When
INSIGHT began research for the report, "Provisioning of Private
Line and Frame Relay Services: A Global Perspective," we
believed that we would find an international market-place that
was providing International Private Line (IPL) services at a
healthy rate and International Frame Relay (IFR) services
evolving and growing rapidly internationally. In fact, we joked
at times that by the time the report was finished, these
services would have been supplanted by even newer technology.
What we found is an
industry that is indeed evolving rapidly. However, the speed of
that evolution varies significantly in different parts of the
world. The array of telecom products and services available in
the US to both the business and residential consumer and the
speed with which new technology becomes commonplace can cause
the average American to mistakenly assume that their counterpart
in the far flung reaches of the world enjoys similar access.
In researching this report
we did find that the telecom infrastructure continues to be
enhanced world-wide, and IPL and IFR services are becoming
available in more locations every quarter. The inherent
complications arise, however, when crossing not only continents
and oceans, but also when navigating international
bureaucracies, and they have caused this reach to lag in certain
areas. Because technology takes longer to become established in
more remote and developing areas, both IPL and IFR services
should be with us for many years to come.
To INSIGHT’s knowledge,
no detailed market analysis of the IPL and FR industry has ever
been published. In developing our own analysis, we begin with
these assumptions:
-
As the reach
of IFR grows, companies will increasingly turn to it in
preference to IPL. -
Growth of IPL
will level off and then begin to decline over the 1999 to
2004 forecast period. -
IFR growth
will continue through 2004. -
As costs drop
and as business becomes increasingly global, smaller
companies will demand and buy IFR services. Because these
companies are likely to lack the infrastructure necessary
for sophisticated network management, they are more likely
to purchase fully-managed bandwidth services.
International
Frame Relay
In
breaking down the overall international market into discrete
regions–Western Europe, Asia Pacific, and rest of the world
(excluding North America)–variations can be seen between
regions. While overall revenue in Western Europe is expected to
double from 1999 to 2004, the growth rate will actually decline,
consistent with the expectation that the Western European market
will reach saturation more quickly than other regions.
Advantage IFR |
It is predicted that IFR services will soon eclipse the growth of IPL. IFR has some conspicuous advantages.
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The frame relay market
originally rose by capturing 9600 bit/s private line, but by
now most of the customers that were attracted by the
price/speed arguments of frame relay have converted. Current
growth is thus expected to come from existing users increasing
usage and bandwidth. By the end of the forecast period, the
leading-edge customers will begin re-tooling for newer
emerging technologies, such as IP networks and Virtual private
Networks (VPNs).
Our projections for the
Asia Pacific market revenue starts at $282 million in 1999 and
tops out at approximately at just over $600 million in 2004.
We again see a decline in annual growth. INSIGHT believes that
the growth wave in this region will lag behind that of Western
Europe only slightly. Towards the end of the period, selected
segments of this market will already begin to migrate to newer
emerging technologies, such as ATM, IP, and VPN.
International
Private Line
Because
of the existing and growing infrastructure, INSIGHT sees Western
Europe continuing to lead with the largest share of the IPL
market. This leading edge, however, is also indicative of
saturation reached more quickly than in the Asia Pacific region.
Western Europe is not the
only area where digital infrastructure is being installed. Many
international carriers and consortiums have turned their sights
toward building fibre optic cables and digital switching centres
in the Asia Pacific region as well. We project that the region
will
double its revenue potential from $313 million in 1999 to over
$650 million in 2004.
For the rest of the world,
we believe that the flexibility, ease of installation, and
potentially lower cost of IFR will eclipse the growth and
penetration of IPL in those regions.
Portions of this article have been excerpted from the Insight report, "Provisioning of Private Line and Frame Relay Services: A Global Perspective." See http://www.insight-corp.com for details. |
INSIGHT expects that revenues will
actually decline, due to the reality that many of these regions
are just now beginning to develop. The private nature of IPL is
inefficient given the constraints of its existing, limited
capacity of the infrastructure; frame relay by its nature can
easily share its limited capacity, allowing more customers to
use the same resource. In addition, business in these regions
tends to be conducted on a small scale globally so high
bandwidth is not always necessary. These factors make IFR a more
attractive option for companies expanding their reach in the
rest of the world.