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Private Line & Wavelength Services 2004-2009
a market research report
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Insight’s annual analysis of the private line market explores buying trends at the wholesale and retail level. Despite the current soft economy, corporate layoffs, and tightened IT budgets—all of which have diminished demand for telecom services—a few verities remain in this dynamic $30 billion market.
Competition, end-user demand for bandwidth, and changing regulations have historically been the principle drivers of growth for private lines. Although these same factors at work today, the nature of the business has changed from providing a full, end-to-end long distance circuit to providing a series of local-channel circuits that connect businesses to a shared data network or to the Internet.
In addition to enterprise demand for private line circuits, we see robust demand for wholesale private line services. Alternative carriers (growing cable MSOs and wireless providers) continue to purchase private lines on a wholesale basis in order to connect their nodes to terminating POPs. Even during bankruptcy, CLECs have continued to gain new customers and increase revenues, further driving the wholesale segment of the private line market.
Private Line Services details revenue and circuit counts by carrier type, and defines the split between wholesale and retail sales of T-carrier (T1, T3) and OC-N circuits (OC-3, OC-12, OC-48, OC-192, OC-768). Wavelength services revenue estimates are also provided. Insight’s annual study illustrates how carriers and their customers continue to move to higher capacity circuits in order to reap the benefits of lower cost-per-bit transport.
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Report Excerpt
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The private line market is at a turning point; though the demand for bandwidth is increasing, the private line market will witness an overall revenue decline by the close of 2004. The sector’s revenue decline is a consequence of eroding prices across the entire private line market, seen over the past 18 months. Moreover, new technologies such as Gigabit Ethernet (GigE) hold the promise to reshape the local private line market, while the sale of wavelength services have the potential to radically alter the cost-per-megabit of transport at the upper boundary of the private line market. While these two potential rivals to traditional private line services are nascent, it is likely they will have an impact on private line revenues in the years ahead.
GigE is sold today as a dedicated service; an alterative to private line. Enterprises with multiple locations require an easy, inexpensive way to connect their local area networks (LANs), and as an alternative to a private line, the interconnection of these LANs with minimal protocol conversion via a native-mode Ethernet service running at Gigabit speed is an attractive solution. Several schemes are afoot to reconcile the carrier’s traditional network architecture with Ethernet, including Ethernet-over-SONET transport or a native-mode Ethernet offer. Though several carriers are offering GigE services today, the future development of this market is still uncertain. INSIGHT’s analysis suggests that GigE will not have a big impact in the traditional private line market in the short term. The impact of GigE will be more dramatic toward the latter part of the forecast period when some of the issues related to standardization and its regulatory standing are resolved.
Another alternative to private line that is emerging is wavelength division multiplexing (WDM) service or sale of discrete wavelengths on a fiber transport facility. Wavelength services differ from private lines in that they are protocol independent and can be leased without protection. Bandwidth can vary from...
