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North American Wholesale SONET Services Market
Frost & Sullivan, April 2006
This Frost & Sullivan research service titled North American Wholesale SONET Services Markets provides an analysis of the market drivers, restraints, and trends that are impacting this market. In this research service, Frost & Sullivan's expert analysts thoroughly examine the following markets/applications/technologies: total wholesale SONET services, metro wholesale SONET services, and long-haul wholesale SONET services, including revenue forecasts and market shares for each sector.
Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:
- North American wholesale SONET services
- Metro wholesale SONET services
- Long haul wholesale SONET services
- Ethernet/Gigabit Ethernet
The following technologies are covered in this research:
- Metro Network: A metro network or metropolitan area network (MAN) interconnects users with computer resources in a geographic area or region larger than that covered by a large local area network (LAN) but smaller than a wide area network (WAN). A metro network typically covers an area within a diameter of 5 to 50 kilometers (3 to 30 miles), spanning a metropolitan area, usually in a ring configuration. Telcos offering metro/local wholesale services typically provide synchronous optical network (SONET), wavelength, or Ethernet MAN services.
- Long Haul Network: Long-haul (LH) networks connect the MANs, providing long distance communications, and may also be considered wide area networks (WANs). North American LH wholesale providers have traditionally offered SONET services, and may also provide wavelength services using WDM (wavelength division multiplexing) equipment.
- Dark fiber: Service provider customers with heavy traffic requirements and wishing to have greater control over their network or wanting to lower their leased line expenses may choose dark fiber. If the size and amount of traffic is relatively large, the dark fiber network consisting of SONET add/drop multiplexers as well as WDM can be cost-justified. Wholesale carriers supplying dark fiber often provide network monitoring and maintenance as well, via their professional services arm.
- Synchronous Optical Network (SONET): This is a standard for synchronous data transmission over fiber optic networks. The United States version, as published by the American National Standards Institute (ANSI) is SONET. The international version is Synchronous Digital Hierarchy (SDH), published by the International Telecommunications Union (ITU).
Carrier Consolidation Positively Impacts Pricing
Despite the growing interest in newer technologies such as Ethernet and Internet protocol/multiprotocol label switching (IP/MPLS), synchronous optical network (SONET) remains highly preferred as a metro and long-haul private line service. This is expected to ensure its continued position as the leading transport technology in North America for some time to come and with the ongoing consolidation among telecom carriers, wholesale SONET prices are also beginning to stabilize, driving revenue growth. However, while some of the biggest opportunities for wholesale SONET are likely to appear from wireless carrier customers, Internet service providers (ISPs), content delivery providers, and competitive local exchange carriers (CLECs), the industry faces numerous challenges such as competing services from IP/Ethernet and an eventual, slow migration by many customers to such next-generation technologies. This migration is being primarily driven by the rapid growth of data, which has replaced voice as the major driver of traffic.
Notably, Ethernet in the WAN as an alternative to SONET private line service is fast developing as a critical market restraint for participants in the North American wholesale SONET services markets. Since Ethernet standards are being continuingly developed, increasing migration to carrier Ethernet or Ethernet over wavelength division multiplexing (WDM) is expected as packetized traffic such as VoIP, data, and video become a greater part of the traffic mix, says the analyst of this research service. Nevertheless, considering the extensive SONET deployments in North America as well as the large, although declining, ATM and frame relay market, carriers are not expected to dispose of their many SONET network elements anytime soon.
Growth in the Wireless Segment Drives Backhaul Needs
In order to meet the growing usage needs of a rapidly expanding wireless subscriber base, North American wireless carriers are being increasingly forced to adopt bigger pipes to backhaul their traffic. Considering that wholesale SONET leased lines are often preferred in this expansion, the growth of wireless technology is expected to positively impact the wholesale SONET services markets for the next few years. Apart from this, other drivers for the North American wholesale SONET services markets include the rising broadband connectivity and the growth of non-traditional providers such as cable MSOs, satellite providers, international PTTs, and content providers.
Overall, although the wholesale SONET services market is mature, it remains strong, particularly in the metro. Having said that, market participants need to be braced for competition from newer services, which is bound to impact sales. Wholesale carriers need to be prepared for the imminent demand shift as some of their customers incrementally shift from SONET to wavelength services, Ethernet, or in certain cases, dark fiber, says the analyst. Outfitting their networks to provide a range of technology alternatives as well as ease in provisioning them is expected to be vital to maintaining market share and momentum.
1. North American Wholesale SONET Services
- 1. Executive Summary
- - 1. Executive Summary
- - 2. Research Scope
- 2. Market Overview and Definitions
- - 1. Market Overview-- 2. Definitions
- 3. Market Challenges
- - 1. Market Challenges
- 4. Market Drivers
- - 1. Market Drivers
- - - a. Continued Preference For SONET
- - - b. Growth In Data Traffic
- - - c. Wireless Segment Growth Drives Backhaul Needs
- - - d. Growth In Consumer Broadband Connectivity
- - - e. CLEC Access Line Growth
- - - f. Growth of Non-Traditional Providers
- - - g. Beginnings of Price Stabilization
- 5. Market Restraints
- - 1. Market Restraints
- - - a. Shift In Demand From SONET to Ethernet
- - - b. Economic Downturn Resulting in Slowed Telecom Spending
- - - c. Prices Stabilizing But Still Competitive
- - - d. Dark Fiber Builds
- - - e. Wavelength Services
- 6. Market Trends
- - 1. Market Trends
- 7. Market Engineering Measurements
- - 1. Market Engineering Measurements
- 8. Market Demand Analysis and Forecasts
- - 1. Total Market Demand Analysis and Forecasts
- - 2. Metro Market Demand Analysis and Forecasts
- - 3. Long Haul Market Demand Analysis and Forecasts
- 9. Competitive Landscape
- - 1. Industry Participants and Selected Provider Profiles
- - 2. AT&T
- - 3. BellSouth
- - 4. Broadwing
- - 5. Global Crossing
- - 6. Level 3
- - 7. Qwest
- - 8. Sprint Nextel
- - 9. Verizon
- 10. Conclusions
- - 1. Conclusions