Metro spending to increase sixfold

Spending on metropolitan-area network products and services in North America will increase more than fivefold during the next four years to replace aging copper infrastructure and its low-speed links, a research firm predicts.

Metropolitan product and service expenditures in the U.S. and Canada will grow from US$420 million this year to $2.7 billion in 2006, according to Infonetics Research Inc. Product expenditures will more than triple during that period, from $105 million to $392 million, while spending on services will balloon sevenfold, from $315 million to $2.4 billion, the firm said in a recent report.

Infonetics’ data is based on responses from officials at 80 organizations who plan to connect their sites with new metropolitan access services by January 2004. Respondents are from organizations with an average workforce of 8,200 and are responsible for product and service purchases, Infonetics says.

The primary drivers for new product and services purchases are network availability, performance, reliability and uptime. Businesses now use copper-based circuit-switched last-mile connections, which provide low speeds relative to the speeds of service provider backbones and corporate LANs.

Most businesses connect from the LAN to the WAN or the Internet using dial-up, DSL or T-1 connections.

But VPNs, storage-area networks and other applications that extend LANs are driving bandwidth requirements, and upstart and incumbent carriers are marketing LAN extension aggressively because the majority of WAN and Internet data communications begin and end as Ethernet frames, Infonetics says. As a result, the most new metropolitan access connections among the respondents to the Infonetics survey are Ethernet.

Barriers to new product and service purchases are service availability, technology compatibility and the financial stability of the service provider, Infonetics says.