Research Overview
Rising Competition to Force a Decrease in IPLC Revenues Even as IP VPN Profits Increase
International private leased circuit (IPLC) is expected to remain the top data service in Asia Pacific despite declining prices. The fierce competition that is causing the fall in price is expected to bring a revenue slump in the next 18-24 months – an outcome not likely to be offset by the increase in contracted bandwidth. Simultaneously, as the overall technology matures and security concerns subside, the emerging Internet Protocol virtual private network (IP VPN) services are capturing the market share of frame relays (FRs), the revenues of which are likely to substantially reduce in the following 24 months. In 2005, IP VPN services experienced a 22.4 percent year-on-year growth, as the Asia Pacific region kept up with the global pattern of IP-based networks driving the implementation of IP VPN.
This Frost & Sullivan research service provides an overview of and an outlook for the international data service markets in the Asia Pacific region, with an emphasis on pricing. The study segments the markets into IPLC, FRs, asynchronous transfer mode (ATM), IP transit, and IP VPN. It provides detailed revenue forecasts as well as market share analysis and is essential for both large and small market participants seeking maximum return on investment.
IPLCs Continue to Dominate Intra-regional Routes
IPLC providing a contracted bandwidth in the range of 256 KB to 1 MB remains the most popular service in Asia Pacific, especially for intra-regional routes. High bandwidth usage is common in competitively priced routes such as the Singapore–Hong Kong one. "In this scenario, FRs still find takers that prefer to renew their contract with these services, albeit at a lesser price, rather than migrating to new technologies," says the analyst of this research service. "The most popular FR offerings are 512K to E1 ports with polyvinylchloride (PVC) and a bandwidth capacity of 256K to 512K."
In expensive routes such as between China and Taiwan, customers are more forthcoming in embracing services with functionalities similar to the ones provided by FRs, which also cost less. Certain countries in this region witnessed migration from conventional legacy systems to the fast-growing IP VPN services. This movement is seeing an upward trend and a large-scale mass migration to other technologies is not likely for the next 12-18 months.
Prices of International Data Services in the Region Decline with the Advent of Deregulation
In countries such as Hong Kong and Taiwan that have greater deregulation, service providers are offering discounts up to 80 percent to attract new IPLC customers. In India, the regulatory body arrived at a new price ceiling that is 64 percent lesser than the current one for international bandwidths from the country. "In controlled markets, as in China and Malaysia for instance, where domestic participants dominate, the price decline is likely to be less significant," points out the analyst. "The current price trends are likely to remain the status quo in the coming 12-18 months."
Overall, maintaining substantial numbers of customers is crucial for data service solution vendors as they seek to provide value-added services based on the IP infrastructure. As the IP backbone industry and correspondingly, the Internet traffic continue to grow, IP transit prices are declining. Synchronous transport module -1 (STM-1) prices dwindled by 27.0 percent on an average between mid 2004 and 2005 (from 44.0 percent during the previous 12 months). The prices of high-capacity ports such as Gigabit Ethernet also decreased by a similar margin during the period.
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Market Sectors
Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:
Retail Data Services:
- ATM
- Frame Relay
- IP VPN (IP Sec, Multi-protocol label switching)
Wholesale Data Services:
Technologies
The following technologies are covered in this research:
- IPLC: It is a point-to-point private line that companies use for information transfer and communication in their offices located across the globe. It is used for Internet access, exchange of business data, videoconferencing and other means of communication.
- FR: This is used for low cost data transfer between local area networks (LANs) and between end-points in a wide area network (WAN). The network offers a permanent virtual network (PVC) which implies that the end user has access to a dedicated connection, while the service provider keeps track of the route used and charges accordingly.
- ATM: ATM is a dedicated-connection switching technology that uses digital signals to transmit digital data over a physical medium after organizing it into 53-byte cell units. Each cell is processed individually and asynchronously with respect to other cells and they are placed in a queue before their multiplexing over transmission path.
- Internet Protocol Transit (IP Transit): IP Transit is the transmission of IP traffic across the network backbone.
- IP Virtual Private Network (IP VPN): IP-VPN is a virtual private network based on the Internet protocol. Such a network is fast, reliable, available, flexible, and also accessible for tele-workers, other company locations, as well as for suppliers and customers. Although IP VPN uses the same protocol as the Internet, it does not make use of the same connections.
What's Included
- Market engineering measurements
- International data services revenue forecasts
- International data services revenue trends
- Market drivers
- Industry challenges
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