Broadband users stick with frame relay and ATM

Although users are spending $2.3 billion more this year on broadband services compared to 2002, most are sticking with traditional offerings. A recent report by Vertical Systems Group suggests that while users are spending the most on private line services – $11.9 billion in 2003 in fact – many users also sticking with frame relay and ATM services.

Users are expected to spend $9.7 billion on frame relay network services this year, which makes up 35% of the total spend.

Behind frame relay is ATM services, which are still popular with users who are spending $2.8 billion on such services in 2003. ATM spending makes up 10% of the broadband market.

It’s important to note that just because users are overall spending more on private line services compared to other offerings, that doesn’t mean that there are more private lines out there. The fact is private line services cost more than frame relay, ATM, DSL and IP services. The high price of private line was one of the main selling points of frame relay when it first hit the market more than 10 years ago.

Many users may be sticking with the tried and true frame relay but DSL and IP VPN services are being adopted. Users are spending $1.1 billion on DSL and another $1.1 billion on IP VPN services. Each separately represent 4% of the total broadband market for 2003.

Alternate high-speed services are not being adopted as quickly as most had anticipated because of the stalled economy. “[Capital expenditure] has been slashed everywhere,” says Erin Dunne, analyst at Vertical. So users that may need to upgrade to a faster technology or to one that better suits their needs, are simply holding on to the networks they have in place.

Other difficult factors are that businesses do not have the in-house expertise to deploy a new technology even if they see the need and they also don’t have the budget to go out and hire an expert, Dunne says.

The technologies that make up the remaining 3% of the market, according to Vertical, include Ethernet, X.25 and other data services.