JULY 9, 2008 -- Organizations around the world are increasingly replacing their legacy Frame Relay, ATM, and private line legacy services with Ethernet and IP MPLS VPN services, reveals a new Infonetics Research report.
Worldwide Ethernet service revenue sequentially grew 33% to $12.5 billion in 2007, and IP MPLS VPN service revenue grew 20% to $13 billion, say Infonetics analysts. Both markets are forecast to grow strongly through 2011.
"Customer demand and IP and next-gen network (NGN) transformation projects are the two main factors contributing to the growing popularity of Ethernet and IP MPLS VPN services," explains Michael Howard, principal analyst at Infonetics Research. "Companies like these services because they offer considerably more bandwidth with little or no increased WAN costs compared to their legacy counterparts (Frame Relay, ATM, private lines). Customers expect--and get--a better per bit cost for Ethernet services," he says. "And service providers like them because they help bring in new revenue, so requests for Ethernet and IP MPLS VPN services are coming from both sides."
Other highlights from the report include the following:
• Although prices vary considerably, as an example in North America, the monthly cost for 100-Mbit Ethernet is about $50 per Mbit/sec, but using DS3s or SONET will cost about $180 per Mbit/sec.
• 80% of all Ethernet service revenue came from retail sales in 2007 (Ethernet services purchased by business, government, consumers, or education from service providers).
• All sources of retail Ethernet service revenue (Internet/WAN, Ethernet private line, and transparent LAN) will increase through 2011, with transparent LAN services growing the fastest.
• Service revenue for mid-band Ethernet, or MBE, which includse the 1- to 10-Mbit/sec and >10- to 50-Mbit/sec speed bands, will jump 120% from 2007 to 2011.
• The EMEA region, which includes Europe, the Middle East, and Africa, accounts for over 1/3 of worldwide IP MPLS VPN service revenue in 2007.
Infonetics' report includes market size, revenue forecasts through 2011, and analysis of the Ethernet and IP MPLS VPN services markets for North America (including U.S. and Canada breakouts), EMEA, Asia Pacific, Caribbean/Latin America (CALA), and worldwide. It tracks wholesale and retail Ethernet service revenue by capacity and retail Ethernet service revenue by source as well (Internet/WAN access, Ethernet private line, and transparent LAN).
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