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Forrester Picks WAN Winners

The operations of large corporations are increasingly dispersed: a corporate headquarters in the United States; a software development lab in India; a manufacturing plant in China; sales outposts all over the world.

The structure, which requires fast and reliable communications, bodes well for wide area network service providers, according to Forrester Research .

In a new report issued today, the research firm said the WAN services market should grow at a compound annual growth rate of between 4.5 percent and 6.5 percent over the next five years.

Large network operators will continue to dominate the market. These carriers, including Equant, which Forrester called "the clear leader," as well as AT&T, and the combined BT/BT Infonet, will comprise nearly half of the total market for multiregional WAN services.

"Most tier-one global network operators will focus their sales and international investments on existing customers and others that have most of their sites within the vendor's IP backbone footprint," Forrester said in its report. "Elsewhere, they will rely mainly on local carrier partners."

Other network operators, such as Telefonica, Singapore Telecoms, and Global Crossing, represent roughly 15 percent of the market. And smaller specialized systems integrators, virtual network operators and global IT outsourcers will hold about 37 percent of this market.

The growth forecast must be encouraging for an industry still recovering from overcapacity issues of the late 1990s. At the time, telecoms spent billions of dollars to lay fiber-optic cable only to have the sliding economy short-circuit demand.

For enterprise customers, there are several factors to consider, Forrester said. Mergers are afoot among several of the larger players (AT&T, MCI). Smaller competitors are biting into the competition too.

Forrester rated consistent service as the most important concern among enterprise customers. Other factors included strong service level agreements with good protection, easy-to-understand pricing models, and financial stability of the carrier.