Mark Donahue Mark Donahue is an associate editor for Telephony magazine. Previously, he worked in The Associated Press’ Chicago bureau, as well as two trade publications. He graduated from...more

US Business Spending on Wireline Data Declining in Recession; All Categories Except IP VPN and Ethernet Services Fall

SCOTTSDALE, Ariz., November 16, 2009 – Across nearly every category of wireline data services, spending by US businesses is falling in 2009, reports market research firm In-Stat ( Overall, In-Stat expects a nearly 2% decline in US business spending on wireline data services, which represents the first time this market has declined in the 10 plus years In-Stat has been tracking it.

Wireline data services include expenditures on wide area network (WAN) data transport services, as well as, dedicated Internet access (which includes cable and DSL), network-based IP VPN, private line, frame relay, ATM, and Ethernet services. The category does not include managed services, such as, hosted IP telephony, LAN infrastructure, security, and other managed solutions, which are tracked separately by In-Stat.

“Ethernet Services and IP VPN services are among the lone bright spots in the market,” says David Lemelin, In-Stat analyst. “Spending on ATM, Frame Relay and Private Line services is particularly weak, declining about nearly 10% from 2008. Among the vertical business markets, the professional services and healthcare segments are faring best, but even these are only flat year to year.”

Recent research by In-Stat found the following:

• Spending on wireline data services by US Enterprises (1000+ employees) is on track to decline from $23 billion in 2008 to $22.4 billion in 2009. Spending will stabilize in 2010 before returning to growth reaching $25 billion by 2012.

• Spending on IP VPN services by US Small Businesses (5-99 employees) is projected to grow from about $100 million in 2008 to over $250 million in 2012.

• Among vertical segments of US Enterprises, government represents the largest segment.

• Spending on Ethernet Services among healthcare firms will see some of the strongest growth, nearly tripling from 2008 to 2012.

The research, “US Business Spending by Size of Business and Vertical: Telecom—Wireline Data Services” (#IN0904591WDFS), provides forecasts of US business telecom spending for the 2007–2013 period with detailed segmentation by product category, size of business, and vertical market.

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