A shakeup is brewing in the Lumen-led US Carrier Ethernet market

Lumen, AT&T, Charter Communications’ Spectrum Enterprise division, Verizon and Comcast have sat atop Vertical Systems Group’s U.S. Carrier Ethernet Leaderboard since at least the middle of 2019. While their ranking has remained constant since that time, VSG Principal Rick Malone told Fierce change is on the horizon. By the end of the year, in fact, Malone said he expects a reshuffling in the order of the top six operators in the space.

According to Malone, the U.S. Carrier Ethernet arena is a relatively mature market, meaning share within the space doesn’t bounce around from quarter to quarter or half to half the same way it does in newer markets. That makes the forecast shakeup all the more notable, he said.

VSG’s forecast is based on the share of Ethernet ports each operator has in the U.S. Those on the Leaderboard list must have a 4% port share or greater while those in the Challenger Tier must have between 1% and 4% share.

While he wouldn’t disclose how exactly VSG expects the ranking to change, Malone noted “there are multiple companies, not just the top two, but multiple companies that are fairly close together in share of those six” at the top of its leaderboard. Cox Business is the sixth company on the mid-2022 Leaderboard, sitting behind Comcast.

Sitting below the aforementioned leaders in the Challenger Tier were Altice USA, Cogent, Frontier Communications, GTT, Windstream and Zayo.

Malone said VSG will be keeping a close eye on Lumen in light of the recent divestiture of its Latin America assets. While that move likely won’t have a direct impact on its number of Ethernet ports in the U.S., it could impact some of Lumen’s global customers, he said.

Taking a broader view, Malone said the market overall achieved a year-on-year port growth rate “in the low single digits,” so below 5%. But he noted only about half the companies VSG surveyed grew.

“There are quite a few of them that actually have lower port counts than they had previously. Some of that is that they’re consolidating lower speed circuits into higher speed circuits,” he explained. “But there are some that don’t view their Ethernet service as their lead strategic service when they go and talk to an enterprise. They are leading with SD-WAN and SASE and the security products that you’d expect.”

Some of the companies that have been successful in the Ethernet arena are those which have been migrating their base away from MPLS to SD-WAN and using Ethernet as a transport mechanism for the latter. “That managed migration is helping them sell additional Ethernet services as an underlay,” Malone concluded.