CAMBRIDGE, U.K. -- Despite a dip in business data service revenues in 2003, growth will continue steadily over the next five years as the business market for telecom operators is transformed by Internet protocol (IP) services, according to a new report published this week by Analysys, the global advisers on telecommunications, IT and media (www.analysys.com).

The new report, Business Data Services: growth opportunities and forecasts 2003-2008, forecasts that European business data service revenue will grow by around 4% every year from EUR23 billion in 2003 to EUR28 billion in 2008. IP virtual private networks (IP-VPNs) will be the fastest growing service in 2004, with a 40% increase in revenue, while over the period covered by the report (2003-8), Ethernet is forecast to enjoy the highest growth rate (CAGR) at 42%.

"Demand for data services continues to be driven by the need to have enterprise-wide connectivity for IP-based applications, bigger volumes of email and the integration of voice and data applications," said Margaret Hopkins, author of the report. "What we will see in the next five years is a gradual slowing of revenue growth rates but an increase in the speed of migration from leased lines, asynchronous transfer mode (ATM) and Frame Relay (FR) to connectivity that is optimised to carry IP traffic, for example IP-VPNs, Ethernet and digital subscriber line (DSL)." (Charts available in executive summary).

Growth of business data services and migration speeds will vary according to different industry sectors and country markets. "All countries examined for this report - France, Germany, Italy, Sweden and the UK - are showing a decline in leased lines and growth in DSL," added Hopkins. "However, there are historical differences between each country, particularly in the use of managed IP, FR and ATM services. "

Analysys Research Ltd.