Hopes of reducing capex and opex and building new revenue opportunities has carriers ready to spend on IP/MPLS gear within the next year, according to a report from Infonetics Research Inc.

Based on a survey of 21 service providers in North America, Europe, and the Asia/Pacific region, the firm says 62 percent of respondents already have projects designed to converge legacy and IP data traffic via IP or IP/MPLS; 86 percent report they plan to have such a project underway in 2004.

Infonetics forecasts that, while all kinds of data traffic continue to grow, IP/MPLS will show the largest increase -- 84 percent in 2004, compared with 22 percent growth in ATM traffic and 8 percent growth in Frame Relay.

Infonetics data shows that the rate of traffic growth will actually drop for IP/MPLS in 2004, compared with what it was this year. But report lead author and Infonetics directing analyst Kevin Mitchell attributes this to a fall-off from heavy initial ramp-ups of IP traffic and some dropoff in spending by competitive local exchange carriers (CLECs). Incumbent carriers, however, are just getting started with IP buildouts, he says.

When asked what areas they'd be likely to spend on next year, 62 percent to 81 percent of Infonetics' respondents said they'd increase investments in IP/MPLS, broadband, and metro Ethernet. In contrast, fewer than one-fifth, Mitchell says, said they would increase investments in ATM and/or Frame Relay.

Respondents seem confident they'll be able to afford the increases; on average, they estimated a 6 percent increase in revenue growth next year.

Despite the big growth projected for IP traffic, Mitchell acknowledges the installed base of ATM and Frame Relay still largely outweighs that of IP or IP/MPLS. By how much, he can't say. But sales of IP routers already outpace those of multiservice ATM gear, he observes. The trend toward packet-based networks is clearly in motion.

— Mary Jander, Senior Editor, Light Reading