Global organisations running out of Wan capacity

Fast growing corporate data traffic volumes are causing global organisations to exceed the capacity limits of their ATM legacy frame relay and private line wide area networks, research warned today.

Infonetics Research said that firms are being forced to replace these legacy services with Ethernet and IP MPLS VPN services, which are more flexible and offer higher throughput capacities.

This shift is happening swiftly, the analyst firm warned in its latest market size and forecast report, Ethernet and IP MPLS VPN Services.

After more than doubling in 2005 to US$5.7bn, worldwide Ethernet service revenue jumped another 65 percent in 2006 to reach US$9.4bn, while IP MPLS VPN service revenue grew 38 percent in 2006 to US$10.9bn.

"Ethernet and IP/MPLS are the layer-two and layer-three service protocols of choice for today's data service networks," said Michael Howard, principal analyst at Infonetics.

"Small and medium businesses and remote and branch offices of large businesses especially like Ethernet and IP MPLS VPNs because they offer considerably more bandwidth with little or no increased Wan costs.

"These are the very customers service providers are targeting for new revenue, and they are succeeding.

"Based on the revenue increases we are seeing, it is obvious that there has been, and will continue to be, a strong uptake in new subscribers to Ethernet and IP MPLS VPN services."

The study estimates that the Ethernet service market will "surge" 171 percent from 2006 to 2010, when it will top US$25bn worldwide.

Service revenue for mid-band Ethernet, which includes the 1-10Mbps and 10-50Mbps speed bands, will nearly triple from 2006 to 2010.

The research also found that EMEA's share of worldwide IP MPLS VPN service revenue was 35 percent in 2006, North America's 32 percent and Asia Pacific's 29 percent.

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