4/7/2009 -- Is there a safe harbor in the midst of the ongoing economic crisis?

Look no further than the carrier Ethernet space. According to market watcher Infonetics Research, carrier Ethernet players -- including Cisco Systems Inc., which markets a carrier routing behemoth in its CRS-1 mega-router -- had a healthy quarter, thanks largely to a push among service providers to replace costly legacy gear.

"The economic downturn favors carrier Ethernet technologies and products, as they are a less expensive alternative to legacy equipment. In fact, service provider investment in carrier Ethernet equipment is growing faster than overall telecom capex," noted Michael Howard, a principal analyst with Infonetics Research, in a statement.

"Carrier Ethernet is one of the key technologies globally integral to IP next-gen network transformation projects pushing the move from TDM to packet-based networks. These IP NGN projects depend heavily on IP, MPLS and Ethernet, and gradually will employ the use of Ethernet transport instead of SONET/SDH."

Nor do Howard and Infonetics view the recent upsurge in carrier Ethernet sales as a temporary phenomenon. A host of factors -- not least of which is a projected spike in video traffic -- will push carrier Ethernet revenues into the stratosphere. By 2013, Infonetics projects, carrier Ethernet equipment revenues will exceed $32 billion, an 88 percent increase over last year's spending.

"Service providers spent $17 billion on carrier Ethernet equipment in 2008, and will increase their spending every year at a healthy clip over the next 5 years," Howard said.

Over the same period, Infonetics projects, service providers will invest heavily in IP core and edge routers, along with carrier Ethernet switches and optical gear. Elsewhere, increasing demand for mobile backhaul solutions should make Ethernet microwave the fastest growing overall segment. --Stephen Swoyer