US MPLSIP VPN Services Market Update 2010

U.S.
MPLS/IP VPN Services Market Update 2010
Focus on Convergence,Telepresence and Network & Application

Performance Management
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October 2010
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Table of Contents
 Executive Summary 8
 Research Scope 9
 Key Definitions 10-11
 Market Overview and Trend Analysis
 Market Engineering Measurements 13-14
 Market Drivers 15-16
 Market Restraints 17-18
 Market Trend Analysis 19-24
 Market Revenue and Ports Forecasts
 Market Revenue Forecasts 26-32
 Market Ports Forecasts 33
 Market Migration Trends by Access Technologies 34
 Pricing Analysis
 Pricing Analysis 36-38
 Competitive Landscape and Market Share Analysis
 Competitive Landscape 40
 Competitive Analysis 41-43
 Market Share Analysis 2009 44
 Market Share Comparison 2008 and 2009 45
 About Frost & Sullivan 46-50
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List of Figures
 Total MPLS/IP VPN Services Market: Market Drivers Ranked in Order of Impact (U.S.), 2010-2014 16
 Total MPLS/IP VPN Services Market: Market Restraints Ranked in Order of Impact (U.S.), 2010-2014 18
 Total MPLS/IP VPN Services Market: Pricing Trends by Port Speed (U.S.), 2009 38
 Total MPLS IP/VPN Services Market: Comparison of Common SLAs for Leading Service Providers (U.S.), 2010 41
 Total MPLS/IP VPN Services Market: Comparison of Service Offerings for Leading Service Providers (U.S.), 2010 42-43
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List of Charts
 Total MPLS/IP VPN Services Market: Market Engineering Measurements (U.S.), 2009 13
 Total MPLS/IP VPN Services Market: Market Drivers Ranked in Order of Impact (U.S.), 2010-2014 15
 Total MPLS/IP VPN Services Market: Market Restraints Ranked in Order of Impact (U.S.), 2010-2014 17
 Total MPLS/IP VPN Services Market: Revenue Forecasts (U.S.), 2008-2014 26
 Total MPLS/IP VPN Services Market: Revenue Forecasts Comparison by 2009 Study vs. 2010 Study
(U.S.), 2008-2013 27
 Total MPLS/IP VPN Services Market: Percent Split in Revenues by Wholesale vs. Retail (U.S.), 2008-2014 28
 Wholesale MPLS/IP VPN Services Market: Revenue Forecasts (U.S.), 2008-2014 29
 Wholesale MPLS/IP VPN Services Market: Revenue Forecasts Comparison by 2009 Study vs. 2010 Study
(U.S.), 2008-2013 30
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List of Charts (Contd…)
 Retail MPLS/IP VPN Services Market: Revenue Forecasts (U.S.), 2008-2014 31
 Retail MPLS/IP VPN Services Market: Revenue Forecasts Comparison by 2009 Study vs. 2010 Study
(U.S.), 2008-2013 32
 Retail MPLS/IP VPN Services: Ports Forecasts (U.S.), 2008-2014 33
 Total MPLS/IP VPN Services Market: Market Migration by Access Technologies (U.S.), 2009 and 2014 34
 Total MPLS/IP VPN Services Market: Market Share Analysis (U.S.), 2009 44
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Executive Summary
The U.S. MPLS/IP VPN services market is the growth stage of product lifecycle with demand for the service increasing
across verticals. Revenues for the U.S. MPLS/IP services market exceeded $5,523.2 million in the year 2009, and are
expected to reach $10,784.4 million in 2014, growing at a compound annual growth rate (CAGR) of 14.3 percent. The
market grew at a higher rate than forecasted in our 2009 study owing to gradual market recovery from recession.
Continuing enterprise focus on convergence is the single most important driver fueling adoption of MPLS VPNs, as
customers realize the cost benefits of moving their voice, data and video applications to a single IP-based network as
compared to running three different expensive networks for each of these applications. As the market migrates to MPLS
VPNs to take advantage of the network’s ability to support traffic prioritization through class of service, there is a growing
focus on network and application performance monitoring tools. Both these tools are critical for the success of MPLS VPN
implementation as customers make the move to a converged architecture and demand more control over the applications
they wish to run on the network.
Following is a summary of other key trends in the MPLS/IP VPN services market:
• Traditional TDM services continue to dominate the access space but, alternative access technologies such as
Ethernet and 3G wireless are gradually gaining traction.
• Integration of video applications such as TelePresence is expected to drive spending on MPLS VPN services.
• Layer 2 Ethernet-based VPNs (VPLS) are complementing layer 3 MPLS VPNs.
• Hybrid networks are seeing growth even as VPLS gains traction.
• Ability to support multicast is fast emerging as a key competitive differentiator.
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Research Scope
Multiprotocol Label Switching/Internet Protocol (MPLS/IP) Virtual Private Network (VPN) as defined in this research
represents VPN services enabled over a carrier’s private MPLS network. The VPN service is necessarily a site-to-site
connection with the service provider managing the end-to-end network. A private IP VPN uses the infrastructure of a single
network provider. A public IP VPN (or Internet VPN) carries data across multiple and non-specified IP backbone
infrastructures. Since a private IP VPN carries traffic across a single infrastructure, the provider can deliver greater and more
standard security, manageability, and connectivity service attributes than a public service that relies on disparate network
infrastructures. In view of the fact that traffic is fully managed end-to-end, private IP VPNs can also offer higher quality of
service (QoS) guarantees supported by contractually binding SLAs.
This study includes analysis and provides market forecasts for layer 3 VPN services that are provisioned for site-to-site
connectivity where the service provider manages the routing tables. Traditional layer 2 VPNs (ATM/FR/PPP based VPNs)
where the customers retain routing control either through rented or owned Customer Premises Equipment (CPE) are not
included in this analysis, as those services are declining rapidly, and also do not support any-to-any connectivity. Ethernet
based layer 2 VPN services such as Ethernet virtual private line (EVPL) and Ethernet Virtual Private LAN service (VPLS) are
not included in the market size. Frost & Sullivan tracks the Ethernet services market separately, hence revenues earned
from it by service providers are counted in our Ethernet analysis. Revenues earned from sales of remote VPN clients are not
included in this study.
Furthermore, the study does not include analysis of Internet VPNs that are provisioned on public IP networks using tunneling
protocols, such as Internet Protocol Security (IPsec) or Secure Sockets Layer (SSL). Interviews with service providers
indicate that carriers do overlay IPsec tunnels over MPLS networks to provide additional security to VPN services, as and
when requested by a customer. However, this study does not include revenue earned by provisioning IPsec over MPLS
networks.
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Key Definitions
IPsec versus MPLS

