Platform convergence drives MAN test equipment demand
by Olga Yashkova
The metropolitan area network (MAN) test equipment market is often considered to be one of the most significant areas in the communications test and measurement industry. The constant increase of data traffic and the emergence and deployment of new technologies such as Ethernet, next-generation SONET/SDH, and resilient packet ring (RPR) are among the key factors that have made MAN test platforms highly desirable.
According to Frost & Sullivan’s forecast, revenues for the MAN test equipment market globally reached in the region of US$591.7 million in 2004. In 2011 the revenues generated by this market are expected to double and reach nearly US$1.116 billion. Frost & Sullivan estimates a compound annual growth rate (CAGR) for this market at about 9.5% from 2004 to 2011.
What spurs growth
Every market, no matter what stage it is in, benefits from factors that contribute to its growth. The advance of IP-based technologies, customer requests for higher bandwidth, and the convergence of multiple networks into a single infrastructure are among the drivers for the MAN test equipment market. The figure represents the top drivers for the MAN test equipment market worldwide.
Many companies are moving away from legacy technology to Ethernet- and IP-based technology due to the convenience and cost savings. Many of the large enterprises have their own private networks, which can be used to carry voice along with the data they already carry. This will enable enterprises to cut costs and avoid the termination fees that they would otherwise have to pay to telecom service providers and carriers. With the widespread adoption of Ethernet, Gigabit Ethernet, 10-Gigabit Ethernet, and IP services, the expected demand for MAN test equipment to support these services over the forecast period should increase.
At the same time, private enterprises and residential customers worldwide are looking for ways to increase bandwidth. They need bandwidth, whether for streaming video or music downloads. Private enterprises also need to constantly increase network bandwidth as they introduce new services or add new features to their networks. For example, new security regulations require companies to back up healthcare records, insurance records, and all kinds of secured information in the wake of 9/11. Companies are mirroring a vast amount of data that takes more than a bit of bandwidth. This puts more demand on the MAN, further driving the need for test equipment.
Finally, more companies and organisations-both carriers and enterprises-are discovering the advantages of a single network for voice, data, and video communications, the so-called triple play. The cost savings associated with having a single network are truly significant. Multiple networks have significant disadvantages:
- Multiple networks mean multiple vendors to manage and multiple platforms to support.
- Multiple networks are more expensive because there are fewer ways to cut back on costs.
Conversely, converged networks have many economic advantages in regard to network infrastructure, network equipment, and operations. Having only one set of links means cutting link costs in the network infrastructure. As far as the network equipment advantages are concerned, there is only one platform as opposed to many to support. In the converged networks, fewer managers are needed for network operation as well.
Convergence also reduces risk because converged networks need less hardware and software and it is easier to scale them. In addition, different functions and features can be added or upgraded by software changes rather than changes in the equipment.
Converged networking has created new options for companies to reduce their telecom investment and monthly operating costs. However, there is a lack of standards associated with converged networks. This lack of a single standard in MANs is driving the test equipment market as well. For example, SONET/SDH benefits from solid, well accepted, and widely implemented standards. Ethernet, on the other hand, is not a firm standard yet. Each equipment vendor implements the IEEE and MEF standards (where they exist) somewhat differently.
This scenario means that vendors not only have to be aware of all possible standards in the MAN, but they also have to incorporate these into their test equipment to keep their product offerings up to date. Ultimately, this factor drives the test equipment market, as network operators need test equipment that can cater to all standards and proprietary protocols.
Competition has created a lot of growth and activity within the MAN test equipment arena as well. Just a few years ago there was not much competition. Now, with competition returning, people are spending money on service assurance. The current heavy competition has driven down the prices for MAN test equipment, which makes it more affordable for more companies. As mentioned previously, Ethernet deployments are on the rise. The higher the demand for Ethernet and the lower the price of Ethernet deployment is-including test equipment-the more demand for MAN test equipment will rise.
It is common knowledge that almost every market and every technology, no matter how successful, encounter a number of challenges. The MAN test equipment market is no exception.
Inability to meet customer needs in video over IP is presenting a challenge for MAN test equipment vendors. It is very easy to see quality-of-service (QoS) issues when video service fails. QoS will be the key issue going forward because video delivery does not have the same standards as TDM. Since MAN is based on interface connections, protocol connections make QoS a big challenge.
Emergence of new technologies challenges the market. Leading test equipment vendors have reported being highly challenged by the emergence of a multitude of technologies in the MAN. The emergence of these new technologies has been driven by the increasing significance of data traffic and the inability of the current network infrastructure to carry it in an efficient manner. In the R&D space, test equipment vendors need to size the potential development of each technology and decide whether to develop test equipment for it or not. In the I&M space, test equipment vendors need to estimate the potential of the technology, make the appropriate decisions, and provide test equipment that can seamlessly test all of these new technologies as well as legacy technologies.
In spite of all the challenges in the MAN test equipment market, this space remains full of opportunities for communications test equipment vendors.
Olga Yashkova is a research analyst for Frost & Sullivan (www.frost.com). This article is based on the company’s report, The World MAN Test Equipment Market. Additional information on the report can be requested from Tori Foster at firstname.lastname@example.org.