Frost: Data Service Demand Rising

SAN JOSE, Calif. -- As wholesale customers migrate to less expensive packetized offerings, demand for data services should rise with the steady expansion of consumer broadband usage and commercial utilization of data storage and content delivery applications. Price declines for new technologies, such as optical wavelength services, will further accelerate demand for data services and offer important opportunities for Next-Generation carriers. New analysis from Frost & Sullivan (www.frost.com ), U.S. Wholesale Data InSight, reveals that this industry generated revenues totaling $11.09 billion in 2001. Steady growth will help total market revenues reach $16.25 billion in 2007. This study provides a comprehensive overview of wholesale private line, asynchronous transfer mode/frame relay, and wavelength service markets. "The persistent penetration of residential broadband and commercial applications are expected to continue to spur innovation at telecommunications, content, and software companies," says Frost & Sullivan Industry Analyst Rod Woodward. "One result will be increased data network utilization for services such as video-on-demand, interactive gaming, remote storage, and conferencing services." Regional Bell operating carriers are expected to derive the greatest benefit from these trends since they continue to dominate local markets in most parts of the United States. For companies that can endure the current economic challenges, other hurdles remain. Building telecommunications networks in metropolitan areas, for instance, will remain expensive because of high costs of real estate and labor. At the same time, falling bandwidth prices could restrain revenue opportunities that are absolutely critical for sustaining newer market entrants. Frost & Sullivan