Carrier Ethernet to Reach $4.1 Billion by 2011

The carrier Ethernet market is growing rapidly in Western Europe. A new IDC study forecasts spending on Ethernet services will reach $4.1 billion in 2011, a CAGR of 22%, and for the first time surpass spending on legacy network services.

At present, the main applications driving demand for carrier Ethernet services in Western Europe are business continuity, IT centralisation, and datacenter consolidation, but growing opportunities in areas such as video (production, broadcast, and conferencing) and electronic trading will fully utilise the potential of Ethernet services. Their low cost per megabit, simplicity, resilience, and flexibility of bandwidth make them the ideal platform to run critical, real-time applications.

Still in its early stages of market uptake in Western Europe, carrier Ethernet is primarily positioned as a cost-effective alternative to leased lines. Migration from legacy layer 2 network services is happening slowly though. This is partly explained by the limited knowledge of Ethernet in the enterprise space and the cautious approach generally taken by incumbents in their marketing strategies. PTTs are often reluctant to compromise their legacy revenue for the sake of more advanced and cheaper technologies, and justify their position by claiming Ethernet has yet to reach ‘carrier class’ status.

The future is bright for carrier Ethernet, nevertheless. Carriers are at present pouring billions of dollars into their “claimed” NGN and will soon write off legacy network investments. Carrier Ethernet will be prime network technology for companies that want to retain their IP routing in-house and are ready for convergence. “About one in four companies with more than 250 employees will be using Ethernet services in 2008,” said Angela Salmeron, senior research analyst with IDC’s European Telecoms Group. But this is only the beginning, she added, and developments in “Ethernet in the first mile” (EFM) for the use of copper, and the standardization in the network-to-network interface (NNI) for global reach, will make Ethernet truly ubiquitous.