Summary
This analysis discusses most recent Ethernet related revenue results covering the US market. It is important for investors interested in spotting the new low-risk opportunities for revenue growth.
Analysis
Metro Ethernet service has played an important role on the telecommunications stage in recent years. New Ethernet installations are growing at an outstanding rate and are generating revenue growth, while other services languish. This has created a dilemma for established carriers whose businesses were built on legacy service: Is it better to chase these "growth" dollars, or to continue reaping healthy margins on older service, despite slowing (or declining) revenue?
For providers operating without the burden of legacy infrastructure and services, the hard choice of others represents enormous opportunity.
Actual year-on-year change in domestic Ethernet service revenue showing that fixed Wireless Providers recorded the largest percentage increase might be a reflection more of their low 2007 baseline than anything else. Furthermore, CLECs (Competitive Local Exchange Carriers) and Cablecos (companies that operate cable television service) achieved the greatest genuine growth in Metro Ethernet, outpacing even the strong gains made by fiber network operators (FNOs) and incumbent local exchange carriers (ILECs), which includes AT&T and Verizon.
Ethernet pure plays, a group dwindling through attrition and absorption into other categories via M&A activity (mergers & acquisitions), managed more modest increases. This group has been competing via Ethernet the longest, and thus has a mature revenue baseline that mutes the relative impact of new growth. The novelty of the pure play model has worn off, and Ethernet is now being harnessed as a growth engine for companies with more diverse businesses.
