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Switch, Router Shipments Down, Backhaul Shipments Way Up

Infonetics reports that telecom carriers are increasing the bandwidth on their backhaul networks to handle exploding mobile data traffic.

Telecommunications service providers are cutting back sharply on shipments of switches and routers, but elsewhere, in mobile backhaul development, the market is rapidly growing, according a report this week from Infonetics Research.

Michael Howard, Infonetics' co-founder and principal analyst, said he began to see carrier cautiousness develop in the fourth quarter of 2008 in switches and routers, and in the first quarter of 2009 shipments were down 13% year over year.

"While the first quarter of every year is typically a down one for the carrier router and switch market, the first quarter showed the deepest sequential decline in years," Howard said in a statement. "With Internet and data traffic growing unabated, service providers are going to have to upgrade their equipment to keep up or risk losing customers."

Howard noted that the change by carriers from TDM to packet IP is transforming their networks. He added that while Cisco is still the dominant supplier in switches and routers, Alcatel-Lucent, Huawei, and Redback are all growing market share in the segment.

The picture in mobile backhaul, however, is different. Another Infonetics report tracking backhaul gear, as well as connections, cell sites, and service charges, found "a traffic explosion" fueled by "bandwidth-hungry" mobile applications. Infonetics predicted that by 2010 data traffic will surpass voice traffic on mobile networks.

"Carriers everywhere are increasing the bandwidth on their backhaul networks to handle this exploding IP data traffic, and the most efficient, cost-effective way to do that is to transition from TDM to packet IP/Ethernet, which is driving the mobile backhaul equipment market," said Howard.

Infonetics noted that microwave technology is the dominant backhaul solution.


InformationWeek has published an in-depth report on the United States' investment in broadband infrastructure. Download the report here (registration required).

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