IP/MPLS edge spending surges

Global spending on service provider switching and routing equipment was up 12% from a year ago to $2.4 billion in the first quarter, according to Ovum-RHK.

Among the strongest growth areas was the IP/multiprotocol label-switching (MPLS) edge segment, which grew 32% from a year earlier to nearly $1.15 billion in the first quarter. By comparison, the IP/MPLS core market grew 11% to $516 million. And the IP/Ethernet space grew 6% to $421 million.

In terms of applications, spending on equipment devoted to Ethernet transport and services grew the fastest, up 22% from a year earlier to $823 million. Spending on IP transport and services grew 20% to more than $1.15 billion. And spending on subscriber services or broadband remote access servers grew 11% to $245 million.

Ovum-RHK singled out Alcatel-Lucent for continued strong growth in the IP/MPLS space during its first full quarter as a combined company. And Juniper Networks, which reported a lump of deferred edge router revenue from Verizon Communications in the first quarter, returned to growth after a roughly flat 2006, as predicted by some analysts.

The first quarter’s growth came despite soft spending in the North American wireline market. Spending there was down 9% from a year earlier to $6 billion in the first quarter, Ovum-RHK said, dragged down by a 2% decline in wireline revenue. Continued wireline revenue erosion will force North American wireline carriers to spend modestly this year and slightly less in 2008.