Colombian Data Communications Services Markets

This Frost & Sullivan research service titled Colombian Data Communications Services Markets provides an overview of these markets along with discussions on key drivers, restraints, challenges, market trends, and forecasts. In this research service, Frost & Sullivan's expert analysts thoroughly examine the following technologies: IP (VPN, MPLS, and Dedicated Internet Access), Frame Relay, Dedicated Lines, ATM, X.25, Gigabit Ethernet, and Metro Ethernet

Market Sectors

Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:

By Applications:

- Retail Market

- Wholesales Market

- International Market

- Value Added Services

By Technologies:

- IP (VPN, MPLS, Dedicated Internet Access)

- Frame Relay

- Dedicated Lines

- ATM
- X.25

- Gigabit Ethernet and Metro Etherrnet

Technologies

The following technologies are covered in this research:

- X.25: This is a communications protocol for WAN networks that use the phone or ISDN system as the networking hardware. X.25 is a standard protocol for connecting computers and other data communications devices to packet-switched networks.
- Frame Relay: Frame relay is a packet switching protocol designed for cost-efficient data transmission for intermittent traffic between local area networks (LAN) and end-points in a wide area network (WAN). Frame relay puts data in a variable-size unit called a frame and leaves any necessary error correction (retransmission of data) up to the end-points, which speeds up overall data transmission.
- Asynchronous Transfer Mode (ATM): This is a cell relay network protocol which encodes data traffic into small fixed sized (53 byte; 48 bytes of data and 5 bytes of header information) cells instead of variable sized packets as in packet-switched networks (such as the Internet Protocol or Ethernet).
- Dedicated Lines: A dedicated line is a telecommunications path between two points that is available 24 hours a day for use by a designated user (individual or company). In the dedicated lines the whole bandwidth is used for transmission, no portion of the channel is set aside for control, framing, or signaling.
- IP: In IP there is no continuous connection between the end points that are communicating. Each packet that travels through the Internet is treated as an independent unit of data.
- Multi Protocol Layer Switching (MPLS): A set of protocols for provisioning and managing core networks, using a technique known as label switching to forward data through the network through a small, fixed-format label inserted in front of each data packet on entry into the MPLS network. MPLS is called 'multi-protocol' as it supports IP, ATM, and frame relay network protocols.

Market Overview

New Technologies Facilitate better Service Integration
Despite the highly competitive and fragmented nature of the Colombian data communications services markets, revenue figures showed moderate growth between 2004 and 2005. This was reflected in operators rolling out new services to existing customers while also undertaking business and network infrastructure expansion in smaller cities using last generation technology. This apart, there has been growth in the carrier segment where network infrastructure is being leased to telecommunication operators and the introduction of new technologies such as IP/MPLS, Metro Ethernet, and Gigabit Ethernet has allowed better service integration with a higher degree of efficiency and lower operational costs. Colombia’s gross domestic product (GDP) grew at 4.0 percent during 2004 and 2005 and this, along with a positive enhancement of the social and political outlook has further facilitated better conditions for foreign investments and promoted a strong growth in the stock exchange markets.
In terms of specific services, Frame Relay, with a market share of 49.0 percent, accounted for the largest revenues and had approximately 1,691 clients in 2005. While IP services overtook dedicated lines to become the second largest revenue generator in the same year, there was minimal difference in their respective market shares, which stood at 20.53 and 20.51 percent in favor of IP.A notable market trend worth highlighting is the introduction of new services such as Metro Ethernet and Gigabit Ethernet that are more efficient and flexible, notes the analyst of this research service. These services are expected to grow considerably in the short and medium term and while Gigabit Ethernet is expected to gradually displace services such as ATM, Metro Ethernet is likely to be highly linked to IP in its access portion.

Carrier Segment Likely to see Continued Growth
The carrier segment in Colombia is characterized by the leasing of data networks infrastructure among competitors and mobile telecommunication operators, fixed operators, as well as cable TV and Internet service providers. By leasing networks to mobile operators to support the explosive growth in user demand and traffics, companies in this segment was among the prominent promoters of the data communications services market in 2005. In the short and medium term, the carrier segment is expected to continue seeing one of the highest growth rates in the data business. This is due to the signing of the Free Trade Agreement with the United States with the possible entry of new operators into the market, the deployment of last-generation networks resulting in more capillarity and coverage in intermediate-sized cities, as well as the growth of national and international data traffic.
In future, the data communications services market in Colombia is expected to feature smaller growth rates as many services are expected to migrate to IP solutions, which are more flexible and cost effective. Additionally, the trend of price erosion is expected to continue due to increasing competition and is likely to have a direct impact in market revenues, says the analyst. IP is expected to become the leading technology due to its ability to enable operators to integrate more services on the same network, with higher economical benefits for the operators and the customers.