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June 23, 2005 Boonton, NJ -- According to a market analysis study from Insight Research, the market for private line services is expected to continue its contraction through the remainder of 2005, before firming prices take hold in 2006, signaling the start of a recovery in that $35 billion telecommunications segment.
Private lines are point-to-point circuits leased by enterprises from telecommunications carriers in order to link enterprise sites to each other and to the Internet. The report says that price compression and competition precipitated private line revenue losses beginning in 2003. However, according to the report, recent events (such as industry consolidations and the Triennial Remand Order issued by the FCC on February 4, 2005) are reshaping the private line business, and will drive a recovery that is expected to take off as early as 2006. The study reports that from 2005 to 2010 the overall private line market will grow at a compound annual growth rate of 2.5%, reaching $36.5 billion in revenue by 2010.
"Believe it or not, this is a dynamic market. We believe that the traditional private line market will eventually be cannibalized by newer technologies, such as IP services and gigabit Ethernet services, but right now it is a huge profit center for the carriers," says Robert Rosenberg, president of Insight Research. "How quickly the market morphs will be dependent in large part on how quickly the carriers reinvest the profit from their traditional private line services into other technologies. The fun part will be watching how the newly consolidated SBC/AT&T and Verizon/MCI tackle the end-user's need for end-to-end data services in light of these new technology options."
The report, "Private Line and Wavelength Services 2005-2010" evaluates the total private line market and segments by local and long distance private line service revenue, wholesale and retail private line revenue, revenue by type of carrier, revenue by T1, T3, or OC-n circuit class, as well as the number of T1, T3, and OC-n private lines sold.
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