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Home Technology Infrastructure & Platforms Computer, Storage, Networks, Connectivity

WAN spending goes up by 44 pct while MPLS declines by 55 pct

FutureCIO Editors by FutureCIO Editors
November 7, 2022
Photo by Pixabay from Pexels: https://www.pexels.com/photo/white-switch-hub-turned-on-159304/

Photo by Pixabay from Pexels: https://www.pexels.com/photo/white-switch-hub-turned-on-159304/

TeleGeography forecasts that the wide area network (WAN) market will grow by around 44%—from US$59 billion in 2021 to US$85 billion in 2026—for the largest 5,000 companies globally.

According to a new five-year market forecast from its WAN market size report, MPLS’ contribution to the market revenue will decrease by 55% over five years.

The researcher says MPLS and access lines connecting MPLS ports accounted for 60% of global WAN revenue for the largest multinational organizations in 2021, but this is predicted to drop to 27% by 2026.

As MPLS is replaced by lower-cost Direct Internet Access (DIA), WAN revenues will likely continue to grow as enterprises select larger port sizes and add SD-WAN overlay services.

Greg Bryan

“As enterprises continue down the path of digital transformation and cloud services become the standard, we see MPLS diminishing as the centre of the WAN. Thus far, we’ve found DIA to be the most common choice for enterprises, as they still want carrier-grade SLAs and service reliability,” said Greg Bryan, senior manager of enterprise research at TeleGeography.

“This could change if substantially more fibre-based broadband plans emerge in the next five years, but as things stand, it very much appears that DIA will replace many MPLS ports and switch places as the key revenue source.”

Greg Bryan

Top WAN spenders

Regionally, East Asia will grow from 41% to 46% of the WAN market in 2026, driven mostly by China. Prices for China and East Asia will be heavily impacted by the shift to DIA, where it is a higher price relative to other geographies.

On the other hand, The Middle East and North Africa will shrink from 9% to 6.5% of the market, while most other regions will remain unchanged.

China, the U.S., and India are forecasted to remain the top three countries by WAN revenue over the next five years, but other countries will change their relative influence on global totals.

“Our 2021 research revealed that East Asia dominates the world market and this only increases in our latest forecast model. China is a huge market where many enterprises must have operations—often with significant bandwidth—despite the sky-high prices that come with the lack of competition,” Bryan continued. “As products switch away from MPLS and toward DIA, the different pricing dynamics of those services, especially how they are priced at higher bandwidths, impacts revenues. China will have the biggest increase among the top-ranked countries, but that will only be 3%.”

Related:  VMware and Intel partner to unlock private AI everywhere
Tags: MPLSTeleGeographyWAN
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