take with you wherever you go.
• It's able to completely hide you from any other boats or submarines.
• It's dependable.
• It costs little to add additional submarines to your fleet once the first is purchased.

Although they are travelling in the ocean along with other traffic, the inhabitants of our two islands could travel back and forth whenever they wanted to with privacy and security. That's essentially how a VPN works. Each remote member of your network can communicate in a secure and reliable manner using the Internet as the medium to connect to the private LAN. A VPN can grow to accommodate more users and different locations much easier than a leased line. In fact, scalability is a major advantage that VPNs have over typical leased lines. Unlike with leased lines, where the cost increases in proportion to the distances involved, the geographic locations of each office matter little in the creation of a VPN.

VPN Security: Firewalls

A well-des­igned VPN uses several methods for keeping your connection and data secure:

• Firewalls
• Encryption
• IPSec
• AAA Server

In the following sections, we'll discuss each of these security methods. We'll start with the firewall.

A firewall provides a strong barrier between your private network and the Internet. You can set firewalls to restrict the number of open ports, what types of packets are passed through and which protocols are allowed through. Some VPN products, such as Cisco's 1700 routers, can be upgraded to include firewall capabilities by running the appropriate Cisco IOS on them. You should already have a good firewall in place before you implement a VPN, but a firewall can also be used to terminate the VPN sessions.