Ethernet Services Surge In Verticals

Carrier Ethernet services continue to record double-digit growth rates, defying North America's persistent recession, according to a report issued Tuesday by Heavy Reading.

The market research organization, a unit of Light Reading, surveyed some 20 carriers and, among other developments, found that high future growth rates appear secure as the technology is increasingly being adopted in vertical industries like finance, healthcare, media/entertainment, law, manufacturing, education, and government. Heavy Reading, Light Reading, and InformationWeek are all published by United Business Media.

"Based on data points from across the industry, we estimate the global market for Ethernet connectivity services has grown at a double digit year-over-year rate during 2009 and is now worth multi-billions of dollars," said Stan Hubbard, the Heavy Reading senior analyst who wrote the report. "There is no question that Ethernet will gain as a percentage of overall data connectivity services market revenues over the next several years as customers seek to take advantage of the indisputable performance/price advantages offered by the technology."

Heavy Reading expects the robust carrier Ethernet gains to continue, even as revenue from traditional frame relay, ATM, and TDM-private-line services continue their decline as customers shift away from legacy technologies. The report cited one area of particular emerging growth -- backhaul of mobile broadband traffic over Ethernet connections.

The research firm estimated that more than 160 telecom and cable operators are currently selling Ethernet connectivity services in North America. One example of the growing boom in carrier Ethernet is the spirited debate that took place in recent weeks for Nortel Networks' carrier Ethernet and optical networking unit. Ciena beat Nokia Siemens Networks for the unit by agreeing to pay more than $769 million for the Nortel operation, which had been put up for sale in bankruptcy proceedings.

The Ethernet services market is also getting a boost from the fact that many enterprises are moving to Ethernet VPNs, Heavy Reading observed.