A newly issued report from the Convergence Consulting Group, Toronto, says the Canadian market for data transmission and Internet access will reach $6.4 billion by the end of 2002 -- up from $4.8 bill...
March 1, 2001
A newly issued report from the Convergence Consulting Group, Toronto, says the Canadian market for data transmission and Internet access will reach $6.4 billion by the end of 2002 — up from $4.8 billion in 2000.
The report, The Canadian Data/Internet Market – 2001 Edition, provides a comprehensive assessment of the Data/Internet access market in Canada. This report includes information from hundreds of interviews with access provider personnel, analysts and equipment makers. Some of the findings include:
The Data/Internet access market represents the key growth driver for access providers.
Bell/Partners (including Aliant, Manitoba Telecom Services, SaskTel) are the market leaders, with over 40 per cent of the market.
Access sales to small to large businesses/organizations comprises over 50 per cent of the market and has the best CAGR (residential sales is second, followed by sales to ISPs and telcos).
As much long-haul bandwidth has been deployed, metro/last mile has become the focus of changes to access providers’ networks.
Multiple dwelling units, multiple tenant units and smart builds (i.e., one-off fiber/network builds and upgrades for communities) have become a target for access providers as evidenced by a number of partnerships and deals.
Value-added services (hosting and delivery, systems integration, portals) have become critical to access providers seeking to complement and augment their access offerings.
As far as specific segments are concerned, the report found the following:
Improvements in network infrastructure, especially technology that allows vast increases in network capacity and new entrants, are contributing to downward pressure on Private Line prices. Revenue is also moving to the emerging LAN and Business DSL segments. However, private line is still a primary choice where direct connection, privacy and traffic intensity justify a dedicated facility in a private network, as well as for provision of bandwidth between and among Internet routers.
Port growth and the transition to higher speeds will continue Frame Relay’s growth. However, going forward Frame Relay will face competition from the LAN and IPVPN segments, leading to a small decline in its share of the access market.
LAN is emerging as a fierce competitor to ATM/Frame for its ease of implementation and the relative simplicity of its Ethernet protocol. Access providers such as GT have bypassed ATM services completely for LAN, and Telus heavily favours LAN to ATM. Transparent LAN services and Gigabit Ethernet Internet access will continue to propel this segment forward.
IPVPN is an emerging market, with leadership still being sorted out. The advantage of IPVPN is its price positioning versus ATM and Frame. Look for a number of players (not just the major telcos) to offer IPVPN services.
Legacy will continue to decline going forward. Legacy losses will be compensated in part by Business DSL, Frame Relay and Private Line revenue gains.
Though the Dial Internet market will continue to decline (due to price drops, a decline in the total number of ISPs, and the continuing growth and shift to high-speed Internet access), the failure of the free ISP model is giving paid-dial a bit more breathing space. Bell/Partners and Telus are well into transitioning their dial accounts to high speed; other ISPs still have a way to go. Residential High-Speed Internet Access will continue its torrid growth. High Speed will chip away at Dial, compensating for its revenue decline. Look for higher speed offerings and better content in 2002.
With Bell/Partners, Telus and new entrants committed to the market, Business DSL is expected to be the most robust growth segment. Business DSL will aid in compensating for revenue declines in the Dial, Legacy and Private Line segments.
For more detailed information on this report, visit the company’s web site at www.convergenceonline.com.