Telcos spending on Ethernet

Carrier capital spending (capex) may be down during the current economic downturn but Carrier Ethernet is bucking that trend.

Service provider investment in Carrier Ethernet gear is growing faster than telecom capital expenditures, according to Infonetics Research. That is probably not too difficult as telecom capex was down about 20% in the first quarter, according to UBS.

Service providers spent $17 billion on carrier Ethernet equipment in 2008, according to Infonetics. The firm expects spending to top $32 billion in 2013, a compound annual growth rate of 13.5%, as service providers migrate to next-generation IP networks, and Ethernet transport from SONET/SDH.

The largest investments will be in IP core and edge routers, Carrier Ethernet switches and optical gear, Infonetics says. Ethernet microwave is expected to grow at a fast clip due to its use for backhauling mobile traffic, the firm says.

And Ethernet services will be marketed as a lower cost-per-bit service than traditional WAN services with the ability to increase speeds without changing out equipment at the central office or customers premises, Infonetics says.

Worldwide sales of Ethernet access devices with OA&M and E-Line and E-LAN services are expected to increase at a CAGR higher than carrier Ethernet equipment in general, Infonetics says, and much higher than the slowly growing -- or declining -- CAGR of telecom capex.