Pre-paid bandwidth a thing of the past

Aug. 29, 2001--Services in the metropolitan area which require customers to pay for a fixed amount of bandwidth will be eclipsed by flexible and dynamically scalable offerings within two years.

According to new research by Ovum, an analyst and consulting company, services in the metropolitan area which require customers to pay for a fixed amount of bandwidth will be eclipsed by flexible and dynamically scalable offerings within two years.

This change will come about because of the introduction of Gigabit Ethernet technology in optical networks that span metropolitan cities (often known as metropolitan area networks or MANs).

The first big wave of Gigabit Ethernet services will be introduced in the wholesale market, serving long distance carriers and service providers who buy their metropolitan network capacity from other carriers.

"At the moment, if you want to connect two city locations with an SDH or SONET link, you have to first predict your maximum bandwidth requirements for the next 12 months, add 20 percent for contingency, and then order and pay for this capacity," says Yum Petkovic, Senior Analyst at Ovum.

"The new technology allows you to buy only the bandwidth that you need today and order additional bandwidth, as and when you need it, which will be available to you within a couple hours from the moment you place your order."

Although the equipment market for Gigabit Ethernet technology is worth $3.5 billion in the wholesale market alone, some global vendors such as Nortel Networks and Marconi have not included this platform in their product portfolio.

Petkovic warns, "These manufacturers are in danger of being leapfrogged by specialist vendors such as Extreme Networks, Riverstone and Sycamore who have formed partnerships with competitive operators such as Storm Telecom (Europe), Telison (US) and Yipes (US) who are showcasing the technology."

Ovum's research titled "Optical MANs: Opportunities and Challenges" provides an insight into why Gigabit Ethernet is bringing about a revolution to capacity services including an analysis of the benefits and risks of the technologies being used.

About Ovum:

Ovum, an analyst and consulting company, serves telecom operators and service providers, telecoms equipment suppliers, IT and software vendors, IT service providers, consultancies, investors, regulators and large users of IT solutions. For more information, visit www.ovum.com.

More in Market Research