U.S. Retail Carrier Ethernet Services Market Update
2011

U.S. Retail Carrier Ethernet Services Market Update 2011

Market Overview

Carrier Ethernet Emerges as the de Facto Replacement for Traditional WAN Transport Services

The U.S. retail carrier Ethernet services market continued to keep up its 2009 momentum in 2010, growing at an impressive annual growth rate of 40 percent, and the 2010 market revenues exceeded $2.1 billion. Ethernet services continue to gain acceptance as the preferred choice for bandwidth needs of different types and sizes of enterprises, owing to the benefits offered by them-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, as enterprise spending on such requirements was put on hold due to the recession. "Ethernet is a more tried and tested wide area network (WAN) service today as compared to 3-4 years ago," notes the analyst of this research service. "More customers are aware of the service and confident in adopting it, which is another reason for the increased market spending." As enterprise customers seek a cost-effective solution to converge their voice, data, and video applications, Ethernet is likely to continue to be a winner in the transport services arena.

Key communication service provider (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 working toward 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.

Customer concerns pertaining to SLAs associated with switched Ethernet service limit market spending on Ethernet virtual private line (EVPL) services. As the market migrates from traditional private lines to Ethernet, customers expect the same kind of service performance as available on T1/T3 and SONET circuits. Ethernet private line, which is enabled over SONET, is more popular than EVPL, owing to this reason. "Service providers are increasingly offering SONET type of protection on switched Ethernet services," says the analyst. "However, the concerns are largely attributed to customers comfort level with moving to a shared platform as compared to dedicated circuits." While carrier Ethernet will continue to see rapid adoption in the metro space, both for E-Line and E-LAN type of services, MPLS virtual private networks (VPNs) will dominate the national/global multisite connectivity space. However, Ethernet will continue to play a key role in hybrid networks involving MPLS/EVPL/virtual private LAN service (VPLS) networks. As the trend toward using hybrid networks gains momentum, customers expect greater control over and visibility into network bandwidth/performance on MPLS and Ethernet networks. This will amplify CSPs' focus on application-aware networking tools.

Market Sectors

Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:

• Private line, synchronous optical network (SONET)
• Wavelength services
• Asynchronous transfer mode (ATM) and frame relay
• Carrier Ethernet
• Multiprotocol label switching (MPLS)

• 1. Executive Summary
• 2. Market Overview
• 3. Total Market
  • 3.1 External Challenges: Drivers and Restraints
  • 3.2 Forecasts and Trends
• 4. Retail Metro/Intracity Carrier Ethernet Services Market Analysis
• 5. Retail Long Haul / Intercity Carrier Ethernet Services Market Analysis
• 6. Market Share and Competitive Analysis
• 7. The Last Word