Tightening Telecom Economy! Business BroadBand On Rise

Doug Allen or Vertical Systems Group writes about the Broadband industry....

If you’re looking for a narrow snapshot of the overall health of business telecom, you might want to check out a recent research report from Vertical Systems Group. In a report entitled “U.S. Access Landlines Connect 5.3 Million Business Sites,” lead author and VSG Principal Rick Malone finds that the number of business customers with landline connections at their U.S. sites has increased by nearly 700,000 lines over the past five years to the aforementioned 5.3 links. That’s a net increase of about 7 percent over that period.

As things stand, this shift towards more Ethernet-based access alternatives over traditional T1s means incumbent telcos have to share more of the business broadband access pie than they are accustomed to. Those incumbents account for about 46 percent of the U.S. Ethernet access market, a far smaller showing than it used to command when T1s were the dominant access medium.

The balance is made up of rival service providers such as Time Warner Telecom and Cogent (remember when this former DLEC/CLEC used to specialize solely in DSL and T1 access?), at about 34 percent, and 20 percent sold by the hard-charging, surging cable operators who continue to raise access line rates much more quickly than corresponding rate increases for telco DSL.

However, as reported elsewhere, the trend towards growth in broadband access lines has started to reverse itself over the last four to five months. Malone has been quoted predicting a “moderate downturn,” though “not a huge disastrous” one in business broadband access.

The decline in business access lines is largely due to office/site closings, especially among financial services companies, according to Malone, who feels businesses are likely only to add access lines where deployments are already in progress or new access lines will bring near-term savings over the existing plant. Examples include legacy network (Frame Relay and ATM) convergence and migration to an IP VPN or Ethernet VPLS transport.

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