The U.S. wholesale carrier Ethernet services market is poised for high growth during the next few years as carrier network interconnects grow, according to Frost & Sullivan’s research "U.S. Wholesale Carrier Ethernet Services Market Update 2010." The emergence of carrier Ethernet exchanges will have a huge impact on the wholesale Ethernet market, providing a platform for carriers to connect to multiple carriers at other locations. This eliminates the bilateral agreements with each of the carriers with whom they intend to interact.

Frost & Sullivan finds that the market earned revenues of $595 million in 2009 and estimates this to reach $ 1.5 billion in 2014.

"Wireless carriers were the single largest segment driving double digit revenue growth for the Ethernet market in 2009," said Frost & Sullivan analyst Roopashree H, in a statement. "Wholesale carriers saw great demand for Ethernet in both mobile backhaul and aggregation, and this trend will continue in the near future."

The Ethernet virtual private line (EVPL) and virtual private LAN service (VPLS) markets witnessed a greater uptake of switched Ethernet services in 2009 and is expected to grow until 2014.

Despite the year-on-year (YoY) growth rates being higher for EVPL as compared to Ethernet private line (EPL), EPL services will represent a majority revenue share in the market.

"The market was largely limited to point-to-point or E-Line circuits and metro access being wholesaled," said Roopashree. "Carriers now have EVPL and VPLS included in their wholesale offering, along with EPL representing the largest market opportunity."

Since the mobile backhaul market is still in the early phase of adoption of carrier Ethernet, wireline service providers are seeing the demand for Ethernet circuits vary from 10 Mbps to 100 Mbps. During 2007 and 2008, mobile operators worked to get the market to grow from zero to a commendable demand in 2009.

As the wholesale Ethernet market migrates from low-speed ports to high-speed ports, particularly 1 GigE, the service will experience significant price decline, reducing overall market revenues. The price decline for high-speed ports – 1 GigE and 10 GigE – is expected to slow toward the end of 2011, leading to price stabilization in the market. Frost & Sullivan expects 1 GigE and 10 GigE services to drive significant demand in the market, which will offset the price decline. Fewer ports will sell, as demand for low speed ports declines, but the high speed ports sold will command a higher price, resulting in a hike in revenues for ports sold.

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