Study: Private lines will continue to thrive

Private line revenue will continue to grow steadily through 2008, despite competition from Internet services, according to a recent report from Insight Research Corp., a telecommunications research firm.

While private line revenue will grow at a compounded rate of 7.7 per cent between 2003 and 2008, most of that growth will be in local private line sales, Insight President Robert Rosenberg says.

Local wholesales lines, sold to other carriers and ISPs, will show double-digit growth; local retail lines, sold by carriers to enterprises, and long-distance wholesale lines will show single-digit growth; and long-distance retail lines will actually decline, the report states.

The reason for the decline in long-distance retail lines is that enterprises aren’t connecting far-flung offices together with private lines as frequently as in the past, Rosenberg says.

Instead, private lines are used to connect offices to a local Internet point of presence. From the point of presence, offices communicate over IP VPNs.

The carriers that will benefit most from the rising sales of local private line services will be those who own metro-area networks, Rosenberg says.