The $35 billion U.S. private line services market is expected to decline 1 percent annually over the next five years, as the shift to packet-based services offsets demand for higher bandwidth private lines, according to a new market study from Insight Research Corp.
While private line revenues will decline modestly, equivalent circuit counts will continue to rise driven by cloud computing and the new video applications.
Private lines are leased point-to-point circuits that are used for a variety of applications, including connecting enterprise locations and backhauling cell towers to mobile switching centers. Insight Research’s study includes a look at the transition from frame relay and ATM networking to IP networks and the uplift driven by new video and data applications.
"We have reached one of those unique periods where demand is rising yet revenues are in decline," said Fran Caulfield, Insight Research Director. "Price erosion and the shift to lower unit pricing at higher bandwidth tiers are to blame."
Caufield said the need to backhaul data-intensive wireless services and increased local bandwidth for wireline data and video services will prevent significant revenue erosion for the foreseeable future.