Frost & Sullivan: U.S. wholesale Carrier Ethernet services a $1.5 billion market in 2014

JUNE 10, 2010 -- The U.S. wholesale Carrier Ethernet services market is poised for high growth during the next few years as carrier network interconnects grow, according to market research firm Frost & Sullivan. New analysis, contained in the report U.S. Wholesale Carrier Ethernet Services Market Update - 2010, finds that the market earned revenues of $595 million in 2009 and estimates it will reach $1.5 billion in 2014.

JUNE 10, 2010 -- The U.S. wholesale Carrier Ethernet services market is poised for high growth during the next few years as carrier network interconnects grow, according to market research firm Frost & Sullivan. New analysis, contained in the report U.S. Wholesale Carrier Ethernet Services Market Update - 2010, finds that the market earned revenues of $595 million in 2009 and estimates it will reach $1.5 billion in 2014.

The emergence of Carrier Ethernet exchanges will have a huge impact on the wholesale Ethernet market, providing a platform for carriers to connect to multiple carriers at other locations, according to the report. This eliminates the bilateral agreements with each of the carriers with whom they intend to interact.

"Wireless carriers were the single largest segment driving double-digit revenue growth for the Ethernet market in 2009," says Frost & Sullivan Research Analyst Roopashree H. "Wholesale carriers saw great demand for Ethernet in both mobile backhaul and aggregation, and this trend will continue in the near future."

The Ethernet virtual private line (EVPL) and virtual private LAN service (VPLS) markets witnessed a greater uptake of switched Ethernet services in 2009 and are expected to grow until 2014.

Despite the year-on-year growth rates being higher for EVPL as compared to Ethernet private line (EPL), EPL services will represent a majority revenue share in the market, says Frost & Sullivan.

"The market was largely limited to point-to-point or E-Line circuits and metro access being wholesaled," says Roopashree. "Carriers now have EVPL and VPLS included in their wholesale offering, along with EPL representing the largest market opportunity."

Since the mobile backhaul market is still in the early phase of Carrier Ethernet adoption, wireline service providers are seeing the demand for Ethernet circuits vary from 10 Mbps to 100 Mbps. During 2007 and 2008, mobile operators worked to get the market to grow from zero to a “commendable” demand in 2009, Frost & Sullivan says.

As the wholesale Ethernet market migrates from low-speed ports to high-speed ports, particularly 1 Gigabit Ethernet (GbE), the service will experience significant price decline, reducing overall market revenues, the report predicts. The price decline for high-speed ports -- 1 and 10 GbE -- is expected to slow toward the end of 2011, leading to price stabilization in the market. Frost & Sullivan expects GbE and 10GbE services to drive significant demand in the market, which will offset the price decline. Fewer ports will sell, as demand for low speed ports declines, but the high speed ports sold will command a higher price, resulting in a hike in revenues for ports sold, the report states.

U.S. Wholesale Carrier Ethernet Services Market Update - 2010 is part of the Communications Services Growth Partnership Services program.

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