Internet Protocol Security (IPsec) is a standard providing comprehensive privacy and authentication in the IP networks. IPsec
has grown to be the preferred choice for providing secure VPN communications over the public Internet. IPsec, particularly
when run over the Internet, is generally much less expensive than other network types. This is probably a major contributing
factor to its popularity, especially among the smaller enterprise segment.
Multiprotocol Label Switching (MPLS) is a standards-approved technology for speeding up network traffic flow and making it
easier to manage. MPLS involves setting up a specific path for a given sequence of packets, identified by a label put in each
packet, thus saving the time needed for a router to look up the address to the next node to forward the packet to. MPLS is
called multiprotocol because it works with the Internet Protocol (IP), Asynchronous Transport Mode (ATM), and frame relay
network protocols. It is also being touted as an ideal migration path for enterprises with existing Layer 2 private VPN services
that are looking to move to the ‘full IP’ services on Layer 3.
MPLS VPNs do not encrypt traffic. With reference to the standard model for a network (the Open Systems Interconnection, or
OSI model), MPLS allows most packets to be forwarded at the layer 2 (switching) level rather than at the layer 3 (routing)
level. In addition to moving traffic faster overall, MPLS makes it easy to manage a network for QoS. For these reasons, the
technique is expected to be readily adopted as networks begin to carry more and different mixtures of traffic. This may enable
the network to handle the data in a more specific way but it does not offer the same Wide Area Network (WAN) security as
provided by the IPsec. For firms that have security as a greater priority than high bandwidth and scalability, IPsec VPNs
remain a popular choice. IPsec can be layered on top of MPLS though, to add encryption if it is required. Also, MPLS works
best as a site-to-site technology, whereas IPsec can handle both site-to-site and remote access.
MPLS based IP VPNs offer inherent privacy of the customers’ content through traffic segmentation while IPsec offers content
privacy through encryption. Finally, MPLS provides QoS support for multiple classes of service while Internet-based IPsec
VPNs do not support QoS.
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Key Definitions (Contd…)
CPE versus Network-based

VPNs can be set up in several ways but CPE-based and Network-based are the most common methods. Essentially, the
difference lies in the network architecture. In CPE-based VPNs, the routing intelligence resides at end-user sites
whereas in the network-based VPNs, routing intelligence resides at the providers’ edge from where it can be extended
out to many end-user locations.
Network-based VPNs require no CPE except for a standard router equipped to support traffic prioritization. This enables
the service providers to store routing intelligence and VPN functionality in their own networks without setting up and
managing expensive CPEs. Network-based VPNs are mainly targeted at large clients that must deal with hundreds of
customers and hundreds of thousands of tunnels. As the number of locations and the degree of meshing grows, so too
does the complexity in managing a CPE-based VPN. CPE is a good solution for smaller providers or those providers that
have to manage other sophisticated devices on the customer’s premises.
With the availability of high-speed Internet connections, there has been a significant interest in the deployment of CPE-
based VPNs that are capable of being operated over the Internet. This has been driven primarily by the ubiquity and the
distance insensitive pricing of the Internet connectivity that are typically resulting in significantly lower costs than those of
dedicated or leased line services.
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Market Overview and Trends Analysis
12
Market Engineering Measurements
Total MPLS/IP VPN Services Market: Market Engineering Measurements (U.S.), 2009
Measurement Name Measurement Trend

Market age Growth Increasing
Revenues (2009) $5,523.2 million Increasing
Potential revenues (2014) $10,784.4 million Increasing
Base year market growth rate (2009) 14.0 percent Increasing
Forecast period market growth rate (CAGR) 14.3 percent Increasing

Price sensitivity Medium Stable
Customer demographics (product site number and types) Medium & Large
Distributed Enterprises Stable
across verticals
Competitors (active market competitors in base year) 40+ Stable

Degree of competition 8 Increasing
Degree of technical change Medium Increasing
Customer satisfaction 9 Stable

Customer loyalty 9 Stable
Market concentration (percent of base year market controlled by top four 88% Decreasing
competitors)
Note: All figures are rounded; the base year is 2009. Source: Frost & Sullivan
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Market Engineering Measurements (Contd…)
Market Summary
Revenues for this market, including both retail and wholesale segments, totaled $5,523 million in 2009. Revenues are
expected to reach $10,784.4 million in 2014. Traditional layer 2 VPN services such as ATM and Frame Relay are in the
decline stage of the product lifecycle, giving layer 3 MPLS VPN services a boost. Layer 3 VPNs enable customers to build a
fully meshed network supported by strong SLAs and Class of Service (CoS) to handle the convergence of voice ,data and
video applications, thus driving market migration to lP-based networks.
Price Range/Sensitivity
Price sensitivity was medium in 2009, owing largely to market domination by a handful of Tier 1 carriers. The degree of
competition is medium-high, which is higher than the previous year due to Tier 2 service providers in the market continuing to
expand Ethernet access to their MPLS networks (as predicted in the 2009 report N5AE) . The MPLS/IP VPN market, so far,
has been dominated by the traditional Tier 1 carriers largely due to the extensive access/local loop network assets they own,
which gives them an edge over competitive carriers who need to buy these access networks to offer an end-to-end VPN
service. With service providers expanding their Ethernet access networks to connect customers to the MPLS core, we expect
competition to heat up in the MPLS VPN space.
Customer Satisfaction Market Concentration
Customer satisfaction among providers of MPLS/IP VPN The market concentration (as a percent of the base year
services is high, at 9 out of 10, and continues to improve. market controlled by the top four competitors in 2009) was
Service providers are using longer-term contracts as well as at 88 percent. This percentage is slowly decreasing as
better SLAs and bundled offerings to retain customers for a Tier 2 service providers take away market share from Tier
longer period of time. Loyalty is at 9 on a scale of 10, as 1 carriers; however the percentage points change is
customers adopt MPLS VPN for multi-point interconnection to minimal.
link branch offices on a national as well as global level.
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Market Drivers
Total MPLS/IP VPN Services Market: Market Drivers Ranked in Order of Impact (U.S.), 2010-2014
Market Migration
from ATM & FR
Vertical Specific
Demand – Retail
& Healthcare
Support for
Emergence Of Convergence –
Ethernet Access as a Support for Traffic VoIP, Data and
Cost-effective High- Cost-competitiveness
Prioritization Video
speed Access of Layer 3
by Applying CoS to
Technology MPLS VPNs
Bandwidth
Source: Frost & Sullivan
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Market Drivers
Total MPLS/IP VPN Services Market: Market Drivers Ranked in Order of Impact (U.S.), 2010-2014
Rank Driver 1-2 Years 3-4 Years 5 Years