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Market Segmentation
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Private Line Revenue
by Service Type
Local
Long Distance
by
Carrier Type
IXC
ILEC
CLEC
Other (DLECs and Gigabit Ethernet Providers))
by
Wholesale vs. Retail
Wholesale
Retail
Private Line Circuit Counts
by
Circuit Class
DS-1, T-1
DS-3, T-3
OC-3
OC-12
OC-48
OC-192
by
Wholesale vs. Retail
Wholesale
Retail
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Table of Contents
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TABLE OF CONTENTS
Chapter I
EXECUTIVE SUMMARY
1.1 The Impact of GigE & Wavelengths on Traditional Private Lines
1.2 Traditional Private Line Market Today
1.3 Forecast Summary
Chapter II
BACKGROUND
2.1 History and Development of Private Line Services
2.2 Evolution of Private Line Technology
2.2.1 Transition to Digital Networks
2.2.2 SONET and Optical Carrier Transmission
2.2.3 IP
2.2.4 Private Line Emulation
2.3 Types of Providers: Blurring Boundaries and Definitions
2.3.1 IXCs
2.3.2 Local Exchange Carriers
2.3.2.1 ILECs
2.3.2.2 CLECs
2.4 Description of Traditional Private Line Services
2.4.1 Circuit Types
2.4.1.1 56 Kbit/s Circuits
2.4.1.2 64 Kbit/s Clear-Channel Circuits (DS0)
2.4.1.3 Fractional T1 Circuits
2.4.1.4 T1 Circuits (DS1)
2.4.1.5 Fractional T3 Circuits (Fractional DS3)
2.4.1.6 T3 Circuits (DS3)
2.4.1.7 Optical Carrier Circuits
2.4.1.9 IRUs and Dark Fiber
2.4.3 Circuit Layout
2.4.4 Redundancy & Restoration
Chapter III
TRENDS, APPLICATIONS, AND MARKETS
3.1 Overview
3.1.1 CLECs
3.1.2 IXCs
3.1.3 Cable MSOs
3.1.4 Wireless Operators
3.1.5 The FCC
3.1.6 RBOCs
3.2 Market Forces
3.2.1 Adding Voice to Data Networks
3.2.2 Managed Packet Networks
3.2.3 Encryption over VPN
3.2.4 Integrated Services
3.3 Applications
3.3.1 Internet Access
3.3.2 Special Access
3.3.3 Local Private Lines
3.3.4 Interexchange Private Lines
3.3.4.1 Dedicated Private Line Networks
3.3.4.2 Emerging Carriers
3.4 Wholesale vs. Retail Markets
3.4.1 Wholesale Services
3.4.2 Retail Services
3.4.3 Facilities-Based Carriers vs. Resellers
3.4.3.1 Local Resellers
3.4.3.2
Long Distance Resellers
Chapter IV
EMERGING PRIVATE LINE SERVICES
4.1 GigE Services
4.1.1 Ethernet Services Technology
4.1.2 MPLS
4.1.3 Impact on Private Line Markets
4.2 Wavelength Services
4.2.1 Development of Wavelength Services
4.2.2 Wavelength Services Technology
4.2.3 Impact on Private Line Markets
4.2.4 Example Wavelength Service Providers
4.2.5 Wavelength Services Market Direction
Chapter V
NETWORK PROVIDERS
5.1 Overview
5.2 AT&T Corporation
5.2.1 Network Architecture
5.2.2 Private Line Services Offered
5.2.3 Other Services Offered
5.3 BellSouth Corporation
5.3.1 Network Architecture
5.3.2 Private Line Services Offered
5.3.3 Other Services Offered
5.4 Broadwing, Inc.
5.4.1 Network Architecture
5.4.2 Private Line Services Offered
5.4.3 Other Services Offered
5.5 Global Crossing
5.5.1 Network Architecture
5.5.2 Private Line Services Offered
5.5.3 Other Services Offered
5.6 Level3 Communications, Inc.
5.6.1 Network Architecture
5.5.2 Private Line Services Offered
5.5.3 Other Services Offered
5.7 MCI
5.7.1 Network Architecture
5.7.2 Private Line Services Offered
5.7.3 Other Services Offered
5.8 Qwest Communications International, Inc.
5.8.1 Network Architecture
5.8.2 Private Line Services Offered
5.8.3 Other Services Offered
5.9 SBC Communications, Inc.
5.9.1 Network Architecture
5.9.2 Private Line Services Offered
5.9.3 Other Services Offered
5.10 Sprint
5.10.1 Network Architecture
5.10.2 Private Line Services Offered
5.10.3 Other Services Offered
5.11 Verizon Communications
5.11.1 Network Architecture
5.11.2 Private Line Services Offered
5.11.3 Other Services Offered
5.12 WilTel Communications
5.12.1 Network Architecture
5.12.2 Private Line Services Offered
5.12.3 Other Services Offered
5.13 XO Communications
5.13.1 Network Architecture
5.13.2 Private Line Services Offered
5.13.3 Other Services Offered
Chapter VI
MARKET FORECASTS
