By Dr. Judy Reed Smith (judyrsmith@atlantic-acm.com) and Fedor Smith (fsmith@atlantic-acm.com)

Background:

We recently completed our survey of quality, price competitiveness and opportunities for wholesale local service providers.  The following is a sneak peek at some of the opportunities and surprises we are uncovering as we analyze the data.

Analysis:

• Wireless wholesale transport purchases have dramatically shifted from lower speed DS1s and DS3s to high speed OC lines, including Ethernet and Wavelengths.  The shift is from only 25 percent of wireless respondents’ transport spend on OCs in 2007, to 32 percent of transport spend in 2008, to 38 percent in 2009.
  
  
• Wireless players are interested in Ethernet Transport as they shift to higher speeds but have not yet committed to the technology.  Interviews with carriers reveal that wireless carriers are not moving their connections to cell sites en mass to Ethernet, but test by moving some circuits to Ethernet, sampling the technology.  We believe this “testing” of Ethernet is likely pervasive, as 56 percent of respondents from all wholesale customer segments report using Ethernet, with 24-percent growth in spending expected, yet the overall revenue from Ethernet remains a small percentage of total wholesale spending.
  
  
• Wireless MTSO spending allocation is on the rise.  We ask what percentage of each wholesale purchasers’ local transport spending will be on the various types of points of presence.  The allocation of local transport spend in wireless MTSO  from 2008-2009 moved from eight percent  to 12 percent of total local spending. 
  

The Bottom Line:

As we pen this DATALINE we are digging in to pricing and product quality satisfaction data and will provide some tidbits from these areas in our next DATALINE.   As you can see from the trending data we uncovered this week, wireless demand at the retail level is translating to significant growth opportunities for wholesalers.  Look for wholesalers to increasingly focus on this space as they seek to fill networks, and for continued migration toward wireless wholesale opportunities similarly to, and including, the dynamics outlined in last week's DATALINE ("Fiber-to-the-Tower Update.)"