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thumb What is a VANVAN (Value Added Network) has history but no formal defining document. It isn't part of the X12 and isn't anywhere required. There is a lack of an existing generally accepted definition of what a VAN is. We will tie this in with the notion that they exist for the purpose of promoting and enabling transfer of data between trading partners, but that they are not a requirement of the process or infrastructure.

Earlier this year, I wrote on "What Is EDI? - A Definition and History". I concentrated more on the standardization of DOCUMENTS, not how to exchange them. I covered how the Transportation Data Coordinating Committee (TDCC) morphed into the American National Standards Institute (ANSI) and became the ANSI X12 Committee and how on the other side of the ocean, standards for documents used in international trade, called Tradacoms , were developed. These bodies adequately took care of controls for individual documents and multiple documents (mailbags, etc.), but nary a word about actual delivery to the trading partner. It was left up to the user, but the vendors jumped into the drivers seat.
What is a VAN
Let's look more at this! So I "rounded up the usual suspects" to build a rough timeline about EDI communications.

1965: First EDI Messages. Holland-America Steamship Line sends shipping manifests as telex messages that are automatically converted into computer data. Sounds great but it wasn't. No fun. I once used telex to accumulate financial data. We converted paper tape to punched cards then to magnetic tape. Sometimes a key number was replaced by a "non-printable" character. We referred to it as a "bird on the wire" and had to call the sender so we could manually change.

1973: File Transfer Protocol (FTP) is published. The File Transfer Protocol (FTP) enabled file transfers between Internet sites. At the start, there was no Internet, so you had to pay a phone bill to use.

1975: Telenet, the first Value Added Network (VAN) started. Telenet, the first commercial packet-switching network and the civilian equivalent of ARPANET, was born. Telenet represented the first value-added network, or VAN — so named because of the extras it offered beyond the basic service of linking computers. The brainchild of Larry Roberts, Telenet linked customers in seven cities. Telenet was acquired by GTE (now Verizon) in 1979. After it was acquired by Sprint in 1986, it was renamed SprintNet.

1981: EDI VAN Services Started. Tymshare started providing EDI services in 1981. The EDI group was eventually spun off and acquired several times to become MCI's EDI*NET. Most major VANs have their origins in the early 1980s.

1996: EDI over the Internet (EDIINT) formed. The Uniform Code Council (UCC) started EDI over the Internet (EDIINT) program. EDIINT was set up to standardize the communications of EDI data over the Internet. MCI was the first long distance company to offer frame relay access for EDI.

2001: AS2 Communication Standard created. EDIINT published the AS2 standard which supports communications of EDI using the HTTP protocol.

2004: Wal-Mart Implements AS2 Over Internet. Wal-Mart sets trend for EDI over the internet by migrating thousands of their suppliers to AS2 using iSoft.

These dates above are from Concise Timeline and History of Electronic Data Interchange (EDI) and other sources as noted.

I studied the early VANs to see what types of companies were in the business. In other words, did they exist to promote the growth of EDI or did they just capitalize on their networks for added profit? Breaking down the business models, I see a four-way break:

(1) Telecommunications companies with an established network: low incentive: MCI; Sprint; AT&T; Bell Canada.

(2) EDI service providers (including software providers) who operated a VAN also: high incentive: Sterling Commerce (owned ORDERNET which had been started as an industry-specific VAN for drugs and hardware); IBM Information Network (started in 1982 with intracompany transactions, combined with Sears Communications Company to form Advantis); Harbinger (formed in 1983 to serve banks, created VAN in 1985).

(3) Hybrids who owned a network in addition to VAN; and were EDI service and software providers: medium to high incentive: GEIS (a business of General Electric, already owning a "timesharing" network, got into EDI winning a contract with Provigo Food Markets of Canada, developed EDI PC and EDI Mainframe, then a "Hub" which included other VANs).

(4) Company whose sole business activity was their VAN: highest incentive: TransSettlements, RAILinc.

(5) These classifications are at the time these businesses were formed. Over time, many added EDI software and other services.

To show the only extent that ASC X12 ever recognized "somebody" delivering documents, see the description below of the interconnect mailbag:


The basic interconnect mailbag consists of an interconnect mailbag header segment (IH), the EDI data to be transmitted from one interconnect entity to another, and the interconnect mailbag trailer segment (IT).

This standard is intended to be used with standards developed by ASC X12, including X12.5 Interchange Control Structures and X12.6 Application Control Structure. This standard does not affect any ASC X12 standards that define the syntax of the EDI data interchanges contained within an interconnect mailbag.

Lots of definitions of what an EDI VAN is, so let's use mine:


EDI trading partners traditionally found it more practical to use EDI Value Added Networks, commonly referred to as VAN's, rather than transmit data directly to each other. The EDI VAN acts as a clearinghouse and offers a variety of services that make EDI more accessible and cost-effective. Newer technologies use the Internet or an "extranet" such as "ANX" (Automotive Network eXchange).


I took a look at several papers, discussions, WebSites, etc to look for comments relative to the growth of VANs. Below are some comments from Steve Brewer in (CovalentWorks blog):

"Emergence of the internet in the 1990's provided the first real competition for VANs. The obvious question was "why use a VAN for communication when the internet was free"? And innovative companies did start to do point-to-point communication over the internet. Standards emerged for this communication and the most popular became AS2 communication. Even though the transportation of the data was free, reliable and secure communication had to be maintained for each trading partner with whom EDI transactions were exchanged. The demise of VANs was widely predicted because the internet was "free". However, in the late 1990's and the 2000's VANs reduced their pricing in order to stay competitive with the internet alternative. In fact, prices changed so much that it again became cheaper for many companies to outsource their point-to-point communication to a VAN rather than doing it themselves with AS2. Many of their trading partners still used a VAN for the same reason. Some VANs began offering connections to trading partners that used AS2 communication, while others resisted the trend. Today a competitive VAN offers their customers one point of communication regardless of their trading partners' communication preferences."

Other helpful sources include:

A SoftCare EC Inc. White Paper describes the move away from the VAN towards the Internet.

Seeburger EDI-INT AS2: VAN Elimination & Deployment Options (2005)

Communications History and Evolution: How did we get here?

123EDI Communications Alternatives. EDI specifications do not require any particular type of transport. There are several methods to choose from:

  • (1) Point-to-point Communications lines. This connection could either be a leased or a dial-up line.
  • (2) Value-added Networks

From the WIKI concerning VANs in Europe/rest of the World:

The large-scale allocation of network services by private companies was in conflict with state-controlled telecommunications sector. To be able to gain a license for telecommunication service provision to customers, a private business had to "add value" to the communications line in order to be a distinguishable service.


Therefore, the notion of "Value-added Network Services" was established to allow for operation of such private businesses as an exemption from state control. In the later 1980s, running a "Value-Added Network Service" required licensing in the U.K. while "VAN" had merely become a functional description of a specific subset of networked data communication in the USA, as stated in.Robert W. Crandall, Kenneth Fla mm.Changing the Rules. 1989, Brooking Institution Press. ISBN 0-8157-1595-1, also at (Google books), page 273. In the absence of state-operated telecommunication sector, "Value-added Network Service" still is used, mainly as a functional description, in conjunction with dedicated leased lines for B2B communications (especially for EDIFACT data transfer). Governments like South Africa still maintain explicit regulation while others address specific services with licensing.


Last modified on Monday, 19 August 2013
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