Increasing demand for network services to support convergence –
1 IP Voice, Data, Video, Unified Communication, and multimedia High High High
applications are fueling adoption of MPLS VPN services
Support for traffic prioritization by applying Class of Service (CoS)

2 High High High
to bandwidth is a key factor driving MPLS adoption
Cost competitiveness of Layer 3 MPLS VPN service makes it an

3 High High High
attractive choice for multipoint-to-multipoint connectivity
Emergence of Ethernet Access as a cost-effective alternative to

4 traditional access technologies even while supporting higher access High High High
speeds is driving adoption of MPLS VPN services
Vertical specific demand for interconnecting distributed
5 offices/branch locations –- specifically retail, healthcare, financial High High High
services and government - drives adoption of MPLS VPN services
Market Migration from expensive ATM & Frame Relay networks to

Medium
6 MPLS IP network owing to its support for convergence of High Medium
applications and managed services. drives market spending
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Market Restraints
Total MPLS VPN Services Market: Market Restraints Ranked in Order of Impact (U.S.), 2010-2014
Traditional Access
Emergence of VPLS -
Technologies
MPLS not Suitable for Layer 2 VPNs
Pt-to-Pt Connectivity Preferred due to
Routing Control
Capabilities
Sunken Investment in
ATM & FR Networks
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Market Restraints
Total MPLS VPN Services Market: Market Restraints Ranked in Order of Impact (U.S.), 2010-2014
Rank Restraint 1-2 Years 3-4 Years 5 Years

MPLS does not provide the best SLAs for point-to-point
1 applications; it is more of an any-to-any kind of application, thus High High High
reducing the overall market spending on MPLS
Traditional TDM services still rule the access space in the US, thus
2 High High High
restraining customer migration to higher bandwidth ports
Emergence of Layer 2 Ethernet VPN or Virtual Private LAN service

3 eating into layer 3 VPN revenues for multipoint-to-multipoint Low Medium Medium
connectivity
Sunken investment in traditional layer 2 services such as ATM & Medium

