Mobile Backhaul to Drive Wholesale Ethernet Growth, Heavy Reading Finds

As mobile carriers shift their backhaul networks to Ethernet, the U.S. wholesale Ethernet market is poised to grow by 40 percent per year through 2014, new report finds

Apr 22, 2010, 12:36 ET from Heavy Reading

NEW YORK, April 22 /PRNewswire/ -- The migration of mobile backhaul to Ethernet will help spur growth of the U.S. wholesale Ethernet market at an annual rate of 40 percent or more over the next five years, according to a major new report from Heavy Reading (, the research division of Light Reading (

U.S. Wholesale Ethernet Services: A Five-Year Market Forecast analyzes the current market conditions affecting the wholesale Ethernet business in the U.S. and delivers a five-year revenue forecast for this market. It also examines the most significant issues and trends that will affect this market over the next five years, including adoption drivers and obstacles, service availability, interoperability, changing service technologies, and pricing. The report includes in-depth profiles of 15 leading network operators that are shaping the U.S. wholesale Ethernet market.

The information and analysis presented in this report is based on in-depth interviews with senior executives and marketing and network professionals from 15 companies that sell wholesale Ethernet services in the U.S., often including two or three representatives per company. The companies interviewed included traditional carriers, CLECs, international carriers, specialized infrastructure providers, and cable MSOs.

For a full list of companies analyzed in this report, please see:

"Wholesale Ethernet is finally emerging as a major, thriving U.S. market," notes Steve Koppman, Analyst at Large with Heavy Reading and author of the report. "While retail Ethernet has boomed for several years, the wholesale market has been regarded as something of a market backwater until recently. The promise of mass migration of the fast-growing cellular backhaul segment from TDM to Ethernet is infusing massive new energy into this market, which is now pacing already rapid overall Ethernet services growth."

Heavy Reading predicts that within four to five years – even with the rest of the market growing rapidly – mobile backhaul will account for close to half of revenues spent on wholesale Ethernet in the U.S. "By contrast with other categories of wholesale buyers, wireless players are in a stronger position as decision-makers to make major future commitments based on their own growth," Koppman explains. "They have the networks and traffic volumes under their effective control, and they are not dependent, like many resale customers, on uncertain ongoing success with retail end users."

Key findings of U.S. Wholesale Ethernet Services: A Five-Year Market Forecast include the following:

Mobile backhaul will be half the U.S. wholesale Ethernet market by 2014. Mobile carriers have begun moving decisively to shift their accelerating data bandwidth growth to Ethernet. These providers are stuck between phenomenally growing bandwidth demands on the one hand, and a "flat rate" competitive environment that keeps them from spending proportionally for such bandwidth on the other. As such players shift their networks from TDM, this segment will grow at triple-digit rates, from a bit more than $100 million in 2009 to more than $2 billion by 2014.

Ethernet has gained an adequate reputation for reliability. With improved standards and years of market experience, Ethernet seems to be overcoming longstanding doubts about quality and reliability, stemming from its "best effort" origins. This is particularly crucial in wholesale relationships, in which customer satisfaction cannot be risked on a questionable technology where a service passing through multiple carriers is only as strong as its proverbial "weakest link."

The new External Network-to-Network Interface (E-NNI) standard will speed and improve interoperability. Phase 1 of the Metro Ethernet Forum (MEF) E-NNI standard has recently been adopted, promising to enable quicker, more uniform connectivity agreements between operators. Simplifying, standardizing, and speeding these agreements should lead to more such arrangements, more widely available Ethernet service, more robust competition, and lower prices.

New types of partnerships and collaborations, including Ethernet exchanges, will also play a major role. New forms of collaboration will be extremely important in an environment of limited fiber access and service availability, in which no one can afford to "overbuild the world," services are not highly standardized, and interoperability remains fairly problematic. Recently established Ethernet exchanges and other collaborations and partnerships will do more to make interoperability between different carriers' services less of an obstacle to wider Ethernet adoption.

U.S. Wholesale Ethernet Services: A Five-Year Market Forecast costs $3,995 and is published in PDF format. The price includes an enterprise license covering all of the employees at the purchaser's company.

For more information, or to request a free executive summary, contact:

Dave Williams

Sales Director, Heavy Reading


Press/analyst contact:

Dennis Mendyk

Managing Director, Heavy Reading


About Heavy Reading

Heavy Reading is an independent market research organization offering quantitative analysis of telecom technology to service providers, vendors, and investors. Its mandate is to provide the comprehensive competitive analysis needed today for the deployment of profitable networks based on next-generation hardware and software.

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