SONET market continues growth despite uncertain future

May 1, 1999

SONET market continues growth despite uncertain future

The Synchronous Optical Network (SONET) transmission equipment and services market in North America is projected to follow an annual compound growth rate of 9.1% through 2004, according to new strategic research from Frost & Sullivan. The new study, entitled North American SONET Transmission Equipment and Services Market, covers the North American market throughout the period from 1994 to 2004.

But to keep up with the rapid penetration of the Internet and other data applications, SONET manufacturers need to develop features and interfaces that support data delivery, while maximizing the use of SONET platforms. The challenge is to anticipate the uncertain regulatory and technological environment and design products, features, and functions that carriers will be seeking in the future.

The market is divided into transmission equipment and services. Equipment is further segmented into transport nodes, digital crossconnects, and next-generation digital loop carrier components. Transport nodes are again divided into fiber and radio transport nodes.

The growth of the overall market for SONET transmission equipment and services is mainly influenced by the growth patterns of the equipment market as a result of its larger revenue share of the total market size. This growth is being spurred by the trend toward expanding bandwidth capacity of the networks, securing unsurpassed survivability of the transmission, and providing flexibility through the combination of voice, data, and video transmission.

The revenue forecasts in Frost & Sullivan`s report indicate that equipment revenues will increase from $3.54 billion in 1994 to $12.4 billion by 2004. On the equipment side, the increase is from $3.54 billion in 1994 to $11.08 billion in 2004. Services revenues, although making up a much smaller portion of the market total, are projected to increase at a higher compound annual growth rate of 27.4%, from $105.1 million in 1994 to more than $1.3 billion in 2004.

The report indicates the major drivers for SONET transmission equipment include continuous growth of the Internet, SONET ring self-healing features, and continuously growing bandwidth-intensive applications. Restraints in the market include high cost, skepticism about interoperability, and carrier mergers contracting the market size.

For SONET transmission services, the drivers are high speed and bandwidth capacity, the ability to combine voice, data, and video transmissions, and self-healing architectures that provide the best solution for mission-critical applications. The main restraints for this market include high costs, the prevalence of voice over public switched telephone networks, and regulatory obstacles.

This report identifies the impressive market opportunity for service providers in the SONET transmission services market. Those providers that can eventually provide both long-haul and local SONET services will benefit from servicing large companies with growing needs for secure transmission of bandwidth-intensive and mission-critical applications across the United States and Canada. SONET equipment manufacturers can also expect to experience steady demand for SONET equipment as a result of the trend toward upgrading network equipment for higher bandwidths and faster speeds.

The 316-page report is available from Frost & Sullivan for $2950 by calling (650) 961-9000, fax (650) 961-5042, or visit the web site at: u

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