4 Low Low
Frame Relay delays adoption of layer 3 VPN services
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Market Trend Analysis
Enterprise Focus on Convergence Expected to Drive MPLS VPN Adoption Throughout the Forecast Period
Convergence is expected to be a single most important driver for MPLS VPN in the years to come. Private IP presents
itself well to support converged applications -- voice, data and video--primarily due to the inherent security built into the
network that allows service providers to apply multiple classes of service (CoS) to the bandwidth (BW). By applying CoS,
service providers can tailor traffic prioritization as per the customer need, thus allowing customers to run multiple
applications on a single network in a cost-effective manner. Customers can prioritize voice traffic while using VoIP
applications by allocating more BW to voice, and release the BW for data transport while not using VoIP. They can decide
to use the entire bandwidth for video application while using a TelePresence application. This is drastically different from
the earlier model of using separate networks for different applications – private line for voice, Frame Relay for data and
ATM for video to get QoS assurance. Today, one connection to the Private IP network offers all these services, and is
hence expected to drive market adoption throughout the forecast period.
Application-aware Networking Tools are Re-defining the way Enterprises Manage their Network Bandwidth
Application-aware networking software tools enable enterprises to dynamically allocate the required BW to support traffic
prioritization, thus empowering them to control the network bandwidth as per the application needs. For example:
Enterprise IT staff can allocate more BW to a real-time application such as VoIP/Video and less BW to data (email, web
surfing, etc.) as needed. The enterprise IT staff can monitor and control BW at the router level and change the port speed
as demanded by the application. .- This feature can be of tremendous use in specific verticals such as retail, as the IT staff
can increase the port speed to handle the surge in billing traffic during holiday season. In other cases, the IT staff can
also go down to the desktop level to prioritize a particular user’s BW usage, or -prioritize a manager’s laptop over the
receptionist's computer. In scenarios where a number of remote users connect to the network, If a remote user is having
trouble accessing the database, the IT staff can see if a server is being overloaded, and the BW going into that server can
be increased dynamically.
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Market Trend Analysis (Contd…)
Traditional TDM Services Continue to Dominate the Access Space, but Alternative Access Technologies such as
Ethernet and 3G Wireless are Gradually Gaining Traction
Traditional TDM services still rule the access space in the U.S., thus restraining customer migration to higher bandwidth ports.
T1s are widely available and are hence the first choice for access to VPNs. Customers looking to migrate from T1 speeds
generally prefer Ethernet, if available, or move to Fractional T3 services. OC3 and OC12 are still seeing limited demand due to
the exorbitant cost involved in leasing these links. DSL is another access technology that has sustained demand due to
continued usage of the service from certain verticals. Retailers prefer using low cost DSL access owing to the large number of
sites that need to be connected and the broad availability of the service. Also, small enterprises that are extremely cost-
conscious continue to drive demand for DSL access. New Edge, MegaPath and Hughes are largely focused on offering DSL
and T1 access to their MPLS networks.
Ethernet has garnered a significant amount of traction in the market as an alternative to traditional access methods in the MPLS
VPN space. In the past few years, service providers have focused on expanding their Ethernet footprint either through CAPEX
investment or NNIs. However, there is still some amount of reluctance from leading service providers that own Ethernet local
assets to wholesale their networks to other carriers, fearing loss of competitive advantage. Small, regional service providers
with strong local network assets have rolled out mid-band Ethernet services (Ethernet over Copper and Ethernet over T1), and
are more open to wholesaling their Ethernet services, but lack the scale to enter into bilateral agreements with carriers
interested in buying their services. The newly launched Ethernet exchange model solves this problem by facilitating easier
buying and selling of tail circuits, thus driving adoption of Ethernet in the access space.
Wireless access continues to see growth for MPLS backup. AT&T, Verizon and Sprint offer broadband wireless access to their
MPLS VPN network, as does Megapath (which resells service from Sprint, Verizon and Alltel). Although wireless access was
touted as the best option for backup link to MPLS VPN, due to its inherent resiliency to natural disasters and construction
incidents, it is also being adopted as a primary link for new locations that need immediate MPLS connectivity. Wireless access
is the best option for businesses that have dispersed locations where wireline access (DSL or T1) is not available or is
prohibitively expensive to purchase. Retail, Insurance and construction verticals are good examples of industries that often
select wireless access to VPNs.
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Integration of Video Applications such as TelePresence Expected to Drive Spending on MPLS VPN services
CTS 500 CTS 1100 CTS 3200
TelePresence(TP) is an MPLS application that is gaining tremendous traction in the market. Leading service providers have
rolled out managed TP solutions eliminating the need for enterprises to invest in in-house IT expertise dedicated to
TelePresence solution management, which has in turn lead to a greater adoption rate. AT&T, BT, Tata Communications and
National Lambda Rail (NLR) have rolled out TP exchanges that support inter-company TelePresence using Cisco’s
Exchange solutions. For example: Any 2 companies that are AT&T’s customers can use AT&T’s gateway to establish inter-
company TP. Verizon, XO and tw telecom are the other service providers offering managed TP solutions on their MPLS VPN
network. Global Crossing recently announced its partnership with Teliris for TP solutions.
Cisco’s (1300 & below) range of solutions can run speeds as low as 1.5Mbps (T1/E1) when optimized to 720p, a key feature
that is expected to drive adoption of these solutions among the SMB segment that does not necessarily have high-speed
connectivity at all its company locations. Even in places where the customer has access to high-speed connectivity the cost
of leasing these high-speed circuits are most often detrimental to implementing a TP solution. The low speed solutions do not
offer a great picture quality, however, customers can get a decent TP solution running using 3-5 Mbps speed circuits and
move to higher speed solutions when they are ready to make the necessary network investment. The CTS 1300 & CTS 500
cost $89K and $33.9K, respectively, as compared to a CTS 3000 that costs $300K. Comparing the price of the different TP
solutions one can easily understand the reasons for adoption of the solution by the SMB segment.
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Layer 2 Ethernet-based VPNs (VPLS) are Complementing Layer 3 MPLS VPNs
An interesting trend in the WAN transport space today, is that customers are asking for a combined private IP layer 3
solution and layer 2 Ethernet solution for their fully meshed connectivity needs. Customers do not want to differentiate
between layer 2 & 3., Instead they are increasingly looking to solve their business problem with a combination of
services. For network connections that they are used to managing themselves – e.g., HQ location to data center or
between data centers, where they are running very specific applications - they are asking for layer 2 Ethernet. For
branch locations, they are asking for layer 3 VPNs, thus encouraging layer 2 and layer 3 VPNs to coexist in a
complementary fashion in the market.
Market trends also indicate that as customers get comfortable with layer 2 VPN and get involved in enhanced traffic
shaping, they cannot do all of that on the Ethernet switches they use today, and they are looking at carriers to provide
some enhancements. If the IT staff is not able to provide any kind of CoS treatment before the traffic goes to the WAN
link, then they are not going to get the desired performance. Service providers are seeing this as an opportunity to sell
their managed services along with the VPLS service offering.
Hybrid Networks are Seeing Growth Even as VPLS Gains Traction
As explained in the earlier section VPLS is gaining traction in the VPN space, and increasingly public IP VPNs based on
IPsec or Secure Socket Layer (SSL) are being used to connect remote company locations to the service provider’s IP
cloud. DSL-based IP VPNs using IPsec are also seeing greater adoption as a back-up option to MPLS, thus driving
market spending on IP VPNs. Going forward, the market trend is clearly toward more hybrid networks, where MPLS
VPN/VPLS/IP VPNs co-exist, as the ultimate purpose of implementing a VPN network is to support any-to-any
connectivity and service providers will use a combination of technologies to support inter-networking between distributed
company locations.
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Customers are Experimenting with Multiple Back-up Options
Customers are increasingly experimenting with multiple services for back-up or secondary circuits. 3G wireless access
and DSL-based IPsec tunneling are seeing good growth as back-up circuits. Satellite is sometimes preferred for back-up
but is most often used for providing access to locations where other alternatives are not available. 3G wireless access is
also fast becoming a preferred method of primary circuit to connect remote locations to MPLS networks.
The option of usage-based billing has led customers to prefer to lease the secondary/back-up circuit from the primary
circuit provider. In usage-based billing the customer just pays a nominal port fee until the time the circuit gets fully utilized
(in case of primary circuit failure) upon which the customer pays for the BW utilized on the port. Increasingly, wholesale
customers are utilizing usage-based billing to buy MPLS ports and offer it as a back-up option to customers that ask for
carrier diversity for their MPLS circuit.
Bundled Offerings Continue to Gain Traction in the SMB Space
Bundled products such as offering Voice + Internet + VPN for data transport continue to see a great amount of success
in the SMB space, owing to 2 key benefits seen by the customer: 1) Cost savings due to price discounts offered by CSPs
on bundled solutions, and 2) Ease of dealing with a single provider for multiple communication services. VoIP/SIP
Trunking continues to be an integral part of MPLS VPN offerings, as the SMB customer segment continues to focus on
converging its voice and data infrastructure. The ability of MPLS networks to support multiple CoS is the primary reason
for VoIP adoption. Managed services such as managed router and managed security services (CPE-based Firewall,
web content filtering, DDoS) are some of the other services that are being increasingly bundled along with VPN offerings.
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Ability To Support Multicast Is Fast Emerging as a Key Competitive Differentiator
Multicast is simply the ability of a network to support one-to-many type of information sharing/distribution. Since MPLS
VPNs are predominantly a transport service targeted towards any-to-any type of connectivity, the ability to share
information from a single source with multiple receivers can have multifold benefits in some key applications. Since most
large enterprises deploying MPLS VPN infrastructure intend to converge its applications, support for IP multicast can go
a long way in driving adoption of MPLS for media-rich collaboration services.
Typical application scenarios of IP multicast include: delivery of financial market data and stock ticker values data stream
to multiple end users, enterprises using IP video streaming to broadcast their CEOs’ speeches to employees, distance
learning, and primary video distribution networks in the media and entertainment vertical. The content provider segment
is increasingly asking for multicast capabilities to distribute content using the MPLS network. Providers are typically
looking to transmit very large video files using intelligent techniques, but they would also need caching and content
distribution services, which we expect will drive further demand for CDN services offered by some communication
service providers.
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Market Revenue and Ports Forecasts
25
Market Revenue Forecasts
Total MPLS/IP VPN Services Market: Revenue Forecasts (U.S.), 2008-2014
12,000.0 15.0
10,000.0
14.5
Revenues ($ Million)
Growth Rate (%)

