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U.S. Data Transport Services Market Overview
Frost & Sullivan, Jan 2010, Pages: 41
This Frost & Sullivan research service titled U.S. Data Transport Services Market Overview provides an analysis of key trends that are impacting the data transport services market. The study also presents competitive analysis of the market. In this research, Frost & Sullivan's expert analysts thoroughly examine the following markets: private line, synchronous optical networking (SONET), wavelength services, asynchronous transfer mode (ATM) and frame relay, carrier Ethernet, and multiprotocol label switching (MPLS).
Market Overview
Growing Demand for Ethernet and MPLS VPN Services Ensures Sustained Growth Momentum for the U.S. Data Transport Services Market
The multi-billion dollar U.S. data transport services market represents huge revenue potential for communication service providers. The market revenues for overall data transport services exceeded $33 billion in 2009 and are expected to reach $40 billion in 2014, growing at a compound annual growth rate of 4.6 percent. The launch of Ethernet virtual private line (EVPL) service by most leading carriers is poised to enhance market potential for wholesale E-Line services. MPLS and Ethernet services are expected to ramp up market revenues. The Y-o-Y growth rates for these services are pegged at 10 -12 percent for MPLS and 20-30 percent for Ethernet. Private line (DS1/DS3) and SONET services are likely to command a major share of data transport revenues in the foreseeable future. Private Line services, particularly DS1 and SONET services have maintained a modest, but steady inflow of revenues, largely owing to steady demand from wireless service providers on the wholesale front, and the reluctance of end users to move to Ethernet unless their bandwidth needs exceed 6 Mbps on the enterprise/business front. 'Wavelength services are seeing a growth spike owing to escalating demand for higher bandwidth circuits,' notes the analyst of this research service. 'Also, the emergence of Ethernet has revived the wavelength services market as a number of service providers use waves to provision Ethernet circuits, and most 1 GigE and 10 GigE Ethernet circuits provisioned today are over dense wavelength division multiplexing (DWDM).' Legacy services, particularly frame relay (FR) and ATM, are declining at a faster pace than expected, owing to market migration from these technologies to newer IP-based ones such as MPLS and Ethernet. However, despite the market shift to these newer services, the growth in revenue is not as rapid as the decline in revenues for FR and ATM, because of the price competitiveness of IP-based services that offer more bandwidth for a lower cost.
The U.S. data transport services market (wholesale and retail) is dominated by the Tier 1 carriers. Competition is expected to intensify in the MPLS and Ethernet arena, as carriers begin to position themselves as solution providers (selling voice+Internet+data bundles with MPLS backed by hosted/managed security services, as compared to pure MPLS transport). Bundled products such as voice + Internet + VPN for data transport seem to be seeing a great amount of success in the SMB space, as such products can save people a lot of money. Tier 2 carriers are emerging as better solution providers compared to Tier 1 participants, largely due to the focused approach they have on specific verticals and size of enterprises they go after with their solutions, thus creating a market niche.
'Large carriers are seeing a surge in demand for high bandwidth transport services – especially MPLS VPN for multipoint-to multipoint connectivity for large distributed enterprises,' says the analyst. 'Also, large carriers are showing increased interest in integrating Telepresence type of solutions with MPLS, which obviously makes sense for large enterprises.' Some interesting trends are expected to sweep over the transport services segment in the next four to five years with solution selling greatly taking precedence over pure transport or bandwidth. Business voice over Internet protocol/session initiation protocol (VoIP/SIP) trunking and hosted/managed security services bundled into transport are expected to clearly dominate the market landscape.
Market Sectors
Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:
By End-user Vertical:
- Wholesale
- Retail
Technologies
The following technologies are covered in this research:
- Private line
- SONET
- Wavelength services
- ATM & frame relay
- Carrier Ethernet
- MPLS
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