STATFlash: Worldwide Ethernet Services: 4.2+ Million Ports by 2021

Posted by Rosemary Cochran

The Carrier Ethernet market has sustained the longest double-digit growth of any wireline service – ever. Driven by digital transformation, customers throughout the world are deploying Ethernet services to support secure, high performance connectivity for company sites, cloud-based applications, private data centers, and business partners.

Outlook to 2021

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Global demand for retail Ethernet services remains strong. By 2021, more than 4.2 million Ethernet ports will be installed at customer sites based on Vertical Systems Group’s latest projections. Revenue generated from these installations represents an aggregate $300+ billion cumulative opportunity.

Asia/Pacific and the U.S are the largest regional markets for Ethernet services, followed by Europe and countries throughout the rest of the world (RoW). Each of these four regions shows growth throughout the projection time frame. Note that these projections incorporate the potential impact of customer migration to Hybrid VPNs, SD-WAN offerings, and other network service alternatives.

Greater than 70% of new ports sold are delivered on-net with customer sites directly connected to an Ethernet network provider’s service infrastructure. For delivery of the remaining ports, service providers rely primarily on custom bilateral NNI (Network to Network Interface) agreements with multiple wholesale partners. However, a promising outlook for inter-operator connectivity is industry standardization using the MEF ENNI (External Network-to-Network Interface) specification, which also supports emerging requirements for on-demand connectivity across multiple service networks.

Need for Speed & Fiber

The need for speed is a top growth driver for Ethernet, with customer migration driven by requirements for higher speed, scalable connectivity at a lower bandwidth cost as compared to legacy services. In the U.S. market, 100 Mbps and gigabit speed services comprise more than half of all Ethernet customer port installations. These higher speed segments are projected to continue to grow at double digit rates through 2021. As a result, fiber footprint expansion, which was a top goal of Ethernet service providers in 2017, remains high on the list of strategic initiatives for 2018.

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