The Asia Pacific WAN Services Study

This Frost & Sullivan research service titled The Asia Pacific WAN Services Study provides a detailed analysis of the existing wide area network (WAN) services ecosystem. It also provides the key insights and highlights the strategic levers for the growth of the WAS services market in Asia Pacific. In this research, Frost & Sullivan's expert analysts thoroughly examine the following markets: asynchronous transfer mode (ATM), frame relay (FR), local leased circuit (LLC), Internet protocol virtual private network (IP VPN), International Ethernet, and international private leased circuit (IPLC).

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Market Overview

IP VPN Dominates the WAN Services Market while International Ethernet is Gaining Quick Traction

Connection-oriented legacy technologies such as FR and ATM are proving inadequate to cater to the increasing demand of customers for flexibility, performance, and bandwidth. As a virtual circuit needs to be configured manually between each site, supporting multipoint-to-multipoint (MP2MP) connectivity for a higher number of sites can be complex and expensive. Therefore, enterprises have begun considering cost-effective and flexible WAN alternatives such as IP VPN and Ethernet, especially if the number of branch offices is huge. Apart from the technological maturity, the services are simple, scalable, and address security concerns, making them the likely market leaders in the WAN services market. However, ATM and FR are not likely to be phased out, as some enterprises still prefer them for their higher quality and because these customers are unable to justify the switching cost of a full migration to IP-based solutions. "Most customers in these markets are large enterprises, as traditional networks have been too expensive for the smaller business owners to adopt," says the analyst of this research. "As IP VPN gains more traction, more SMEs are expected to adopt data services."

As the Asia Pacific WAN services market is mainly driven by the growing demand for international connectivity, service providers are looking to actively increase coverage in key growth markets through partnerships with foreign service providers for network-to-network interconnection (NNI). Both domestic and international WAN services markets are growing rapidly and the markets in large countries such as India and China are in the growth stage. Relatively smaller Southeast Asian markets, such as Malaysia and the Philippines, are also expanding briskly, as favorable conditions are attracting considerable foreign direct investments into these markets. Simultaneously, homegrown enterprises are seeking global expansion, driving the demand for data connectivity. "In 2008, 75.3 percent of the total revenues was contributed by the domestic segment," notes the analyst. "However, the international segment is expected to grow faster than the marginally growing domestic segment due to multinational companies' (MNCs') increasing need for site-to-site and data center connectivity across multiple regions."

Although the leased-circuits segment continues to be the largest contributor in the domestic segment, it has lost its leading position to IP VPN in the international services segment. International Ethernet is expected to be the biggest gainer and is anticipated to grow at a compound annual growth rate (CAGR) of 47.9 percent from 2008 to 2014, due to its affordability and flexibility. However, the high CAGR could also be attributed to its possible growth from its current small base.

Market Sectors

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

• ATM
• Frame relay
• LLC
• IP VPN
• International Ethernet