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North American Wholesale SONET Services
Frost & Sullivan, Dec 2004
Competition Steadily Eroding Profitability for Legacy Carriers
Following the dot com bust, the North American telecom industry has witnessed sweeping changes in its competitive landscape that have extended into the market for synchronous optical network (SONET) services, as well. For instance, several regulatory measures were introduced that allowed many carriers, including the regional bell operating carriers (RBOCs), to expand into new markets. Some companies successfully emerged from Chapter 11 restructuring, causing a spurt in competitive activity that is proving to be a boon for end users, but a threat to established participants. All participants are eyeing the lucrative enterprise market, once the domain of major carriers such as AT&T and Sprint. With all these changes, aggressive pricing has become the order of the day in the SONET services market, causing a fall in prices and resulting in lower profit margins for carriers.
This Frost & Sullivan research service analyzes the North American market for SONET services, covering wholesale SONET capacity. It examines key issues impacting the market, focusing on growth drivers and restraints and market, pricing, and technology trends. It provides a detailed analysis of the transforming competitive scenario and highlights the potential growth opportunities arising out of these changes.
Explosive Growth of Data Combined with Increasing Wireless Traffic Drives SONET Services
Data is all important in today’s age of information. Constantly increasing volumes of data that need to be manipulated, transferred, and stored require highly efficient networks capable of handling such volumes at high speeds. At the same time, the world is rapidly moving toward wireless connectivity. Voice and data traffic on wireless networks has multiplied and wireless companies are all engaged in building 2.5G networks and wireless broadband networks such as Evolution, Data-Only (EV-DO). This need for wireless data services, especially from large enterprises, is a key driver for the future growth of SONET services.
As the digital age approaches, the wholesale SONET market continues to hold potential for all participant carriers and vendors, notes the analyst of this research service. Enterprises and carriers need reliable services to push data and voice traffic at dependable speeds with a high level of security.
Carriers Need to Demonstrate the Value Proposition of SONET to Customers
Carriers face a strong challenge in the form of increasingly cost-conscious companies looking to keep capital expenditure to a minimum. Many of them are reluctant to replace tried and tested older technologies with the latest ones, wary of the capital outlay required. Network planners are under greater pressure to justify virtually every dollar that is spent.
In such a situation, convergence appears to be the new buzzword in the industry. Triple play is gaining traction. Equipment vendors and carriers are working together to increase the life of the legacy applications and build suitable bridges to help make convergence a reality. The goal is to provide highly reliable networks on demand. As triple play gains traction, it is imperative for SONET providers to concentrate on optimizing networks to carry voice, data, and video, says the analyst. The focus will be on designing, building, and managing future networks for customers.
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