VSG: Global Ethernet exchange opportunity shows potential

Vertical Systems Group forecasts healthy growth of the global Ethernet exchange market segment. During this week's Carrier Ethernet Backhaul & Exchange Europe conference in London, the research firm forecasted that the market opportunity for Ethernet exchange services will be a $674 million global market by 2014.

On a U.S. domestic basis, the majority of the carrier arrangements with the Ethernet exchanges, with the exception of Verizon (NYSE: VZ) and more recently China Telecom Americas (NYSE: CHA), has been from the competitive carrier community, including traditional CLECs like Covad, RCN Metro/Sidera and Transtelco, competitive wholesalers such as Intellifiber, and Cablevision's (NYSE: CVC) business arm Optimum Lightpath.

Similar to these domestic customers, the demand from a global perspective is just as ripe as more service providers are also moving to "fill in selected gaps in their existing network footprints" to sate the needs multinational corporation (MNC) customers want Ethernet for their geographically diverse locations.

"Geographic coverage is a competitive differentiator, so Ethernet providers are open to more efficient ways to deliver services to sites they can't reach directly," said Erin Dunne, director of research services at Vertical Systems Group in a release. "At this early market stage, Ethernet Exchanges have more Ethernet providers committed to selling than buying services. Buyer enrollment is expected to increase as the business benefits of Ethernet Exchanges stabilize as compared to bilateral NNI agreements and other alternatives."

Despite the nascent nature of the market, Ethernet exchange providers are expanding their global market presence. Recent moves by both Neutral Tandem (Nasdaq: TNDM) and CENX into new markets will give service providers looking for interconnectivity outside of their established network footprints or established interconnection arrangements.  

For more:
- see the release

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