8,000.0
14.0
6,000.0
13.5
4,000.0
13.0
2,000.0
0.0 12.5
2008 2009 2010 2011 2012 2013 2014 CAGR
(2009-14)
Revenues ($ Million) 4,843.0 5,523.2 6,323.6 7,263.5 8,329.5 9,514.8 10,784.4 14.3%
Growth Rate (%) -- 14.0 14.5 14.9 14.7 14.2 13.3
Revenues for the U.S. MPLS/IP services market totaled $5,523 million in the year 2009, and are expected to reach
$10,784 million in 2014, growing at CAGR of 14.3 percent. The U.S. MPLS/IP VPN services market is in the growth stage of
the product lifecycle, with demand for the service increasing as end users are convinced of the benefits offered by migrating
to IP-based networks. As discussed in detail in the trends section of this study, numerous factors are contributing to the
growing demand for MPLS/IP VPN services, with convergence and increasing uptake of managed services leading the way.
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Market Revenue Forecasts (Contd…)
Total MPLS/IP VPN Services Market: Revenue Forecasts Comparison by 2009 Study vs. 2010 Study (U.S.), 2008-2013
10,500.0
9,000.0
7,500.0
6,000.0
4,500.0
3,000.0
1,500.0
0.0
2008 2009 2010 2011 2012 2013
2009 Study Revenue Forecast ($ Million) 4,843.0 5,448.3 6,183.9 7,080.5 8,142.6 9,323.3
Note: All figures are rounded; the base year is 2008 for 2009 study forecast & 2009 for 2010 study forecast. Source: Frost & Sullivan
The chart shows revenue forecast comparison of the 2010 study with revenue estimates from the 2009 study. The
MPLS/IP VPN market grew at a slightly higher rate than predicted, due to market recovery in 2009 that fueled
greater adoption of MPLS VPN services. Frost & Sullivan expects the market to sustain this momentum throughout
the forecast period.
N858-63 27
Total MPLS/IP VPN Services Market: Percent Split in Revenues by Wholesale vs. Retail (U.S.), 2008-2014
90.0
80.0
Percent Split Revenues (%)

70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
2008 2009 2010 2011 2012 2013 2014
Wholesale Revenues (%) 12.0 11.2 10.4 9.7 9.0 8.4 7.9
Retail Revenues (%) 88.0 88.8 89.6 90.3 91.0 91.6 92.1
The chart shows the revenue distribution between the wholesale and retail segments. The retail market is expected to represent
a major percentage of the total revenues throughout the forecast period, largely due to service providers’ reluctance to
wholesale the service to competitors for reselling purposes. The dominant wholesale customers are system integrators,
international carriers, content providers and to a lesser extent carriers that buy services from each other for back-up options.
N858-63 28
Wholesale MPLS/IP VPN Services Market: Revenue Forecasts (U.S.), 2008-2014
900.0
7.1
Wholesale Revenues ($ Million)

750.0 6.8
Growth Rate (%)

600.0 6.5
6.2
450.0
5.9
300.0
5.6
150.0 5.3
0.0 5.0
CAGR
2008 2009 2010 2011 2012 2013 2014
(2009-14)
Wholesale Revenues ($ Million) 581.2 618.9 659.2 704.0 753.3 802.2 852.0 6.6%
Growth Rate (%) -- 6.5 6.5 6.8 7.0 6.5 6.2
Wholesale market revenues for the year 2009 were $618.9 million, much lower than forecasted in the 2009 study. Service
providers reported lower wholesale MPLS VPN revenues owing to slower than anticipated growth of the content provider
segment. System Integrators(Sis) and International carriers continue to drive wholesale revenues. Frost & Sullivan expects
carrier neutral exchange providers to represent considerable demand in the future as these providers start offering end-to-end
circuits to their carrier customers instead of just the tail circuit. A carrier/SI wanting to connect between NYC – and Chicago can
now buy both the tail and long haul pieces from the exchange provider, as compared to buying the long haul piece from a
carrier separately. This creates an unique opportunity for Tier 2 or even Tier 1 MPLS providers to sell their transport networks
to exchange providers as long as they do not represent competition to their direct carrier sales.
N858-63 29
Wholesale MPLS/IP VPN Services Market: Revenue Forecasts Comparison by 2009 Study vs. 2010 Study (U.S.), 2008-2013
1,500.0
1,200.0
900.0
600.0
300.0
0.0
2008 2009 2010 2011 2012 2013
2009 Study Revenue Forecast ($ Million) 581.2 681.0 803.9 955.9 1,140.0 1,351.9
2010 Study Revenue Forecast ($ Million) 581.2 618.9 659.2 704.0 753.3 802.2
As shown in the chart above the wholesale market revenue growth in 2009 was less than forecasted in our 2009 study. The
reason is lower than expected uptake of MPLS VPNs by content provider market. Despite a greater interest from this
segment compared to earlier years, the interest has not materialized into comparable market spending due to concerns
regarding video quality on IP-based networks. A limited number of point-to-point IP-based networks are in use today;
however, content provider uptake of MPLS/IP VPN for video distribution is still in the early stages. Today, the wholesale
market demand is largely sustained by international carriers and system integrators. As the content provider segment for
MPLS evolves, Frost & Sullivan will revise the forecasts, accordingly.
N858-63 30
Retail MPLS/IP VPN Services Market: Revenue Forecasts (U.S.), 2008-2014
10,500.0 16.0
Retail Revenues ($ Million)

9,000.0 15.5
Growth Rate (%)

7,500.0
15.0
6,000.0
14.5
4,500.0
14.0
3,000.0
1,500.0 13.5
0.0 13.0
CAGR
2008 2009 2010 2011 2012 2013 2014
(2009-14)
Retail Revenues ($ Million) 4,261.8 4,904.3 5,664.5 6,559.5 7,576.2 8,712.6 9,932.4 15.2%
Growth Rate (%) -- 15.1 15.5 15.8 15.5 15.0 14.0
The retail market revenues totaled $4,904.3 million in 2009, and are expected to reach $9,932.4 million in 2014, growing at a
CAGR of 15.2 percent. We expect the year-over-year growth rates to peak in 2011 and decline marginally thereafter, owing to
price compression over a period of time, as expected with any growing market. Demand for higher bandwidth speeds would
sustain market spending, as customers continue adding voice and video applications to their VPN networks. However, the
overall cost competitiveness of migration to an IP network is expected to result in price depletion leading to reduced overall
market revenues. Carriers are advised to manage this revenue decline by effectively marketing managed services and hosted
services to customers to ensure a steady stream of revenues.
N858-63 31
Retail MPLS/IP VPN Services Market: Revenue Forecasts Comparison by 2009 Study vs. 2010 Study (U.S.), 2008-2013
10,500.0
9,000.0
7,500.0
6,000.0
4,500.0
3,000.0
1,500.0
0.0
2008 2009 2010 2011 2012 2013
As shown in the chart, market revenues for 2009 exceeded our 2009 study forecast owing to a steady market spending
recovery as compared to 2008. Growing focus on convergence of applications (voice + data + video) and the need for
reliable networks for implementing a fully meshed network connectivity among distributed enterprises – are some of the
factors driving adoption of MPLS/IP VPN services. Managed services (managed security, managed router) and growing
focus on network and application performance management tools are expected to contribute significantly to the market
revenues in the MPLS/IP VPN space.
N858-63 32
Market Ports Forecasts
Retail MPLS/IP VPN Services Market: Ports Forecasts (U.S.), 2008-2014
1,000,000 4.0
3.6
800,000 3.2
Growth Rate (%)

