Infonetics: Ethernet exchanges, wireless backhaul drive Ethernet service market

While Ethernet has not only proven itself as an accepted data service and protocol for business customers, it is finding utility in two new market segments: Ethernet exchanges and wireless backhaul.

According to Infonetics' biannual 2010 Ethernet and IP MPLS VPN Services report, the worldwide IP MPLS VPN and Ethernet services markets continued growing amidst 2009's economic downturn. What resonated with enterprise customers during this period was overall efficiency and cost-cutting features of Ethernet services.

In 2009, service providers worldwide generated $20.8 billion from Ethernet services--a 23 percent increase over 2008--while IP/MPLS VPN service revenue increased 12 percent in 2009. As enterprises look for ways to control WAN costs in the face of rising bandwidth needs, Infonetics forecasts that Ethernet services and IP MPLS VPN services will be a $68.2 billion market in 2014.  

As Ethernet providers look to expand their respective out of region Ethernet footprints, they are finding they can complement their traditional External Network to Network Interconnection (E-NNI) arrangements with the Ethernet exchange. Driven by pure play Ethernet exchange operators (CENX) and data center providers (Equinix and TELX), the benefit of the Ethernet exchange is that it lets service providers locate, purchase and provision Ethernet connections from one another.

At the same time, the increasing demand for data centric wireless services is creating what could be called a wholesale bonanza for wireless backhaul. This market is not only attracting the typical incumbent players (AT&T, Qwest and Verizon Wholesale), but a host of competitor wireless backhaul specialists (FiberTower, Intellifiber, TTI, TowerCloud and Zayo).

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