CAPACITY STRAINS WILL STIMULATE GROWTH IN METRO AREA NETWORKS, ACCORDING TO NEW TIA STUDY

Arlington, Va. -- The telecommunications industry will see strong growth in metropolitan area network (MAN) services through 2006, according to the recently released 2003 Telecommunications Market Review and Forecast, an annual publication of the Telecommunications Industry Association (TIA). Bottlenecks are appearing in the metro area and in long-haul routes connecting Tier 2 and Tier 3 cities, as demand continues to grow for high speed Internet access. The market for MAN services is expected to expand at a compound annual growth rate of 65.6 percent to $4.1 billion by 2006, up from only $548 million in 2002. Seventy percent of that growth is expected to come from value-added services, including virtual private networks (VPNs), outsourced network management and network security.

Arlington, Va. -- The telecommunications industry will see strong growth in metropolitan area network (MAN) services through 2006, according to the recently released 2003 Telecommunications Market Review and Forecast, an annual publication of the Telecommunications Industry Association (TIA). Bottlenecks are appearing in the metro area and in long-haul routes connecting Tier 2 and Tier 3 cities, as demand continues to grow for high speed Internet access. The market for MAN services is expected to expand at a compound annual growth rate of 65.6 percent to $4.1 billion by 2006, up from only $548 million in 2002. Seventy percent of that growth is expected to come from value-added services, including virtual private networks (VPNs), outsourced network management and network security.

The metro sector of the network was first served by competitive local exchange carriers (CLECs), which were leaders in offering Ethernet-only services in the late 1990s. The sector now attracts incumbent local exchange carriers (ILECs) and interexchange carriers (IXCs) alike. CLECs comprised 79 percent of the retail Metro Ethernet services market in 2001. That same year, regional Bell operating companies (RBOCs) took 19 percent of the market, followed by IXCs, which had 2 percent market share.

TIA anticipates that wireless MANs will become more popular as they allow service providers to eliminate the cost of deploying fiber in and to buildings and metro areas. The study cites standards work under way for high-speed wireless MANs. These networks will provide for fast local connections to corporate networks and the Internet, allowing wireless transmission of data, voice, video and higher-end applications such as real-time videoconferencing.

Ethernet, being a widely deployed and robust data transport technology for LANs, is also a strong option for deployment in MANs. Fast Ethernet, Gigabit Ethernet (Gig-E) and 10 Gigabit Ethernet (10 Gig-E) will experience compound annual growth rates of 33.7, 347.2 and 16.2 percent from 2003 to 2006, respectively. The higher speed Ethernet services are not expected to completely replace Synchronous Optical Network (SONET) or Asynchronous Transfer Mode (ATM) systems already heavily entrenched in the network. Instead, Gig-E and 10 Gig-E infrastructure will likely be overlaid to accommodate heavy capital expenditures already made on those legacy metro systems.

"The industry will experience heavy growth in the market for metro services and equipment," stated Matthew J. Flanigan, president of TIA. "Driven by increasing demand from corporations and individuals for broadband services bandwidth, Metro Ethernet and MAN services will reliably and cost effectively satisfy the thirst for access."

To obtain press copies of the report, please contact Jennifer Mead at (703) 907-7723 or jmead@tiaonline.org. For ordering inquiries, please go to www.tiaonline.org/media/mrf.cfm, email marketreview@tiaonline.org or call (703) 907-7074.

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TIA is the leading trade association serving the communications and information technology industry, with proven strengths in market development, trade shows, domestic and international advocacy, standards development and enabling e-business. Through its worldwide activities, the association facilitates business development opportunities and a competitive market environment. The association provides a market-focused forum for its 1,000 member companies that manufacture or supply the products and services used in global communications. TIA represents the communications sector of the Electronic Industries Alliance (EIA). Visit us at http://www.tiaonline.org.

P.A. Release 03-49
04.16.03