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News recap: Fiber services reach 42% of businesses

In telecom news, a report shows that fiber services are reaching more businesses as operators increasingly deploy fiber, while the Ethernet switch market continues to hit revenue records.

This week in telecom news, a report from Vertical Systems Group found business fiber service penetration reached 42.5% in 2014 as operators increasingly use fiber for Carrier Ethernet service connections. Meanwhile, the Ethernet switch market reached record revenues in 2014.

The Dell'Oro Group has revised its 2015 U.S. telecom capital expenditure (Capex) downward as a strengthening U.S. dollar is expected to wipe $20 billion from telecom spending.

Business fiber services reach 42.5% penetration

The accessibility of business fiber services in the U.S. has quadrupled in the past 10 years, increasing to 42.5% penetration in 2014, according to a report from networking research firm Vertical Systems Group.

In 2004, business fiber services had a penetration rate of 10.9%. The accessibility of fiber has grown as operators increasingly deploy fiber for Carrier Ethernet service connections and to give access to high-speed IP/MPLS VPN services, cloud and Internet connectivity, and mobile backhaul applications.

"Looking forward, the high-stakes endgame for network operators is to deepen and broaden their services infrastructures around fiber -- the future of wireline," said Rosemary Cochran, principal analyst at Vertical Systems Group.

To measure the growth, Vertical Systems Group measured the fiber availability at more than 2 million company-owned and multi-tenant buildings with 20 or more employees.

Ethernet switch market hits record revenue

Revenue for the global Ethernet switch market reached $21.7 billion 2014, driven by investments to accommodate the increasing demands that applications place on network infrastructure, according to a new report from Infonetics Research.

The Ethernet switch market has been hitting record revenues each year since 2010, according to the report.

"40GE is the key growth segment right now, but we expect this to last only another one to two years, after which 25GE and 100GE technology takes over," said Matthias Machowinski, directing analyst for enterprise networks and video at Infonetics.

Shipments for 40GE ports tripled in 2014 and revenue doubled. Infonetics said 100GE ports grew more than sixfold in 2014, and the arrival of 100GE on fixed switches and the introduction of low-cost optics will drive the growth of 100GE in 2015.

Machowinski said 10GE was the one weakness in the market as revenue is slowing. Despite the slow revenue, port shipments grew 27% in 2014 due to data center upgrades, server virtualization and core network build-outs.

Stronger U.S. dollar leads to lower telecom Capex

The growing strength of the U.S. dollar is expected to wipe out $20 billion in telecom Capex in 2015, according to a new report from the Dell'Oro Group.

"Assuming rates remain at current levels, the strengthening U.S. dollar will unequivocally impact telecom Capex," said Stefan Pongratz, group carrier analyst at the Dell'Oro Group.

According to the report, telecom operators invested heavily in fiber and LTE networks in 2014. This focus on mobile-related spending offset declining wireline investment, leading to a fourth consecutive year in Capex growth.

In October, the Dell'Oro group predicted that telecom Capex would decrease 2% in 2015 due to high mobile device penetration, slower mobile data growth, lack of new revenue streams and increased competition from developed and undeveloped markets.

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