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Outlook for U.S. Enterprise Data Services

Most traditional wireline data services spending by U.S. businesses has been consistently falling in 2009, according to the latest market study by In-Stat. However, there are a few exceptions to this trend.

Overall, In-Stat expects a nearly 2 percent decline in U.S. 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.

Note, the category does not include managed services, such as, hosted IP telephony, LAN infrastructure, security, and other managed service 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 percent 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.

In-Stat's market study found the following:

- Spending on wireline data services by U.S. 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 U.S. 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 U.S. 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.

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