Users seeking unified network services, higher bandwidth, and lower costs are ditching traditional ATM and Frame Relay in favour of Ethernet and DSL which are seen as more flexible.
Brisbane-based Golden Casket Lotteries (GCL) migrated off a 2Mbps Megalink network to Ethernet over a year ago for manageability reasons as the cost was comparable.
Mal McKercher, GCL network engineer, said ATM (Asynchronous Transfer Mode) won't survive "by relying on [customer's like] us".
"It's hard to justify using ATM when the quality of service of Ethernet and other technologies is comparable," McKercher said. "Whether ATM will survive, I'm 50-50 on that one."
GCL's carrier is Telstra, which has a large customer base of ATM and Frame Relay services, but is facing increasing competition from IP-based carriers. "It's not just cheaper bandwidth, customers get the same quality of service [with Ethernet]," he said. "If you can do the same, go with Ethernet."
GCL now has 6Mbps between its three Brisbane sites, which are about five kilometres apart. The company also uses Frame Relay but it is phasing that out too.
"Ethernet is as attractive as Frame Relay, so I'll be surprised if we go with anything else," McKercher said. "Ethernet is a niche area where other carriers can compete, for example, SPT is targetting higher bandwidth."
McKercher said consolidation of technologies, like voice and data, is also a driver towards Ethernet.
"Instead of having six pipes coming in, just have one and run everything off that," he said.
IDC Australia telecommunications research director Landry Fevre said revenue for Frame Relay was about $700 million in 2004 and should decline only by about $100 million over the next five years. Revenue for ATM is significantly less at $150 million but is projected to remain steady.
"A lot of the market is with Telstra which is moving customers to Ethernet and DSL," Fevre said. "When it comes to reviewing contracts, customers are looking at Ethernet."
Fevre said greenfield Ethernet carriers are doing well in a high-growth market and Telstra will need to rationalize its varied offerings, which are expensive to maintain, in the future.
"We estimate that about 30 to 40 percent of IP VPN connections are using Frame Relay or ATM; this is likely to decline in the next 18 months as business DSL is being marketed more aggressively by Telstra and Optus," he said.
SP Telemedia's (SPT) marketing communications manager Hannah White said the company, formed from the purchase of IP carrier Comindico, now has thousands of customers using Ethernet.
"Customers are migrating to Ethernet from a combination of ISDN, ATM and Frame Relay," White said, adding that the benefits of Ethernet are cost, quality of service, and being able to access a regional backbone typically within a few kilometres of the customer's premises.
SPT has 250 access points nationally and 66 VoIP termination points into the Public Switched Telephone Network.
Telstra was invited to comment on its commitment to ATM and Frame Relay but did not respond before deadline.