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Market
Research
March
20, 2004
Metro Ethernet services market poised
for growth
SINGAPORE
-- According to a recent Frost & Sullivan study,
Asia Pacific Metro Ethernet Services Market 2004, metro
Ethernet services are gaining wider acceptance in the
Asia Pacific region as a compelling means to provide
next-generation broadband services and address potential
surges in demand for bandwidth.
Increasingly,
more service providers are looking to metro Ethernet
as a high-speed alternative to ADSL or cable modem,
especially in metropolitan areas such as Hong Kong and
Taiwan, where it is a commercially proven approach to
break the metro bandwidth bottleneck. Besides the inherent
cost efficiencies, it is packet-based, provides ease
of inter-working, and it is a ubiquitous adoption. It
also provides rapid provisioning on demand, shorter
time-to-market, and managing capex.
According
to the study, the number of metro Ethernet subscribers
in the APAC region are likely to grow from 16.9 million
in 2003 to 23.3 million in 2004. In terms of revenues,
the metro Ethernet market generated an estimated US
$3.84 billion in 2003, a growth of 42.7 percent (from
US $2.69 billion in 2002). This is likely to reach US
$5.31 billion this year. By 2008, revenues are likely
to hit US $15.24 billion, representing a CAGR of 33.5
percent.
Japan
and South Korea are the early market adopters with the
most extensive metro Ethernet networks in the world.
South Korea leads in terms of revenue, capturing over
52 percent of the region’s 2002 revenues. In South
Korea, service providers provide the pipe for metro
Ethernet, while third-party providers offer the services.
Nitin
Bhat, head, telecom services, Frost & Sullivan,
said: "We have observed that the service popularity
and uptake of metro Ethernet were largely driven by
the urban planning scenario in each country. On top
of that, countries leading the way generally have two
major characteristics -- rapid evolution in broadband
demand and large clusters of property development. China,
Hong Kong, and Taiwan are likely to lead the industry
in terms of revenue and subscriber growth for metro
Ethernet services."
China
is leading in terms of large-scale deployments. The
well-developed fiber infrastructure and high density
in Chinese cities provides an incentive to boost the
uptake of metro Ethernet services. Unlike other countries,
there is a vast deployment of this technology to home
users. In China, target customers vary according to
service providers. Revenues are generated from the home
user, which makes up the bulk of subscribers.
As
for Hong Kong, Taiwan and Singapore, the development
of metro Ethernet services seems to be following a similar
path. In addition, the three countries are major economic
hubs with the presence of MNCs. This provides the perfect
environment for metro Ethernet service providers, as
most of these companies will require high bandwidth
services. Service providers have leveraged the situation
by delivering additional value-added services, such
as broadband TV, voice telephony, and IP VPN. The primary
difference between the three countries is in the revenue
source. In Hong Kong, service providers generate most
of their revenue from residential subscribers. In Singapore
and Taiwan, revenue is generated largely from enterprise
customers.
Bhat
added: "Looking forward, prices for metro Ethernet
services are likely to continue to decline as the market
matures over time. We predict that the metro Ethernet
pricing will be based mainly on a flat fee bandwidth
usage, although additional charges can be applied to
those wanting temporary additional bandwidth. Such charges
might be limited to lower end residential customers
or to the SOHO market."
Contact:
Frost
& Sullivan
www.frost.com
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