Ethernet will contribute over 75% of business bandwidth by 2017, VSG says

Ethernet continues to outpace legacy T1 and other lower speed business access services, and is expected to contribute more than 75 percent of total global business bandwidth by 2017, according to a new Vertical Systems Group report.

"One of the data points is that Ethernet is going beyond the legacy installations globally, and looking forward there's such a ramp up for higher speeds like 10 Gig," said Rosemary Cochran, principal at VSG, in an interview with FierceTelecom. "When you look at it from a bandwidth standpoint there's going to be a lot going on in the next few years."

Businesses are purchasing more 1 Gbps and 10 Gbps speed services to support applications such as video and content delivery.

Vertical Systems Group global business bandwidth to 2017

"One of the growth drivers are new ultra high bandwidth applications and then lighting up fiber that's been there and new installations," Cochran said. "Service providers are also looking to retire old technologies or customers are looking to migrate their own networks to the newer technologies." 

Another factor is bringing more fiber to buildings, including data centers, to support these higher speeds for Ethernet access to IP VPNs and cloud services.

Having broad coverage to support these services has become a table stakes requirement for service providers like Telstra Global, which established a Network to Network Interconnection (NNI) agreement with CenturyLink (NYSE: CTL) this week to better serve its U.S. customers that have growing operations in Asia.

Cochran said that anybody that's "in the global business has to look at" providing these services to "maintain their VPN bases and trying to be in as many places as they can."  

A growing base of incumbent telcos, cable operators and CLECs continue to ramp up their Ethernet footprints and speeds.

Two of the largest U.S.-based telcos, AT&T (NYSE: T) and Verizon (NYSE: VZ), reported in their Q3 earnings statements that Ethernet and cloud were two of their biggest business revenue engines.

AT&T reported that next-gen Ethernet and IP VPN services grew 15.7 percent, while Verizon reported that next-gen business services grew 5.2 percent during the quarter.

For more:
- see the release

Special report: Charting the Ethernet ecosystem

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