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Tuesday, January 31, 2012

Wireless service providers boost Ethernet backhaul buying

It is not news that wireless service providers are upgrading their backhaul connections to support fourth generation networks. As a result, 2011 was the first year that wireless operators bought a higher percentage of wholesale metro connections at speeds above DS-3 (45 Mbps) than below that rate.
At the same time, Ethernet connections grew to represent 29 percent of new backhaul links, up from 16 percent in 2010.

“From 2010 to 2011, wireless buyers’ portion of local transport spending dedicated specifically to Ethernet increased by 13 percent, while for the rest of the industry, Ethernet spending grew five percent,” said company CEO Dr. Judy Reed Smith.
About 17 percent of executvies surveyed by Atlantic-ACM said they would increase buying of Ethernet private line connections in 2012
About 16 percent of respondents said they would increase buying of switched Ethernet services, while 14 percent said they would buy more Ethernet direct Internet access.

Friday, January 27, 2012

80% of AT&T backhaul traffic now on Ethernet facilities

There’s an interesting tidbit in AT&T’s most-recent quarterly earnings report. CEO Randall Stephenson pointed out that AT&T now has “80 percent of our total mobile data traffic on Ethernet backhaul.”
That doesn’t mean 80 percent of the sites have been upgraded, but more than the sites representing 80 percent of the traffic have been upgraded to Ethernet facilities. What isn’t so clear is what has happened to backhaul as a percentage of operating costs.

In the past, backhaul has represented as much as 30 percent of total operating costs for some operators, in some cases perhaps even more.
AT&T has advantages greater than most other mobile service providers, in that it has the biggest fixed network physical footprint of any mobile service provider in the U.S. market, meaning AT&T has the ability to use its own facilities for backhaul, rather than leasing Ethernet connections from other providers.

Wednesday, January 25, 2012

U.S. carrier Ethernet revenues hit $6 billion in 2011

U.S. carrier Ethernet services sold by cable, incumbent and competitive service providers topped $6 billion in 2011, according to Vertical Systems Group. Those figures suggest why the business is more attractive to specialty providers than to the tier one providers in the U.S. market.

In a U.S. market with annual service revenues topping $300 billion annually, a $6 billion market, even if directly related to the rest of the core capacity business, isn’t a big enough revenue generator for a firm the size of AT&T or Verizon to spend too much time thinking about.
Big carriers need big markets to make any impact on their revenue top lines, or bottom lines. That tends to leave the niche opportunities to smaller providers whose cost structures are better aligned to $100 million opportunities than $5 billion opportunities.
It is, on the other hand, a very attractive business for smaller competitors to whom $100 million in annual revenue is highly significant.
Also, as is typical of capacity products, revenue growth was accompanied by a compression of average selling prices, a pattern that is typical of the capacity business overall. Carrier Ethernet grows
Capacity markets these days feature a continual decline in cost per bit prices.