This research study covers the U.S. market for dedicated internet access services through the period 2008 to 2015. The analysis in the study is segmented by retail (sales to enterprises) versus wholesale (sales to service providers) revenues, and percentage breakouts of revenues by service type. The wholesale portion of DIA is also commonly referred to as high-speed IP transit services in the industry. This is referred to as wholesale DIA in this study. The study provides market share analysis based on revenues for the U.S. dedicated internet access services market only.
This Frost & Sullivan research service titled U.S. Dedicated Internet Access Services Market Update 2010 provides an analysis of key market drivers, restraints, and trends that are impacting the market, The study also presents market share analysis and competitive analysis. In this research, Frost & Sullivan's expert analysts thoroughly examine the following technologies: T1, T3, SONET, and Ethernet.
Market Overview
Migration of Bandwidth-Intensive Applications to the Internet Drives Growth in the U.S. DIA Services Market
The U.S. dedicated Internet access (DIA) services market has undergone some interesting changes over the past 2 years. Both the retail (DIA) and wholesale (high-speed IP transit) market segments experienced negative growth rate from 2008 to 2009, primarily due to the economic downturn. The market revenues did rebound modestly in 2010, with the retail recovering faster than the wholesale market. The need for businesses to access ever-higher IP bandwidth and the growing migration of bandwidth-intensive applications to the Internet is fuelling market spending on high-speed services. The Internet is viewed as a tool to reduce travel costs and help drive higher productivity due to real-time and virtual conferencing, collaboration, and other virtual office applications and services. “The shift to such applications – including video conferencing, web conferencing, Internet training and voice over Internet protocol (VoIP) – on the Internet is increasing bandwidth usage as companies apply these various tools to their overall cost reduction plans,” notes the analyst of this research service. “To manage the traffic growth companies are electing to purchase more bandwidth than currently needed, seek burstable options from suppliers or migrate to Ethernet for its scalability component.”
As customers add voice/video applications to their Internet pipes, there is a growing demand in the market for managed Internet services where the service provider offers a richer set of offerings that enhance the overall service experience/framework/component. Some of the services offered include: managed router, network security services (such as customer-premises equipment (CPE) or cloud-based, network management, and software updates) and physical maintenance as covered in the service level agreements (SLAs).
Pricing pressures on the wholesale side for high-speed IP transit services continue to challenge service provider revenues. The economic downturn has only worsened the situation. Although demand for high-speed IP transit services remains high, the price decline has clearly led to reduced revenues overall. Wholesale customers are demanding higher speed ports but the commit rate on those ports is lower than the commit rates for TDM services. “Wholesale customers are investing in Ethernet as it comes at a better price per megabit (MB),” says the analyst. “However, the fact that Ethernet bandwidth is easily scalable has led to reduced commit rates on the ports.” Service providers are trying to address this challenge by keeping the per MB price higher for lower commit rates to ensure high levels of commitment from customers. In the retail DIA services market, demand for traditional services such as T1/T3 and SONET is declining, but the growing demand for Ethernet services is sustaining market growth. The DIA services market is a fairly commoditized market as service providers have traditionally offered just pure bandwidth. This has resulted in a significant reduction of pricing levels for DIA services. Over the past 4-5 years, carriers are emphasizing value-added services and managed services to counter the revenue decline. Hence, this challenge is acting as a driver for companies willing to provide managed services and as a restraint to those who see the DIA space as selling pure bandwidth.
Market Sectors
Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:
Wholesale
Retail
Technologies
The following technologies are covered in this research:
T1
T3
SONET
Ethernet
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