AT&T, Lumen, and Spectrum Enterprise dominate the Ethernet services market as businesses transition to SASE and SD-WAN architectures.
Lumen remains in second position based on port share that accounts for its spinoff of U.S. assets to Brightspeed, European assets to COLT, and South American assets to Stonepeak.
Verizon, Comcast Business and Cox Business also held onto their top Ethernet market share, according to Vertical Systems Group’s 2023 U.S. Carrier Ethernet LEADERBOARD. To qualify for a LEADERBOARD ranking, these providers each have a four percent or more share of the U.S. retail Ethernet services market.
According to a new Vertical Systems Group report, driven by the Dedicated Internet Access (DIA) segment growth, the U.S. Ethernet market grew by 2.4%. This growth was offset by what the research firm said was “continued declining demand for switched services.”
While the LEADERBOARD rankings remain unchanged since mid-2023, the market could see shifts amongst the top players.
“There is a possibility for change to the current rank positions at mid-year or by the end of 2024,” said Rosemary Cochran, the principal of Vertical Systems Group.
DIA continues to dominate
In the Ethernet market, Dedicated Internet Access (DIA) service continues to hold a dominant spot.
DIA is a high-speed internet connection dedicated to a business and not shared with other businesses. Also, DIA services are supported by Service Level Agreements between the internet provider and the business or subscriber.
VSG said that DIA services already contribute over one-third of U.S. Ethernet revenue. By 2026, the research firm expects DIA to eclipse aggregate revenue for all five other Ethernet services combined based on projected growth rates.
“Vertical Systems Group’s research projects that DIA will continue to be the largest and fastest-growing U.S. Carrier Ethernet service based on ports installed,” Cochran said. “Enterprise customers rely on DIA for secure, dedicated access for applications requiring high bandwidth and fast response time - e.g., connectivity to cloud-based services.”
Cochran added, "DIA is also used as a core underlay service for SD-WANs.”
SD-WAN/SASE’s impact
The role of DIA and Ethernet continues to impact the SD-WAN and SASE market segments.
Despite carrier challenges with integration, Vertical projects that the number of Carrier Managed SD-WAN sites in the U.S. will surpass one million by 2027. A network operator manages these sites, utilizes an SDN architecture, enables dynamic optimization of site connectivity, and provides centralized network control with end-to-end visibility.
Still, the growth of SD-WAN/SASE has continued to pose challenges for service providers.
Security integration was one of the critical issues for service providers, as cited in VSG’s 2022 Managed SD-WAN LEADERBOARD. This was a key challenge for service providers offering two or more SD-WAN platforms.
Based on the firm’s mid-2023 research, this challenge is more technically and operationally problematic, with some providers now integrating security across as many as five or more different SD-WAN solutions.
Cochran said that carriers must contend with a myriad of issues to accommodate specific business requirements,
“The SD-WAN/SASE impact is challenging as carriers are contending with customer requirements, vendor technology options, and connectivity solutions when configuring customer networks,” she said. “Ethernet Dedicated Internet access is used in many SD-WAN configurations, including in conjunction with--or to replace MPLS.”
Challenge tier movement
In the Challenge Tier of VSG’s Ethernet 2023 LEADERBOARD, Altice USA, Cogent, Frontier, GTT, Windstream, and Zayo continue to hold a spot.
The Challenge Tier, cited alphabetically, includes providers with 1% and 4% share of the U.S. retail Ethernet market.
“Movement could be a company advancing into the LEADERBOARD with more than 4% share or dropping to the Market player tier,” Cochran said.
While it did not reveal anything specific to Ethernet, Altice USA reported that its Business Services segment grew 1% year over year. Cogent and Frontier will release their earnings results later this month.
Meanwhile, Windstream, via its Windstream Wholesale division, continues to test the boundaries of optical networking and Ethernet. In December, Nokia completed a trial of 800 Gigabit Ethernet (GE) service transmission over a single 800 Gbps wavelength over a 1,386-kilometer link across Windstream’s live network.
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