Optical Ethernet Services to net $4 billion by 2006, says RHK

March 27, 2002--Growing demand for bandwidth is expected to create $4 billion in new revenues by 2006 for North American service providers offering optical Ethernet services, claims a three-part, multi-client study conducted by RHK Inc (San Francisco).

Growing demand for bandwidth is expected to create $4 billion in new revenues by 2006 for North American service providers offering optical Ethernet services, claims a three-part, multi-client study conducted by RHK Inc (San Francisco). The three studies in the "Opportunities for Gigabit Ethernet" series break down the Gigabit-Ethernet (GbE) food chain to identify revenue opportunities for Ethernet service providers, equipment manufacturers, and component suppliers.

"By extending LAN-based Ethernet technology into carrier networks, service providers will offer unmatched flexibility to meet customers' bandwidth demands," explains Dr. Stephanie Boyles, RHK's program director of Packet Services Global. "In 2002, pure-play Ethernet-LECs and CLECs will use existing assets, rather than extending Ethernet network rollouts, and incumbents will continue with trials rather than full-scale deployments. This slow start, plus Yipes!'s recent Chapter 11 bankruptcy filing, will spark some skepticism around optical Ethernet services. But customer demand and competitive threats will cause the big carriers to bring Ethernet services to almost a million potential customers by 2006," she adds.

These services will be deployed using a variety of networking systems, including Ethernet switches, optical edge devices, and WDM platforms. RHK expects incumbent carriers to use all three approaches.

"We expect more than 2.4 million Ethernet ports to be implemented across several types of networking systems by 2006, with 10/100-Mbit ports being the most widely deployed," contends Keith Mayberry, analyst, Packet Services Global. "This increase in metro Ethernet port shipments will result in a $0.8-billion opportunity for Ethernet equipment manufacturers by 2006."

The study also analyzes demand for optical components and communications semiconductors.

"We found the majority of Ethernet ports used in metro and access networks will be at 10- and 100-Mbit/sec rates, while GbE and 10-GbE ports will be used for aggregation and interoffice transport purposes," adds Allen Leibovitch, director, Communications Semiconductors. "Although the LAN market for GbE and 10-GbE remains strong, SONET technology will dominate the carrier market opportunity for optical component (transceiver) and communications semiconductor suppliers through 2006."

RHK interviewed over 300 potential users and 33 early adopters, as well as 20 Ethernet service providers and nearly 50 equipment and component manufacturers. Additional market data was acquired from surveys of IT managers at 3,500 business locations in North America. The report examines the emerging market for GigE services delivered over metro and wide area networks. For more information, visit the company's Web site at www.rhk.com.

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