Ethernet Services Continue to Soar in Downturn, Heavy Reading Finds

The market for carrier Ethernet services continues growing as more business customers replace legacy services with Ethernet-based offerings, according to Heavy Reading

Dec 29, 2009

Despite a severe global economic downturn, the market for carrier Ethernet services in North America continued to grow at a double-digit rate in 2009, as more business customers opt for a wide range of Ethernet-based offerings to replace legacy services, according to the latest report from Heavy Reading (, the research division of Light Reading (

Ethernet Services in North America: Leader Profiles delivers an up-to-the minute update on the Ethernet services market and an extensive examination of key operators shaping its development. The report is based on recent interviews and other input from some 20 carriers, conversations with many carrier Ethernet/MPLS network equipment vendors, and additional primary research. The report builds upon more than five years of Heavy Reading's in-depth research on the carrier Ethernet services and equipment markets.

The report includes detailed profiles of seven top providers of carrier Ethernet services in North America, to provide a clear framework for how the Ethernet services market is evolving. The seven profiled operators offer 113 different flavors of point-to-point, point-to-multipoint, and multipoint-to-multipoint Ethernet services within metro markets, between metro markets in the U.S., and between metro markets in different countries. They also provide Ethernet-based access to IP/MPLS VPN, Internet, and other services and applications like storage extension, disaster recovery, and video transport.

"Based on data points from across the industry, we estimate the global market for Ethernet connectivity services has grown at a double digit year-over-year rate during 2009 and is now worth multi-billions of dollars," says Stan Hubbard, Senior Analyst with Heavy Reading and author of the report. "There is no question that Ethernet will gain as a percentage of overall data connectivity services market revenues over the next several years as customers seek to take advantage of the indisputable performance/price advantages offered by the technology."

Feedback from dozens of Ethernet service providers indicates the retail and wholesale Ethernet services markets have held up relatively well during the economic downturn, Hubbard notes. "While revenues from traditional Frame Relay, ATM, and TDM private-line services generally have continued to decline, many operators have reported positive momentum for Ethernet services sales due to growing adoption across multiple industry verticals - including finance, healthcare, media/entertainment, law, manufacturing, education, and government," he says. "On the wholesale front, we are in the early days of what many operators expect will be a big opportunity related to the backhaul of mobile broadband traffic over Ethernet connections."

Key findings of Ethernet Services in North America: Leader Profiles include the following:

The North American Ethernet services market is now firmly established as a mainstream revenue source, and its importance to network operators will only continue to grow. Heavy Reading estimates there are more than 160 telecom and cable operators selling Ethernet connectivity services in North America. Numerous data points suggest that Ethernet services generally represent one of the fastest growing parts of the data connectivity services portfolios of these service providers.

Enterprises of all sizes and organizations from every industry vertical are shifting from legacy TDM private lines, Frame Relay, and ATM services to Ethernet connectivity services. Many enterprises also are embracing Ethernet VPNs as a secure alternative to Layer 3 VPNs or using Ethernet as part of hybrid Layer 2/3 VPN solutions.

Enterprises are embracing Ethernet for reasons that go beyond performance/price, total cost of ownership, familiarity, simplicity, and scaleability. Service providers have made it much easier for businesses to overcome adoption hurdles associated with availability, performance, and awareness of service options. There essentially is no significant technical reason why nearly all enterprises should not be able to at least have a mid-band Ethernet service (between 2 Mbit/s - 45 Mbit/s) delivered to every site that needs connectivity.

Service providers in North America collectively offer hundreds of Ethernet connectivity services and are approaching the market as both competitors and collaborators. Operators generally are cooperating and competing with each other at the connectivity level, while competing aggressively at the applications level.

Ethernet Services in North America: Leader Profiles is essential reading for a wide range of industry participants, including the following:

  --  Carrier Ethernet service providers: What is the current competitive
      landscape for carrier Ethernet services in North America? How does
      your service portfolio map to other leading operators? Are there any
      significant gaps in your product line that need to be addressed? What
      are the key advantages that you hold over rivals, and how can you
      capitalize on those advantages?

  --  Telecom equipment manufacturers: Which operators are moving most
      aggressively to deploy carrier Ethernet services, and which
      technologies are they going to rely on for their initiatives? Is your
      current and anticipated product portfolio in line with projected
      technology deployments?

  --  Investors: How will the continued growth of carrier Ethernet affect
      not only competitors in this sector, but providers of other types of
      network services? Which operators are positioned to emerge as the main
      suppliers of carrier Ethernet services, and when are they most likely
      to reap the benefits of market leadership?

Ethernet Services in North America: Leader Profiles costs $3,995 and is published in PDF format. The price includes an enterprise license covering all of the employees at the purchaser's company.

  For more information, or to request a free executive summary, contact:
  Dave Williams
  Sales Director, Heavy Reading

  Press/analyst contact:
  Dennis Mendyk
  Managing Director, Heavy Reading

  About Heavy Reading

Heavy Reading is an independent market research organization offering quantitative analysis of telecom technology to service providers, vendors, and investors. Its mandate is to provide the comprehensive competitive analysis needed today for the deployment of profitable networks based on next-generation hardware and software.

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SOURCE: Heavy Reading

CONTACT: Dave Williams, Sales Director, Heavy Reading, +1-858-485-8870,, or Press/analyst contact: Dennis Mendyk,
Managing Director, Heavy Reading, +1-201-587-2154,

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