Carrier Ethernet has arrived, as a significant milestone is approaching: the technology will contribute more than 75% of total global business bandwidth by 2017, according to latest analysis from Vertical Systems Group. And the segment is driving double-digit revenue gains to match.
“Given that legacy services accounted for the majority of business data bandwidth utilized worldwide during the past decade, this upcoming milestone underscores how substantially Ethernet is transforming the wide area networking landscape,” said Rosemary Cochran, principal at Vertical Systems Group.
In 2012, global bandwidth purchased for business Ethernet surpassed installed legacy services bandwidth for the first time—and the segment just continues to grow.
“Market demand is heightening this year for higher capacity Ethernet connectivity,” said Cochran, “propelled by purchases of 1 Gbps and 10+ Gbps service.”
Ethernet’s central driver continues to be its ability to meet growing bandwidth demands at lower cost and with greater flexibility than competing legacy services—especially for the small and medium-sized business segment. Applications vary from providing basic Internet connections to delivering high-end enterprise applications and providing access to cloud infrastructure.
That translates into a big revenue opportunity for communications service providers (CSPs) and their channel partners—if they can provide the right level of customer satisfaction. U.S. enterprises and small- and medium-sized businesses are expected to spend more than $49 billion over the next five years on Ethernet services provided by carriers, according to data from Insight Research.
Ethernet metro area and wide area services are ubiquitous, available from all major data service providers, including cable/MSOs, who are building a formidable base around Ethernet services in the small to mid-sized business market, Insight noted. Industry revenue is expected to grow from nearly $5.5 billion in 2013 to more than $13 billion by 2018.
“Ethernet services in the small to mid-sized business market is the fastest growing segment of this market,” said Fran Caulfield, director of research at Insight. “Over the five year forecast period we project a compounded annual revenue growth rate of 19 percent, with the highest growth levels in the next two years.”
