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Ethernet Extender - Infonetics Raises Revenue Forecasts for Ethernet Exchanges
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July 06, 2010

Infonetics Raises Revenue Forecasts for Ethernet Exchanges

By David Sims
TMCnet Contributing Editor

Market research firm Infonetics Research (News - Alert) has released the first edition of its biannual 2010 Ethernet and IP MPLS VPN Services report, which "tracks service provider revenue derived from wholesale and retail Ethernet services and layer 2 and layer 3 IP MPLS VPN services," according to Infonetics officials.

The worldwide IP MPLS VPN and Ethernet services markets continued growing throughout the economic downturn in 2009 as companies gravitated to the efficiency and cost-cutting features of these services.

Worldwide, service providers generated $20.8 billion from Ethernet services in 2009, a 23 percent jump from 2008.

Michael Howard (News - Alert), co-founder and principal analyst of Infonetics Research, called Carrier Ethernet Exchanges "an important new development" that facilitate Ethernet connections and "accelerate the move to Ethernet transport and services."

How do the exchanges work? A service provider pays a fee to a Carrier Ethernet Exchange to make it easy for them to locate, buy, and provision Ethernet connections from other service providers. This in turn "jump-starts more Ethernet services and more of the IP VPN services that ride on Ethernet transport," Infonetics officials explained.

The net effect of these new Ethernet exchanges, Infonetics officials say, when combined with fast-rising mobile backhaul connections, is "a quickening of the Ethernet and IP VPN services markets."

And good news in this: "As a result, we have raised our revenue forecasts,' the report says. Combined, Ethernet services and IP MPLS VPN services are forecast by Infonetics to hit $68.2 billion in 2014.

Healthy growth in the market "is expected," the report says, as organizations "increasingly look to IP MPLS VPN services to control WAN costs in the face of rising bandwidth needs, to Ethernet for the lowest cost-per-bit, and to managed layer 2 and layer 3 services, where the expertise, knowledge, and tools of service providers can help stabilize WAN costs and prioritize critical applications while increasing capacities."

David Sims is a contributing editor for TMCnet. To read more of David's articles, please visit his columnist page. He also blogs for TMCnet here.

Edited by Marisa Torrieri

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