Innovate to differentiate

Innovate to differentiate

Ajay Sunder/Frost & Sullivan  |   January 28, 2013
Wholesale Carrier Ethernet revenues topped $1.2 billion worldwide last year. Wholesale carriers saw strong demand for Ethernet for mobile backhaul (tower/cell site access) and aggregation, and this trend will continue for the next few years. In Asia we are increasingly seeing ISPs buying high-speed Ethernet ports for IP-transit applications, and this revenue stream is expected to increase further in the coming years.
The past couple of quarters has seen a significant increase in demand from the traditional inter-exchange carriers (IXCs) and competitive local exchange carriers (CLECs) for Ethernet. Cloud networking is beginning to drive demand for wholesale Ethernet services, as cloud companies look to Ethernet instead of public IP networks to build their cloud networks. Ethernet is attractive for service providers because it can be offered economically, with a lower price per megabit than any other service.
Furthermore, it can be offered in a range of bandwidths and for a variety of private line and LAN extension services. Traditional streams of revenues like wholesale metro access and E-Line (point-to-point) services continue to dominate the revenue share. There is a noticeable up tick in market adoption of high-capacity port speeds, particularly 1 GigE, especially in Japan, Korea, Singapore and Malaysia.
Mobile demand
The mobile backhaul application market has now moved into the growth stage, spurring demand for circuit speeds of 20 to 100 Mbps at the cell sites. With the proliferation of bandwidth hogging 3G/4G wireless devices, there is an exponential growth in mobile backhaul traffic on service providers’ networks, which is pressuring mobile operators to evaluate cost-effective backhaul technologies. With many countries (i.e. Malaysia, LTE; Thailand, 3G) moving toward next-gen networks, we expect more than 50% of APAC subscribers to be either on 3G or 4G networks by 2017. This will further drive the demand for Ethernet for mobile backhaul connectivity for the data intensive offerings operators have planned.
The adoption trends in the retail/enterprise market for Ethernet access are reflected in the demand for wholesale Ethernet. Service providers are seeing increased demand for 100-Mbps and 1-GigE speeds from their wholesale customers. Carriers are also seeing increased demand for 10 GigE in the access space from ISPs for IP transit purposes.
Cloud-based services offer an affordable and flexible alternative for enterprises to implement applications using a virtualized model hosted by a third party, instead of buying, developing and maintaining dedicated infrastructure. A cloud model means significant capex savings for enterprises (no more enterprise-owned dedicated servers) and the flexibility to scale as they grow. As cloud offers mature, key applications such as ERP and CRM are being entrusted to the cloud.
As mission-critical applications and processes migrate to the cloud, the reliability and security of the networks that interconnect cloud providers’ data centers are highly critical. Hence, cloud service providers are increasingly looking to Ethernet to build their cloud networks, instead of the public IP networks to serve customers that demand a high level of security, end-to-end on with their cloud services. This trend is increasingly seen by the Asian data center providers offering cloud services.
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