The market for Ethernet services in western Europe is booming, analysts reported today.
IDC's latest research suggests that spending increased by 42 per cent in 2005 to reach $1.2bn and is set to reach $3.4bn by 2009.
By that time, Ethernet will have overtaken traditional point-to-point leased lines, and will represent over 20 per cent of spending on all wide area network services.
Demand for Ethernet is high due to its inherent benefits to enterprises, including low cost per megabit, flexible and incremental availability of bandwidth, transparent connection of Lans already based on Ethernet, and suitability for voice/video/data convergence.
An additional benefit for some organisations is that, as a Layer 2 service, customers can choose to retain their IP routing in-house for security or other reasons.
IDC noted that the vast majority of spending on Ethernet is currently for point-to-point services, primarily to replace existing leased lines.
The highest growth, however, is expected to be in any-to-any Ethernet networks (primarily VPLS-based) that can provide high-bandwidth, fully-meshed Layer 2 services at relatively low cost.
The next development in this area will be interconnection between providers' networks, and the work of standards organisations in this regard is crucial in furthering Ethernet's potential as a wide area network service.
Ethernet is still targeted at large enterprises and the public sector. But as the market matures, Ethernet will appeal increasingly to smaller customers that have not previously been able to afford high-bandwidth services, the analyst firm noted.
"Ethernet promises much, but has its limitations at present," said Angela Salmeron, a senior research analyst with IDC's European Telco Strategies.
"There are still unresolved issues around interoperability between Ethernet providers and multi-service inter-working standards that limit the ability to run Ethernet with other managed data services.
"These and other developments are in the hands of the Metro Ethernet Forum and others, but resolution and implementation of the standardisation process is still some years away."
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