Metro Ethernet’s excellent value proposition of low cost, ubiquity, suitability for high-bandwidth data transport and the overall shift toward network convergence, is gradually weaning enterprises away from reliance upon legacy telecom services. Ethernet’s ability to provide greater bandwidth at the same or lower price as legacy systems has gone a long way in tilting the demand in their favor.
New analysis from Frost & Sullivan North American Metro Ethernet Services Markets, reveals that the market earned revenues of $866.2 million in 2005 and estimates this to reach $3.4 billion in 2012.
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Steady migration from legacy services such as asynchronous transfer mode (ATM), frame relay and traditional private line to metro Ethernet, results in cannibalization of higher-priced legacy services revenues. This is likely to adversely affect the business of large incumbent local exchange carriers (ILECs) and other service providers that still depend on legacy services for the majority of revenues.
Nevertheless, service providers continue to recommend metro Ethernet not only because it is the technology of the converged network architecture, but also for the fear of losing their legacy customers to competing providers. Impressive cost savings of up to 50 percent is catalyzing the shift to metro Ethernet among enterprise customers.
“Apart from educating customers, service providers must gain the trust of legacy users by initially providing them with Ethernet Internet access services,” says Frost & Sullivan Senior Analyst Maria Zeppetella. “Once customers are comfortable with Ethernet access, they are more likely to upgrade to higher-priced metro Ethernet point-to-point or multipoint services.”
Ethernet’s increasing ubiquity has minimized end-user resistance to it as a metro service offering and has helped extend its reach beyond the local area network (LAN) to the metropolitan area network (MAN). Increasing numbers of bandwidth-intensive applications such as common gateway interface (CGI), medical imaging and video are placing unprecedented demands on networks and Ethernet is considered the most cost-effective and manageable solution to such data traffic.
“The adoption of Ethernet, combined with IP backbones and the widespread availability of optical fiber and wavelength division multiplexing (WDM) technology, is transforming the metro,” notes Zeppetella. “Ethernet’s ability to provide granularity, its ongoing progression with carrier Ethernet standards developments and the lower capital expenditure (capex) and operational expenditure (opex) are expected to help it gain further ground.”
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North American Metro Ethernet Services Markets