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How Big is the Private Line Market?

November 03, 2014

How Big is the Private Line Market?


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By Gary Kim
Contributing Editor



Just how big is the private line market, and why do we care? The answer depends on how one defines “private line.”

Some might use only a traditional definition, namely point-to-point connections using the digital signal level formats (DS1, DS1C, DS2 (News - Alert), DS3), equivalent trunk level (T1, T3), or optical carrier products (e.g., OC1, OC3, OC12, OC24, OC48, OC96, OC192).


In that sense, “private line” means time division multiplex forms of point-to-point connections.

The asynchronous transfer mode and frame relay services normally are considered part of the private line segment as well.

Many also would include Ethernet Private Line services that mimic traditional OC and DS connections at the end points in the category as well.

Enterprises, large public organizations, and mobile service providers have been among the traditional and future buyers of such connections, and will continue to do so, if at declining rates, in some cases.

As bandwidth requirements climb, dark fiber, optical wavelengths and other Ethernet-based connections are becoming reasonable alternatives, and some might consider those products a form of private line.

Insight Research estimates the U.S. private line market at $30 billion, and predicts the U.S. private line services market has finally entered a period of “no growth,” though the segment, by Insight Research estimates, has grown for at least 18 years.

But the category is expected to decline 2.3 percent over the next five years, as the shift to Internet access allows customers to get higher bandwidth at lower costs.

Insight Research says the private line market declined in 2013 for the first time and will continue to do so for several years, as greater reliance is placed on packet services. Others might date the product peak several years earlier.

The research firm also predicts an uptick in private line revenue by about 2017, but it has made such predictions before, and as recently as 2012 was predicting continued private line revenue growth.

The size of the private line market obviously matters to sales forces selling the product to business segment customers. It also matters to some segments of the telecommunications business that traditionally have focused on small business, mid-market or enterprise customers.

Private line also matters to the Federal Communications Commission, which wrestles with the amount of regulation that should apply to such “special access” services, on a wholesale basis. 




Edited by Stefania Viscusi
 
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