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Business data service revenues in Western Europe

globaltelconews-admin by globaltelconews-admin
12 December, 2005
in English
0

According to Analysys, spend on business data services will grow at 2% per annum to 2008, reaching EUR28 billion in Western Europe, but will then start to decline as growth in broadband levels off and the lower prices of bandwidth delivered via digital subscriber line (DSL) and Ethernet start to have an impact.

“The business data service market is growing now as both large and small businesses invest in expanding their networking capabilities to deliver applications such as email, intranet access, back-office applications, VoIP
and video,” says Margaret Hopkins, the report’s author. “But with strong competition and severe price cutting, this cannot last. Price pressure remains strong, with users expecting more for their money at every upgrade.”

Broadband revenue, which for business mostly means DSL, will continue to grow at an average of 6% per annum for the next five years to reach EUR6.3 billion by 2010. “DSL is now widely used to connect small sites and homeworkers, providing the connectivity for IP Sec VPNs (secure IP virtual private networks) and access to MPLS (multi-protocol label switching) VPNs
and even Ethernet,” adds Hopkins.

However, says Analysys, carrier Ethernet is the big growth story this year, with a forecast increase from EUR1.7 billion in 2005 to EUR7 billion in Western Europe by 2010. “Point-to-point Ethernet is growing very strongly, replacing SDH (synchronous digital hierarchy) leased lines and in many
cases providing access to MPLS VPNs. Ethernet VPNs are starting to be adopted as replacements for FR and ATM (asynchronous transfer mode) VPNs and may displace IP VPNs in some parts of the market,” Hopkins explains. “Ethernet increases margins for operators as well as providing cheaper
bandwidth for customers, so it’s a win-win situation.”

FR is fast becoming obsolete because DSL (for small sites) and Ethernet (for large sites) offer much more bandwidth for the money. “Some carriers are planning to switch off their FR networks and support the remaining customers on MPLS,” says Hopkins.

Overall, spend on data services is expected to grow only 2% in total over the period, from EUR27 billion in 2005 to EUR27.5 billion in 2010, with Ethernet and broadband spend growing at the expense of FR, ATM and SDH leased lines. (Chart available to journalists on request.)

This new report looks at the drivers of change in the business data services market and the technologies that will support new services. The report discusses the current state of the market and the migration from
leased lines and FR to IP VPNs, DSL and Ethernet. Forecasts for spend on point-to-point, IP VPN, Layer 2 VPN and Internet access services are included for France, Germany, Italy, Spain, Sweden, the UK and Western Europe. The forecasts for each geographical area are further broken down by type of technology: Ethernet, FR, ATM, broadband and SDH leased lines.

About business data services

Business data services are provided by network operators to deliver wide area connectivity to business sites, enabling organisations to connect their data networks to geographically dispersed locations, the Internet and their customers and suppliers. For the purposes of this report, this definition includes Layer 2 and Layer 3 services, managed and unmanaged, as well as Internet access and leased lines, but does not include narrowband dial services.

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