Ports Forecasts 2.8
600,000 2.4
2.0
400,000 1.6
1.2
200,000 0.8
0.4
0 0.0
CAGR
2008 2009 2010 2011 2012 2013 2014
(2009-14)
Ports Forecasts 767,917 790,955 816,265 844,018 869,339 893,680 916,022 3.0%
Growth Rate (%) -- 3.0 3.2 3.4 3.0 2.8 2.5
Frost & Sullivan estimates an installed base of 790,955 retail MPLS ports in 2009, and expects the port count to increase to
916,022 in 2014, growing at a CAGR of 3.0 percent. The ports growth grate is expected to gradually decline beyond 2011 as
we expect market migration from multiple low speed ports to fewer higher speed ports. That is, a single 10 Mbps or 100
Mbps physical Ethernet port will be shared among multiple locations (by creating multiple logical VLANs), instead of each
location using a separate physical port. This will result in a port count decline with fewer ports being sold., However, the high
speed ports sold will command a higher price, resulting in higher per port revenue.
N858-63 33
Migration Trends by Access Technologies
Retail MPLS/IP VPN Services Market: Market Migration by Access Technologies (U.S.), 2009 and 2014
Satellite 4%
3%
EVDO 4%
2%
Ethernet 22%
5%
SONET (OCx) 2%
3%
T3/Frac T3 2%
6%
T1/Frac T1 55%
65%
DSL 8%
10%
Fram e Relay 2%
4%
ATM 1%
2%
0% 10% 20% 30% 40% 50% 60% 70%
2009 2014
The chart shows market migration trends by access technologies for the years 2009 & 2014. T1 speeds continue to dominate
the access space, with a steady growth in Ethernet access being adopted. Traditional ATM/FR access are clearly on a
decline but not completely retired, yet. DSL continues to hold its share due to a sustained market demand from the cost
conscious small business segment, and distributed verticals such as retail. EVDO or Wireless access as a primary link is
increasing, as opposed to being limited for back-up circuit applications in the past. Satellite access continues to see uptake
from terrestrial service providers to connect customer locations that are beyond the wireline network footprint.
N858-63 34
Pricing Analysis
35
Pricing Analysis
While we would like to provide very specific information about MPLS pricing, that is not possible for two reasons: not all carriers price MPLS
services in the same way, and the actual price paid is affected by factors such as the size (number of sites, managed services selected) and
length of the customer's contract with the carrier. It is also affected by the customer's goals for MPLS when it negotiated the contract.
Virtually all carriers have a pricing structure for MPLS services that includes a cost for the access circuit and the port speed. Most carriers
offer and charge for a variety of advanced services including network-based firewalls and IP multicast. Most carriers also charge a premium
for the highest CoS. But there are always exceptions; for example, Sprint does not charge for IP multicast, and charges one single price for
all classes of service. Every provider offers at least two service classes. One of the service classes is referred to as real-time and is intended
for applications such as voice and video. The other is called best effort and is intended for any traffic that is not placed in the real-time service
class.
Broadly, there are 3 types of pricing structure for MPLS VPN services.
• Monthly Recurring Charge (MRC ) based Pricing: In a MRC model, the customer pays for the service on a monthly basis, depending on
the bandwidth subscribed to. The price components in this model are access, port and bandwidth. Some carriers do not charge a port
fee, and just charge for the bandwidth. The pricing could vary by class of service depending on the service provider.
• Usage-based Pricing: Customers with seasonality of traffic go for a usage-based model. The price components are similar to that in a
MRC based model – access + port + BW charge. Customers pay as they go for the BW they use (top 5% or 10% generally gets
discarded), but they still are paying a MRC for access. Carrier generally charge a one-time non-recurring charge for port or sometimes
expect a minimum BW commitment from the customer in this model. Carriers state that other service providers are buying usage-based
MPLS VPN service and offering it as a back-up circuit to end customers.
• Usage-based plus MRC Pricing: In this model, the customer pays MRC for committed BW and any BW usage above the committed
rate is charged a per MB price. The industry term for this kind of billing is 90th percentile billing where the carrier bills the customer for
any overages if it is above the committed rate more than 90% of the time in a given interval (typically measured every 5 minutes). At the
end of the month, the samples are sorted from highest to lowest, and the top 10% of data is thrown away. The next highest
measurement becomes the billable utilization for the entire month. Similarly, some carriers also offer 95th percentile.
N858-63 36
Pricing Analysis (Contd…)
Class of Service Pricing

It is common to see most carriers offering 4-6 levels of CoS in the MPLS VPN space. Real Time, Interactive, Mission-critical,
Priority and Best-effort are some of the CoS options available for VPN service. The various VPN service pricing options
available in the market today are as follows:
• Flat-rate charge (as a percentage of port charge): Service providers charge a flat-fee based on the rate
customers pay for the port. For example, if a customer pays $400 per month for a DS1 port, the CoS fee is 10
percent of the port fee, which is $40 in this case. The fee does not vary based on access, with a flat rate of 10%
of the port fee being charged as CoS fee.
• Flat-rate charge (varies by bandwidth): Service providers charge a flat rate based on the type of port
speed/bandwidth that a customer subscribes to. For example, a T1 link has a flat $100 rate allowing the customer
to have service classes for T1.
• Variable CoS fee (as applied to usage-based service): This is applicable to usage-based MPLS VPN services.
Each MB of packet sent into the network is segregated based on the CoS provided for that MB and the applicable
per MB price is applied to that BW.
N858-63 37
Pricing Analysis (Contd…)
Total MPLS/IP VPN Services Market: Pricing Trends by Port Speed (U.S.), 2009
Service Average MRC ($)

