AT&T seizes top spot from Lumen in U.S. Carrier Ethernet leaderboard

Lumen found itself overthrown from the head of Vertical Systems Group’s (VSG) U.S. Carrier Ethernet leaderboard, with AT&T nabbing the top spot instead.

VSG’s year-end 2022 report showed Lumen fell to second place for the first time since 2017. According to VSG, the drop came from Lumen’s sale of its 20-state ILEC assets to Brightspeed as well as declines in the managed data services.

Lumen’s drop came as no surprise, VSG Principal Rick Malone told Fierce. Since the start of the pandemic, Lumen’s managed data services segment hasn’t been growing as fast as those of its competitors. Rather, VSG noticed Lumen is more quickly transitioning from MPLS to broadband-based transport solutions. Malone also pointed to AT&T, whose Ethernet business gained “some momentum” over the last several quarters.

Charter Communications’ Spectrum Enterprise came in third, followed by Verizon, Comcast and Cox Business. VSG’s ranking is based on the share of Ethernet ports each operator has in the U.S., and providers must possess a port share of 4% or greater to land on the leaderboard.

Aside from Lumen and AT&T, Malone said the remaining leaderboard rankings stayed the same, but their individual market shares changed.

“Some of them had grown just slightly faster than others and a couple of positions have tightened up,” he said. The three MSOs on the list (Charter, Comcast and Cox) all increased their shares as they continue to expand their network footprints and “upsell into higher markets.”

The providers on the Challenge Tier, those that hold between 1% and 4% market share, were Altice USA, Cogent, Frontier Communications, GTT, Windstream and Zayo.

The Market Player tier, which consists of all providers with less than 1% port share, was populated with around 50 operators. Notable names include Brightspeed, Consolidated Communications, Orange Business, T-Mobile and Ziply Fiber.

All told, the total U.S. Ethernet market grew only by “low single digits” in 2022, or less than 5%. From the six segments VSG is tracking, Dedicated Internet Access (DIA) was the fastest growing one and perhaps it’s “growing even faster than we had forecast,” according to Malone.

“We’re seeing a lot of 10 and 100-gig speeds in the DIA space,” he said. “We don’t see that in the access space…it’s a bump up in speed and lower cost per bid associated with DIA. That’s why it’s been a very popular service.”

He added DIA can also facilitate speeds of 400G, which isn’t yet as prevalent in the current market “but it is coming.”

The Ethernet market is rife with challenges, with VSG noting that ongoing supply chain issues, price compression and customer migration to SD-WAN are some of the top concerns for Ethernet service providers.

Thus, the other five segments have either slightly declined or saw flat growth, said Malone. Ethernet Private Lines and Metro LAN, for example, were on the flat side in 2022, while the WAN VPLS segment “has grown slightly.” E-Access to VPN saw the most decline, due to the ongoing shift from MPLS to more SD-WAN/SASE-based networks.

“Those lines are being replaced with either broadband lines or DIA lines,” he said.

As for this year’s outlook for the Ethernet market, Malone predicts providers will establish more hybrid networks, where “the MPLS stays in the network for performance and security requirements” while sites that don’t require as much security will lean towards a “lower cost per bit service managed under some kind of SD-WAN and SASE umbrella.”