The $36 billion private line service segment might not see much growth in 2011, but the continual growth of new 4G wireless, IP-based wireline business and residential services will drive new demands for private lines, claims a new Insight Research study.
Private lines are point-to-point circuits that are used by both wireless operators for wireless backhaul from their cell towers and by enterprise customers to connect their sites together and to the web.
In the near-term, Insight's report "Private Line and Wavelength Services, 2010-2015" revealed that the transition from Frame Relay/ATM to IP-based services is putting a dent in service provider's private line revenue growth.
However, Insight believes that as service providers sign up more IPTV, LTE 4G and enterprises adopt more IP-based services like Ethernet, "the need for private lines to backhaul such data-intensive traffic onto backbone networks" will drive a rebound in private line revenue.
"The transition away from frame and ATM puts a break on overall private line industry revenue growth near term, but we anticipate that growth will resume two years down the road," Robert Rosenberg, Insight Research's president said in a release. "The need to backhaul 4G services will create huge demand as will the local bandwidth for caching IPTV video services, and for facilitating VoIP."
Evidence of what could be called an IP growing pain trend continues to be seen at all of the large U.S. incumbent carriers.
Take Q3 2010, for instance. All of large players including AT&T (NYSE: T), Qwest (NYSE: Q), Sprint (NYSE: S) and Verizon (NYSE: VZ) reported ongoing growth in IP-based business services, while seeing continuing declines from legacy business services (Frame Relay/ATM) and landline voice.
Just taking into account the business services angle, AT&T, Qwest and Verizon reported that IP-based services were up 15.4 percent, two percent and 6.9 percent, respectively. And while the majority around Sprint tends to focus on the wireless side, the IXC reported that while it saw 12 percent decline in wireline revenue, the ongoing migration to IP-based network services drove down its operating costs 8 percent year-over-year.
- see the release
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