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U.S. Retail Carrier Ethernet Services Market Update, 2011
Frost & Sullivan, Aug 2011, Pages: 91
Revenue Growth Continues even as Competition Heats Up
This study presents an in-depth analysis of the challenges, drivers, and key trends impacting the retail carrier Ethernet services market. The study also includes market revenue forecasts, ports forecasts, and market share analysis. The analysis is segmented by transport length (metro versus long haul), service type (Ethernet Access, E-Line and E-LAN) and port speeds (10 Mbps, 100 Mbps, 1 GigE and 10 Gbps). Revenues considered for analysis in this research are revenues recognized by service providers from all types of retail Ethernet services. A brief discussion on pricing trends is also included in the research.
Market Overview:
The retail Carrier Ethernet services market continued to keep up its 2009 momentum in 2010.
Ethernet services continue to gain acceptance as the preferred choice for bandwidth needs of different types and sizes of enterprises, owing to the benefits it offers—scalability, reliability and cost efficient bandwidth.
Service providers indicate that a large portion of the increased market spending in 2010 could be attributed to the bottled-up demand from 2008/09, since enterprise spending on such requirements was put on hold due to recession. However, Ethernet is a more tried and tested wide area network (WAN) service today — more customers are aware of the service and confident in adopting it—which is another reason for the increased market spending.
Market demand for the overall service continues to grow, with Ethernet access being rapidly adopted for access to VPNs and Internet, and E-Line (EPL and EVPL) becoming the de facto service for replacement of traditional private line circuits. Metro E-LAN continues to see growth in key verticals such as healthcare, government and education that often need multipoint to multipoint connectivity. Lastly, VPLS continues to be adopted along with MPLS VPNs; but true VPLS service has received lukewarm response from the market with the growth being lower than Communication Service Providers' (CSPs') expectations.
Key CSP initiatives in 2010 include continued focus on network expansion, service level agreements (SLAs) and classes of service (CoS) offered on their Ethernet networks. As part of their network expansion strategies, CSPs are focusing on bringing more customer locations on to their Ethernet network in the metro space, and enabling intercity connectivity in the long haul space—either through partnerships and/or through capital investment. With respect to network SLAs, customers now have a deeper understanding of the service and are leading development of Ethernet SLAs focused on tighter network monitoring and control tools. However, CSPs are still scrambling to meet customer expectations from the SLAs offered with switched Ethernet services. The market has yet to see standardized SLAs across Ethernet services; most CSPs are still customizing SLAs according to customer needs.
As enterprise customers seek a cost-effective solution to converge their voice, data and video applications, Ethernet—with its completeness of benefits, and cost effective, flexible and reliable bandwidth—will likely continue to be a winner in the transport services arena.
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