While pricing is extremely competitive, providers including network operators, virtual network operators (VNOs) and integrators/outsourcers are delivering value-added services to enhance WAN services offerings.
New analysis from Frost & Sullivan, Global Enterprise WAN Services Markets, reveals that revenues in this market totaled $ 17.7 billion in 2005, and is likely to reach $ 40.7 billion in 2013.
"Globalization trends are spurring growth among global enterprise WAN services as multinational corporations expanding their operations to additional countries and regions worldwide, driving the need for additional telecommunications connectivity between sites," notes Frost & Sullivan Senior Analyst Maria Zeppetella. "Global enterprise WAN services link these growing firms with data, voice and video connectivity, while managing their networks and delivering business applications and other value-added services."
This trend, as well as the desire to converge data, voice and video networks onto an MPLS -enabled network will drive the adoption of MPLS-IP VPN and virtual private LAN service (VPLS)-based Ethernet. Steady migration from legacy services such as ATM, FR and international private line to newer technologies will also continue as enterprises seek more bandwidth, convergence, better management and increasing value-added services for their enterprise WAN expenditures.
However, with intense price competition and a large number of competitors, profitability issues are likely to remain a major challenge for market participants. Although last year's consolidation among providers had promised pricing stability, little of it is seen to date. Surprisingly there are still too many providers offering the same commoditized services.
"The global enterprise WAN services market is very competitive in terms of pricing, breadth of services offered, and number of providers offering similar services," explains Zeppetella. "Pricing for global WAN services remains low with some signs of stability during this year, yet overall pricing has not improved as expected following the acquisitions in this market."
Considering the commoditization of WAN services with high pricing pressures and little differentiation, providers must rely upon other value-added services. Hence, providers are increasingly differentiating their offerings based on value-added services, management, and maintenance, to obtain new customers and retain existing customers.
