Ethernet, IP/MPLS service revenue to surpass $81B by 2016

Driven by cloud services and the ongoing appetite for data services, a new Infonetics report indicates that service providers will continue see Global Ethernet and MPLS IP VPN service revenue growth.

In 2011, Ethernet and MPLS IP/VPN service revenue grew 13 percent to over $50 billion, a figure that will grow beyond $81 billion by 2016.

Infonetics Asia Pacific IP MPLS 2012

"The move from legacy frame relay, ATM, and leased line services onto Ethernet and IP services is quickening as businesses put a razor-sharp focus on staying competitive in today's highly interconnected, mobile, video- and cloud-oriented world," notes Michael Howard, co-founder and principal analyst of Infonetics Research. "By 2015, ATM and frame relay will virtually vanish, while private leased lines will be around a bit longer."

Evidence of the migration from ATM and Frame to Ethernet continues to be displayed every quarter by all of the major service providers such as AT&T and Verizon, both of which just announced their Q2 earnings results.

Both Verizon (NYSE: VZ) and AT&T (NYSE: T) reported strong strategic business sales, including cloud services, security, IT and strategic networking services like Ethernet in Q2 2012 while legacy service revenues continued to decline.

While Verizon's Global enterprise revenues declined 3.4 percent from Q2 2011 to $3.8 billion, strategic business services, rose 4.4 percent. Likewise, AT&T reported that despite the fact that business services overall declined 1.5 percent to $9.1 billion, strategic business services, grew 13.5 percent versus the year-earlier quarter.

Outside of the U.S., Asia Pacific continues to be a hotbed for growth. This year, Infonetics forecasts Asia Pacific will surpass EMEA as the major region for IP MPLS VPN services and currently leads the Ethernet services market. Led by China and India, Infonetics argues that Asia will continue to lead the combined IP MPLS VPN and Ethernet services market.

Along with selling services to enterprise and business customers, another big piece of the Ethernet market continues to be wireless backhaul. Over 90 percent of the spending on mobile backhaul equipment in 2011 was on IP/Ethernet gear as wireless operators continued their respective transitions to 4G LTE.

For more:
- see the release

Special report: Wireline in the second quarter of 2012

Related articles:
Study: Cloud will carry VPN services to $81 billion by 2016
Switching and routing market to grow 4.4% in 2012, breaking stagnant Q1
BT Ireland chooses Alcatel-Lucent for its IP/VPN Ethernet initiative
Carrier Ethernet certification by MEF gains popularity

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