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.

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