DSL $150-$200
T1 $300-$400
T3 $1,500-$2,500
OC-3 $6,500-$8,000
Ethernet-10 Mbps $500-$700
Ethernet-100 Mbps $2,000-$2,500
Ethernet-1 GigE $5000 & above
The figure shows pricing trends for various MPLS port speeds in the market. Please note the indicative pricing is for
MRC-based port or bandwidth. It does not include access fee, CoS charges or any other managed service offered with
the port.
N858-63 38
Competitive Landscape and Market Share Analysis
39
Competitive Landscape
The U.S. MPLS/IP VPN market space continues to be dominated by the Tier 1 carriers, with AT&T, Verizon, Sprint and Qwest
together, controlling more than 88 percent market share. The competitive carriers such as Level 3, tw telecom, XO
Communications, and Global Crossing are equally active in the space. The third tier consists of companies like PAETEC,
AboveNet, CenturyLink, Megapath, New Edge Networks and many other small service providers. The U.S. market is mature in
terms of the MPLS network assets owned by service providers. Most domestic carriers have their own expansive footprint and
they do not buy and resell other carriers’ VPNs, unless the service is being sold as an MPLS backup option. However, they
wholesale their MPLS offerings to International carriers looking at expanding their footprint in the U.S. markets. Hence, the
wholesale MPLS VPN market is largely driven by the demand for high bandwidth ports from content providers and system
integrators, as compared to other domestic carriers in the U.S. markets.
The Tier 1 carriers dominate the MPLS VPN space, largely owing to their national network footprint. AT&T and Verizon lead the
space. The widespread availability of their MPLS networks, in addition to the fact that they own more local loop assets than rest
of the service providers in the market, helps them offer a cost competitive service backed by the strong SLAs that are expected
from a Tier 1 carrier. They are in a position to support multiple access technologies to their MPLS networks, most of which they
own nationally, and are hence the choice of service provider among large distributed enterprise customers, and verticals such
as – Government, Education and Retail. Since layer 3 MPLS is touted as the preferred service for multipoint- to-multipoint
network connectivity, the reach of a service provider's network becomes very important while connecting customer sites that
can run to multiple hundreds at times. ILECs have an edge over other service providers in the market, particularly owing to this
reason. They have access to depreciated copper links that helps keep their costs low and offer a competitive service as
compared to CLECs/regional service providers who have to buy access at a premium from ILECs to offer their VPN services.
Service providers such as Global Crossing, Level 3, XO Communications and tw telecom are also seeing commendable
success in the markets they operate in. Some regional providers are extremely successful in the MPLS VPN space through
their service differentiation. They offer robust networks with excellent SLAs and work closely with the customer which is
important for targeting the SMB space. Especially, among customers that have less than 25 sites, regional service providers
seem to be a huge success.
N858-63 40
Competitive Analysis
Total MPLS IP/VPN Services Market: Comparison of Common SLAs for Leading Service Providers (U.S.), 2010
Service
Availability MTTR Latency Jitter Packet Loss Installation
On-net &
On-net On-net On-net & Off-net
On-net Off-net On-net Off-net & Off- & Off- Off-net (Business
SLA SLA Actual SLA SLA net SLA Actual net SLA Actual SLA Actual Days)
AT&T 99.95% 99.95% 99.99% 2 Hours 4 Hours 37 ms 34.3 ms < 1 ms 0.7 0.050% 0.010% NR
Global
100.00% 99.99% NR 4 Hours 4 Hours <50 ms 42.19 ms <3 ms NR 0.001% 0.030% NR
Crossing
Level 3 99.99% 99.99% NR 4 Hours 4 Hours <50 ms 38.6 ms < 3 ms 0.0058 0.100% 0.100% NR
Sprint 100.00% 100.00% NR 4 Hours 4 Hours <55 ms 36.67 ms < 2 ms 0.0017 0.100% 0.000% NR
tw telecom 100.00% 99.99% NR 2 Hours 4 Hours <45 ms 40.14 ms < 5 ms 0.04 0.100% 0.000% < 45 days
Verizon 100.00% 99.90% NR 2 Hours 4 Hours <36 ms 33.1 ms < 5 ms 0.084 0.500% 0.004% 45
XO 100.00% 100.00% 100.00% 4 hours 4 Hours <55 ms 55 ms < 1 ms 1ms 1.000% 1.000% NR
Key: NR = Not Reported.

Note: Qwest did not respond to our request for the above details, and is hence not included in the above table.
N858-63 41
Competitive Analysis (Contd…)
MPLS/IP VPN Services Market: Comparison of Service Offerings for Leading Service Providers (U.S.), 2010
AT&T Verizon Sprint Qwest tw telecom Level 3 XO Global Crossing
Real Time/Voice Real Time (EF

CoS1 (AF) Default
(EF Class) Class)
CoS2 -In Contract Bulk Data
Video/Priority Data Priority Data (AF4 Premium Plus (EF+)
(AF31) CoS2- Out Preferred
(AF4 Class) Premium Class) Premium (EF)
of Contract(AF32) Data Real-time
Classes of Mission Critical Critical 4 Priority Mission Critical Enhanced Plus (AF+)
CoS3 - In Critical Data Critical
Service
Market Revenue Forecast & Pricing Analysis
Contract(AF21)
CoS3 -Out of
Data (AF3 Class) Business
Business Data Standard
Queues Data (AF3 Class)
Business Data
Interactive
Voice Video
Priority
Standard
Enhanced (AF)
Basic Plus (BE+)
(AF2 Class) (AF2 Class) Basic (BE)
Contract (AF22) Real Time
General Data Best Effort (Default
CoS4 (Default) Voice Video
(Default Class) Class)
Integrated
VoIP/SIP Yes Yes Yes No Yes Yes Yes Yes
Trunking
Multicast
Yes Yes Yes Yes Yes (ICB) Yes Yes Yes
Support
Yes
Yes Yes Yes
Telepresence Yes (Cisco) Yes (Cisco) (Cisco/Tandberg Yes (Cisco) Yes (Teliris)
(Cisco) (Supported) (supported)
with partners)
via Managed
Remote VPN Yes Yes Yes Yes Yes (Q42010) Yes Yes
Security Services
IPv6 Yes Yes 1H 2011 Yes Yes No No Yes
Mobile IP
Yes Yes Yes No No No No Yes
Integration
N858-63 42
Competitive Analysis (Contd…)
MPLS/IP VPN Services Market: Comparison of Service Offerings for Leading Service Providers (U.S.), 2010
AT&T Verizon Sprint Qwest tw telecom Level 3 XO Global Crossing

