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Enterprises in NZ and Oz keen on Ethernet services

Enterprises in NZ and Oz keen on Ethernet services

First-mover advantage is key, as firms are looking for long-term relationships with their service providers, says Ovum.

The enterprise Ethernet market in Australia and New Zealand is still in an early stage of its lifecycle in comparison to other developed regions. Only 11 percent of the large enterprises Ovum surveyed currently consider Ethernet (private lines or VPN) as their main WAN technology. Enterprises are also looking for more applications support over their networks.

Competition in the Ethernet market is still weak in comparison to more mature technologies such as MPLS (main technology for 41 percent of the companies), which may be restricting its attractiveness and slowing its uptake, says the research company.

However, expectations of adoption are high and 24 percent of large enterprises expect to have Ethernet as their main WAN technology in two years. This suggests these enterprises expect more mature offerings to emerge in the market.

“This high expected growth represents a great opportunity for service providers, but they must remain aggressive on customer acquisition. The first-mover advantage is key, because enterprises are looking for long-term relationships with their network service providers, and wants to avoid the cost and disruption involved in breaking contractual obligations”, says Claudio Castelli, Ovum senior analyst.

The survey says the increasing adoption of MPLS and Ethernet networks is justified by the growth of networked mission-critical business applications and realtime communications applications, including video.

Like other developed regions, ANZ has high adoption of these applications supported over enterprise WANs, but its large enterprises are the most likely to support site-to-site VoIP in the future. Thirty percent of large enterprises in ANZ don't support site-to-site VoIP across their WAN today but expect to do so in one year. “This is significant expected growth, considering that 41 percent of the large enterprises currently support site-to-site VoIP”, says Castelli.

Enterprises in ANZ are thought to be interested in buying more network management capabilities from their service providers, including the ability to prioritise the performance of individual business applications.

Service providers in this market need to respond to this preceived increase in demand for advanced network management capabilities and the ability to prioritise the performance of individual business applications, by offering applications-centric networking solutions and more end-to-end performance management capabilities, especially around VoIP. We expect to see new offerings coming from service providers in the next few years.

Overall, enterprises in ANZ are more satisfied than their counterparts in other developed regions with their service providers’ support services and responsiveness, especially their performance in fixing faults and keeping them informed of progress.

The weakest area is around SLAs and penalties for not meeting them, reports Ovum. This suggests that, more than in other regions, there is unmet demand for service providers to be business partners and share the potential impact of network faults and service degradation with enterprises.

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