Ethernet Grows, Frame Relay and ATM Slipping

The U.S. business market for wireline data remained steady with year-over-year average gains of roughly two percent, says In-Stat.  The education vertical is seeing the highest spending gains, while construction is faring the worst growth.  The healthcare and social services vertical market spent $5.5 billion on wireline data services in 2009. Retail and trade will spend over $3 billion on Ethernet services in 2012.

The overall market reflects a spending shift to Ethernet at the expense of both the ATM and frame relay markets, as you might guess. The frame relay market will shrink 57 percent, while Ethernet spending will exceed $18 billion by 2014.

Small business spending will grow at a greater rate over the next five years than any other size of business segment, In-Stat says.

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Carrier Ethernet Demand Strong in Several Verticals

Carrier Ethernet services are best suited today for organizations with less-dynamic networking environments and very-high port bandwidth (dynamic bandwidth allocation), a very dumb edge and very low latency—essentially emulating LAN operating characteristics.

That tends to mean carrier Ethernet service ideal for connecting advanced, distributed data centers and converged cloud-based applications globally.

Companies that will drive Ethernet WAN services growth post-2010 will be heavily dependent on transporting huge amounts of data and converged traffic including real-time/live high-definition video, and/or will be computing-intensive businesses using a less dynamic or “fixed” network architecture. These companies typically fall into specific industy verticals.

Higher education, including universities, university research centers, online education/distance learning and vocational training, is among the lead candidates.

Media and entertainment companies have been lead adopters as well.

Health care also is an area where increasing use of telepresence and telemedicine has the potential to drive exponential bandwidth growth and carrier Ethernet purchases.
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Finally, the U.S. federal government tends to have needs for telepresence, collaboration, high-performance computing and data center access as well. These include the need to link numerous national (or international) sites, small communities, and eventually even geographically remote sites (and mobile and remote workers) while maintaining secure network connections.

Those verticals will not be the only logical candidates for further adoption of carrier Ethernet services, but will disproportionately represent top prospects.

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19% of North American Enterprises Expanding Carrier Ethernet Adoption This Year

About 29 percent of  North American enterprises surveyed by Forrester Research say they already have deployed carrier Ethernet services and 19 percent are expanding their current deployments.

So just a bit under half of North American enterprises already are buying carrier Ethernet services, with a bit more than half of the enterprises still to buy their first carrier Ethernet services.

In 2009 about a third of North American enterprises were purchasers of carrier Ethernet, representing growth of about 14 percentage points in 12 months.

About 51 percent of North American enterprises use Ethernet for access. About 19 percent have implemented a network based on Ethernet point-to-point circuits. By the end of 2010, this will have grown to 31 percent.

Some 16 percent of North American enterprises have moved to a network based on Ethernet multipoint services. By the end of 2010, this proportion will have risen to 26 percent.