Infonetics Research Forecast: US and Canadian Tier-Two Service Provider Expenditures Grow Over 170 Percent, from $2.1 Billion to $5.7 Billion between 2001 and 2005 - Industry Overview

Fiber Optics Business, Oct 15, 2001

US and Canadian tier-two service provider expenditures grow over 170 percent, from $2.1 billion to $5.7 billion between 2001 and 2005, according to a market research study released by Infonetics Research, The Tier 2 Service Provider Opportunity, US/Canada 2001.

"Many tier-two carriers in the US and Canada failed over the last 12 months, leaving about 75," said Infonetics Research analyst, Kevin Mitchell.

"The free-wheeling days are over -- at least until the next cycle -- and all eyes are focused on revenue and profitability. The tier-two service providers are under pressure to reduce capital expenditures by using their equipment more efficiently, and by buying new products only where the operational cost savings are clear, such as with next-gen[eration] voice equipment and intelligent optical hardware," Mitchell added.

MPLS is of interest to many of the carriers interviewed in this study, as they look to use it as a traffic engineering tool and as a foundation for advanced services, such as VPNs.

For QoS and traffic engineering:

- 70 percent of respondents will use MPLS in 2002, up from 30 percent in 2001;

- 45 percent of respondents will use Diff-Serv in 2002, up from 25 percent; and

- 45 percent of respondents will use ATM both in 2001 and 2002.

This new 167-page study from Infonetics Research features 107 exhibits and a broad range of topics, including:

- Five year forecast of US and Canadian tier-two service provider expenditures through 2005;

- Service provider network infrastructure and plans for access technologies, backbone architecture, optical architecture, and next-generation voice;f

- Wholesaling and outsourcing ports and services (dial, DSL, firewalls, VPNs, etc.);

- Content delivery services;

- Management and billing software;

- VPN and security services;

- Fixed and mobile wireless data services;

- Managed network services;

- Circuit and packet switched voice services;

- Hardware and software expenditures;

- Customer account information, including service revenue breakdowns;

- Purchase process, including information sources and manufacturer selection criteria; and

- Service provider segments and sub-segments and how they relate to one another.