Infonetics Sees Spurt in Tier 2 OutlaysInfonetics Sees Spurt in Tier 2 Outlays

SAN JOSE, Calif. -- US Tier 2 service provider network equipmentexpenditures will grow 110% between now and 2004, from $3.1 billion in 2000to $6.5 billion, according to a market research study released today byInfonetics Research, Inc. The study, "The Service Provider Opportunity inthe US 2000: National ISPs and Tier 2 CLECs," is part of a three-volumeresearch series Infonetics Research is conducting this year on serviceproviders in the US.

Change in the Tier 2 service provider marketplace is as chaotic as it isamong the Local/Regional ISPs and Tier 3 CLECs, and the chaos is on a largerscale. There are about 75 national ISPs (SAVVIS, Epoch, etc.) and Tier 2CLECs (McLeod USA, Covad, etc.) in the US. This number will increaseslightly in the next two years due to new entrants and network expansion ofsome Tier 3 service providers.

"Tier 2 service providers are preparing for the advent of voice/dataconvergence and are transforming into integrated communications providers,"said Michael Howard, principal analyst and co-founder of InfoneticsResearch. "DSL is almost a given for this market-Tier 2 service providersare finding ways to leverage their DSL connections, especially through thethree Vs over DSL: video, voice, and VPN services....These service providers and product manufacturers are definitely embracingemerging technology. We found that over half of our respondents are usingcaching or content delivery now, and that close to ¾ of them will by nextyear; 52% are already using at least one type of cloud-based VPNs."

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