Infonetics research tracks Ethernet, IP MPLS VPN services

MAY 3, 2007 -- With corporate data traffic growing unabated, organizations around the world are rapidly exceeding the capacity limits of their legacy Frame Relay, ATM, and private line networks, reveals a new report from Infonetics Research (search for Infonetics Research). As they exceed this capacity, organizations are increasingly replacing legacy services with Ethernet and IP MPLS (search for MPLS) VPN services, which are more flexible and less restricted than their legacy counterparts.

This shift is happening swiftly. After more than doubling in 2005 to $5.7 billion, worldwide Ethernet service revenue jumped another 65% in 2006 to reach $9.4 billion, and IP MPLS VPN service revenue grew 38% in 2006 to $10.9 billion, say analysts.

"Ethernet and IP/MPLS are the layer 2 and layer 3 service protocols of choice for today's data service networks," reports Michael Howard, principal analyst at Infonetics Research. "Small and medium businesses and remote and branch offices of large businesses especially like Ethernet and IP MPLS VPNs because they offer considerably more bandwidth with little or no increased WAN costs," he explains. "These are the very customers service providers are targeting for new revenue, and they're succeeding: Based on the revenue increases we're seeing, it's obvious there's been and will continue to be a strong uptake in new subscribers to Ethernet and IP MPLS VPN services."

Market highlights:

The Ethernet service market is forecast by Infonetics to surge 171% from 2006 to 2010, when it will top $25 billion worldwide.

77% of Ethernet service revenue came from retail sales in 2006 (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 2010.

Service revenue for mid-band Ethernet (MBE), which include the 1-10 M and >10-50 M speed bands, will nearly triple from 2006 to 2010.

EMEA's share of worldwide IP MPLS VPN service revenue was 35% in 2006, North America's was 32%, Asia Pacific's 29%, and CALA's 4%.

Infonetics'report, "Ethernet and IP MPLS VPN Services," includes market size totals, annual revenue forecasts through 2010, and analysis of the Ethernet and IP MPLS VPN services markets for North America (including US and Canada splits), EMEA, Asia Pacific, CALA, and worldwide.

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After more than doubling in 2005 to $5.7 billion, worldwide Ethernet service revenue jumped another 65% in 2006 to reach $9.4 billion, and IP MPLS VPN service revenue grew 38% in 2006 to $10.9 billion