Application Aware
VPN Tools
AT&T Business Verizon Enterprise Compass tw telecom Level 3 Enabled Business

Web Portal NR uCommand®
Direct Center Portal MyPortal Portal Center
Network
Yes Yes Yes NR Yes Yes Yes Network Integrity
Performance
Application Available 1Q
Yes Yes Yes NR Yes (by CoS) Yes Application Integrity
Performance 2011
Yes (Usage- Available 1Q Yes (Usage-based

Dynamic IP BW Yes Yes NR Yes Expected
based billing) 2011 billing)
Managed Services
Managed Router Yes Yes Yes Yes Yes Yes Yes Yes
Managed WAN Yes Yes Yes Yes Yes Yes Yes No
Managed Security Yes Yes Yes Yes Yes Yes Yes ICB
Key: NR = Not Reported

N858-63 43
Market Share Analysis 2009
Total MPLS/IP VPN Services Market: Market Share Analysis (U.S.), 2009
Sprint
18.6%
Qwest
12.6% Global Crossing
3.0%
Level 3
1.4%
Verizon
24.5% tw telecom
1.3%
XO
1.4%
Others
4.0%
AT&T
33.2%
AT&T leads the market with 33.2 percent market share, followed by Verizon (24.5 percent), Sprint (18.6 percent) and Qwest (12.6 percent)
in 2nd, 3rd, and 4th position, respectively. These 4 companies together, earn close to 88 percent of the market revenues. The next nearest
competitor, Global Crossing, has 3.0 percent market share, followed by Level 3 and XO at 1.4 percent each, and tw telecom at
1.3 percent. Tw telecom and XO have emerged out of the “others” category and are new entrants in our market share chart. The others
category represents 4.0 percent of the market revenues, and includes companies such as MegaPath, Paetec, New Edge, AboveNet,
CenturyLink, Hughes and many other small service providers in the U.S. MPLS/IP VPN services market.
N858-63 44
Market Share Comparison 2008 and 2009
Total MPLS/IP VPN Services Market: Market Share Analysis (U.S.), 2008 and 2009
2008 2009
Sprint
Sprint
19.0%
18.6%
Qwest
12.6% Global Crossing
Qwest
3.0%
13.8%
Global Crossing Level 3
2.6% 1.4%
Verizon Verizon
24.0% Level 3 24.5% tw telecom
1.4% 1.3%
Embarq XO
1.3% 1.4%
Others Others
5.0% 4.0%
AT&T
AT&T
32.9% 33.2%
The charts show the market shares by revenue for leading industry participants in 2008 and 2009. As depicted, AT&T, Verizon and
Global Crossing increased their market shares marginally in 2009. Sprint and Qwest lost a few percentage points of market share,
however, in terms of absolute revenues, the companies captured a significant revenue share of the total market revenues. XO and
tw telecom are the new entrants in our market share chart, XO tied with Level 3 at 1.4 percent share and tw telecom with 1.3 percent
share. Embarq, post merger with CenturyLink, had revenues less than 1.0 percent, and hence is included the “Others” category.
N858-63 45
About Frost & Sullivan
46
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The Growth Consulting Company
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N858-63 47
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N858-63 48
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N858-63 49
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MPLS/IP VPN Services Market Update 2010

Focus on Convergence,Telepresence and Network & Application

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 Total MPLS/IP VPN Services Market: Revenue Forecasts (U.S.), 2008-2014 26

 Wholesale MPLS/IP VPN Services Market: Revenue Forecasts (U.S.), 2008-2014 29

 Retail MPLS/IP VPN Services Market: Revenue Forecasts (U.S.), 2008-2014 31

 Retail MPLS/IP VPN Services: Ports Forecasts (U.S.), 2008-2014 33

• Layer 2 Ethernet-based VPNs (VPLS) are complementing layer 3 MPLS VPNs.

• Hybrid networks are seeing growth even as VPLS gains traction.

• Ability to support multicast is fast emerging as a key competitive differentiator.

IPsec versus MPLS

CPE versus Network-based

Measurement Name Measurement Trend

Revenues (2009) $5,523.2 million Increasing

Potential revenues (2014) $10,784.4 million Increasing

Base year market growth rate (2009) 14.0 percent Increasing

Forecast period market growth rate (CAGR) 14.3 percent Increasing

Competitors (active market competitors in base year) 40+ Stable

Degree of technical change Medium Increasing

Customer satisfaction 9 Stable

Customer Satisfaction Market Concentration

Source: Frost & Sullivan

Rank Driver 1-2 Years 3-4 Years 5 Years

Support for traffic prioritization by applying Class of Service (CoS)

Cost competitiveness of Layer 3 MPLS VPN service makes it an

Emergence of Ethernet Access as a cost-effective alternative to

Market Migration from expensive ATM & Frame Relay networks to

Source: Frost & Sullivan

Source: Frost & Sullivan

Rank Restraint 1-2 Years 3-4 Years 5 Years

Emergence of Layer 2 Ethernet VPN or Virtual Private LAN service

Sunken investment in traditional layer 2 services such as ATM & Medium

Source: Frost & Sullivan

CTS 500 CTS 1100 CTS 3200

Layer 2 Ethernet-based VPNs (VPLS) are Complementing Layer 3 MPLS VPNs

Hybrid Networks are Seeing Growth Even as VPLS Gains Traction

Customers are Experimenting with Multiple Back-up Options

Bundled Offerings Continue to Gain Traction in the SMB Space

Ability To Support Multicast Is Fast Emerging as a Key Competitive Differentiator

Total MPLS/IP VPN Services Market: Revenue Forecasts (U.S.), 2008-2014

Growth Rate (%)

Percent Split Revenues (%)

Wholesale MPLS/IP VPN Services Market: Revenue Forecasts (U.S.), 2008-2014

Wholesale Revenues ($ Million)

Growth Rate (%)

Retail MPLS/IP VPN Services Market: Revenue Forecasts (U.S.), 2008-2014

Retail Revenues ($ Million)

Growth Rate (%)

Retail MPLS/IP VPN Services Market: Ports Forecasts (U.S.), 2008-2014

Growth Rate (%)

0% 10% 20% 30% 40% 50% 60% 70%

Class of Service Pricing

Service Average MRC ($)

Ethernet-10 Mbps $500-$700

Ethernet-100 Mbps $2,000-$2,500

Ethernet-1 GigE $5000 & above

Key: NR = Not Reported.

AT&T Verizon Sprint Qwest tw telecom Level 3 XO Global Crossing

Real Time/Voice Real Time (EF