6.1 Private Line Market Summary
6.1.1 Methodology
6.1.2 Definitions
6.2 Forecasts and Analyses
6.2.1 Total Market
6.2.2 Local and Long Distance
6.2.3 Wholesale and Retail
6.2.4 Carrier Types
6.2.4.1 ILECs
6.2.4.2 CLECs
6.2.4.3 IXCs
6.2.4.4 Totals by Carrier Type
6.2.5 Wavelength Services
6.2.6 Circuit Class
6.2.6.1 Local Circuit Count
6.2.6.2 Long Distance Circuit Count
TABLE OF FIGURES
Chapter I
I-1 Typical Layout for a Full Circuit
I-2 Total Private Line Revenue, 2004 and 2009 ($Millions)
Chapter II
II-1 Capacities of 64 Kbit/s, T1, and T3 Circuits
II-2 Typical Layout for a Full Circuit
II-3 ISDN Switched Backup
II-4 SONET Rings
II-5 Fiber-to-Fiber Redundancy
II-6 Cable-to-Cable Physical Redundancy (Diverse Cable Redundancy)
Chapter III
III-1 Common Drivers of Private Line Services
III-2 Managed Packet Network--Virtual Private Line
III-3 Integrated Services Architecture
III-4 Internet Access Architecture
III-5 Special Access Architecture
III-6 Interexchange Private Line Architecture
III-7 Typical Circuit Switched Voice Network
III-8 Typical Packet Switched Network
III-9 Typical IP Network
Chapter IV
IV-1 Resilient Packet Ring Technology
Chapter V
V-1 All-Optical Switch Network
V-2 Private Line Metro Service
V-3 Level3`s National Backbone
V-4 SONET Dedicated Ring Service
V-5 Verizon`s National Network
V-6 Circuit Emulation
V-7 XO Communications Network Map
TABLE OF TABLES
Chapter II
II-1 Digital Services Hierarchy
II-2 SONET/Optical Carrier Hierarchy
II-3 Coordinated vs. Non-Coordinated Circuits
Chapter III
III-I Mergers and Acquisitions, 2002-2004
III-2 Cable High-Speed Lines (Thousands), 1999-2003
III-3 ADSL vs. Coaxial Cable: Number of High Speed Lines, 1999-2003
III-4 ALLTEL Long Distance Penetration, 1997-2004
(Percentage of Total Market)
Chapter IV
IV-1 SONET and Ethernet Defined Transmission Rates
IV-2 Wavelength Market Segments
IV-3 US Peak Time Data Traffic Demand: Residential and Enterprise, 2002-2008 (Gbit/s)
IV-4 Typical Service Providers Offers for Native Wavelength Services
IV-5 Typical Service Providers Offers for Wavelength Services Over SONET
Chapter V
V-1 Carrier Network Architecture Comparison
Chapter VI
VI-1 Total Private Line Revenue 2000-2009 ($Millions)
VI-2 Private Line Revenue, Local vs. Long Distance, 2001-2009 ($Millions)
VI-3
Private Line Revenue by Wholesale/Retail Segments, 2001-2009 ($Millions)
VI-4 Revenue Local
Private Line by Wholesale/Retail Segments, 2001-2009 ($Millions)
VI-5
Revenue for Long Distance Private Line by Wholesale/Retail Segments, 2001-2009 ($Millions)
VI-6 ILEC
Private Line Revenues, Local and Long Distance, 2001-2009 ($Millions)
VI-7 ILEC
Private Line Revenues by Wholesale/Retail Segments, 2001-2009 ($Millions)
VI-8 CLEC
Private Line Revenues, Local and Long Distance, 2001-2009 ($Millions)
VI-9 CLEC
Private Line Revenues by Wholesale/Retail Segments, 2001-2009 ($Millions)
VI-10 IXC
Private Line Revenues, Local and Long Distance, 2001-2009 ($Millions)
VI-11 IXC
Private Line Revenues by Wholesale/Retail Segments, 2001-2009 ($Millions)
VI-12 Private Line Revenue Totals by Carrier Type, 2001-2009 ($Millions)
VI-13 Wholesale
Private Line Revenue Totals by Carrier Type, 2001-2009 ($Millions)
VI-14 Retail
Private Line Revenue Totals by Carrier Type, 2001-2009 ($Millions)
VI-15
Wavelength Services Private Line Revenue Totals by Carrier Type, 2001-2009 ($Millions)
VI-16 Local Private Line-Estimated Circuit Count by Circuit Class, 2001-2009
VI-17
Long Distance Private Line - Estimated Circuit Count by Circuit Class, 2001-2009
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Pricing Information
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Hard Copy
Price
$ 999
Electronic Copy Price
(PDF License Descriptions)
$ 1174 Single-User Printable PDF
$ 1749 6-Seat Printable PDF
$ 2500 Unlimited Corporate-Wide Distribution
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Telecom
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