US high-end optical private-line market to top $8 billion by 2005, Gartner

United States high-end optical (OC-n level) private line and wavelength retail and wholesale service revenue are forecast to nearly double from $4.3 billion in 2001 to more than $8 billion in 2005, according to Dataquest, a unit of Gartner. OC-n level services make up the highest reaches of the business and ISP-driven market for dedicated private line services, above much smaller, ‘high-capacity’ T1 and T3 lines. An OC3 line, for example, carries 2,016 channels on one circuit, while an OC12 carries four times that and an OC48 line or wave 16 times. These lines and waves are used by wholesale carriers, ISPs and businesses with very large bandwidth requirements.

“Growth among enterprises remains strong while carrier growth is more modest,” said Steve Koppman, senior analyst for Gartner Dataquest’s Worldwide Public Network Services program. “Declining and even negative growth of OC-n demand has concentrated in the ISP and high-technology sectors that have borne the brunt of the economic downturn. Some customers particularly in the Internet sector who at one time contracted for capacity on speculation in anticipation of ever-expanding volumes have moved to a more ‘just in time’ approach.”

OC-n level services will continue to grow strongly despite the recession and slowing growth in other, lower-level private line segments in the face of rapidly declining prices and product substitution. High-end private line growth has been powered by dramatic expansion of business bandwidth demand, including for the Internet and Internet Protocol (IP) as well as dramatic increases in WAN and LAN traffic.

Total OC-n revenue will grow at a compound 20 percent level in the 2000 through 2005 period, paced by growth in OC48+ and wavelength service revenue.