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Excerpt:
Vertical: Ethernet bandwidth is outpacing legacy service bandwidth
by Sean Buckley
FierceTelecom
July 27,
2011
While there are still a lot of businesses
that have completely let go of their legacy Frame Relay, T1 and ATM
services, a new Vertical Systems Group report reveals that Ethernet
bandwidth is actually taking the lead.
The research firm argues that 2011, which is interestingly coincides
with the 10-year anniversary of the Metro Ethernet Forum, marks a
"tipping point" in an uptick of new Ethernet service installations
with bandwidth rates scaling up to 10 Gbps and beyond.
By 2015, Vertical forecasts Ethernet bandwidth will more than double
based on the research group's analysis of enterprise service
requirements.
"Between the period from 2005-2015, the access
connections have a compound growth rate of 1 percent, but the
bandwidth is 22 percent," said Rosemary Cochran, Principal and
co-founder of Vertical Systems Group in an interview with
FierceTelecom. "The reason is that while the access connections
haven't changed much, the capacity of those connections has gone up
quite a bit."
During this transition period, service providers like AT&T and Verizon
are seeing legacy services Frame Relay, ATM and T1 circuits eroding
while Ethernet and IP services continue to rise. Such a trend was
reflected in AT&T's Q2 business earnings results, for example.
AT&T reported that Q2 2011 total business revenues were $9.3 billion,
down 0.3 percent sequentially and down 4.1 percent versus Q2 2010. The
slight decline in AT&T's business services segment was due to slow
voice and legacy data products like Frame Relay. At the same time,
AT&T reported that next-gen services--including Ethernet, VPNs,
hosting, IP conferencing and applications--grew 19.4 percent.
In conducting its research, Vertical looked at three factors: the 5
million connections, including Ethernet, FR, private line, ATM, IP
connection, broadband (cable and DSL) being used by businesses; the
speeds; and the amount of bandwidth that's available to use.
"We looked at where the bandwidth is coming from
and the fact that there are still a lot of legacy circuits, which is
still growing because customers are moving up, the upswing in
bandwidth has been 10X for Ethernet in the past five years," Cochran
said.
As businesses look to upgrade their respective services from lower
speed T1 and Frame Relay circuits to Ethernet, they are looking at
various options, including CLECs and even cable operators. This
phenomenon creates a new opportunities for these players that don't
have to deal with cannibalizing legacy service revenues.
"Customers are migrating to other services and
that's the point at which they look for alternatives, including a
cable company like Comcast and see what they have to offer." Cochran
said. "They will either stay with their current incumbent provider or
look to some competitive provider or a cable company, which does not
have to worry about preserving existing T1 service revenue."
Complete article at
http://www.fiercetelecom.com/story/vertical-ethernet-bandwidth-outpacing-legacy-service-bandwidth/2011-07-27
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