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December 29, 2010

VoIP T1: Telecom Private Line Services Revenue Growth to Resume in 2013

Demand for new telecommunications private lines is likely to rebound after 2011, as demand for new 4G wireless applications increases.

The growth in leased point-to-point circuits will resume in 2013, despite expected little growth in 2011, according to Insight Research.

The current market size of the private line services is $36 billion. Telecom private lines are used by wireless carriers to link their towers to land line networks. Enterprises use these lines to link their sites to each other and to the Internet.

Insight Research cites the transition from frame relay/ATM networking to IP networks, which is putting a near term drag on private line revenue growth, as one of the main reasons for slow growth.

However, there is a silver lining for the future. Video and new data applications on the emerging 4G wireless networks significantly increase the need for private lines to backhaul such data-centric traffic onto backbone networks.

“The need to backhaul 4G services will create huge demand as will the local bandwidth for caching IPTV (News - Alert) video services, and for facilitating VoIP,” said Insight president Robert Rosenberg. This will help the private lines services market rebound.

“The transition away from frame and ATM puts a break on overall private line industry revenue growth near term, but we anticipate that growth will resume two years down the road,” Rosenberg added.

“These areas are telecom's growth areas and they create demand for private lines, so we expect to see overall growth return to the private line sector by 2013,” Rosenberg concluded.

Insight Research’s study, “Private Line and Wavelength Services, 2010-2015,” evaluates the total private line market and segments it by local and long distance private line service revenue, wholesale and retail private line revenue, revenue by type of carrier, revenue by T1, T3 or OC-n circuit class, as well as the number of T1, T3, and OC-n private lines sold. Estimates of wavelength revenues are also provided.

4G investments are happening across the world. Last year, Maravedis indicated that nearly 560,000 BWA/WiMAX (News - Alert) subscribers were added in the second quarter of 2009, TMCnet reported.

Average BWA/WiMAX subscriber growth rate in second quarter of 2009 was 16.5 percent over the first quarter of 2009 and there was a 74 percent year-over-year growth rate since second quarter of 2008, according to the report.

Rajani Baburajan is a contributing editor for TMCnet. To read more of Rajani's articles, please visit her columnist page.

Edited by Tammy Wolf

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