Carrier Ethernet Revenues are Growing, but Keep Perspective

A global business generating $20 billion worth of revenue might be viewed a pretty big deal, even in a telecom business that generates $1.3 trillion annually. See this.

For this reason some observers would point to growing "Carrier Ethernet" service revenue as "the" answer for future growth. It might be more correct to say it is "a" driver of growth.

The most dramatic growth currently is in mobile backhaul, with Ethernet microwave anticipating a compound annual growth of 41 percent though 2015, according to Infonetics Research.

But assume 10 carriers represent about $745 billion worth of revenue, or about 57 percent of total global revenue. If those carriers were to earn a similar 57 percent share of the mobile backhaul revenue, they would share about $11.5 billion worth of revenue. For a carrier earning about $100 billion in annual revenue, that might be worth a percent point or two of total revenue.

Granted, one percent of a big number can, in turn, be a big number. But you have to keep matters in perspective. As important as any single source might be, in terms of gross revenue, even a billion dollars or so might not be that big a deal for a leading tier-one carrier. It might not be a terribly big deal for a smaller provider, either.

Consider Windstream, which in its second quarter of 2011 earned special access revenues increased $11 million year-over-year, or nine percent, due to circuit growth from increased demand for wireless backhaul services. Read more.. That implies annual special access revenue of about $122 million. Annual business customer revenue is someplace around $1.2 billion, based on second quarter business customer revenue of $498 million.

That suggests all special access revenue is about 10 percent of business revenue. Carrier Ethernet would be a fraction of that. The point is that one has to keep perspective when looking at big numbers.