WAN spend on the increase

TeleGeography, a global telecommunications market research and consulting firm, has revealed that the WAN market will grow by around 44%—from $59 billion in 2021 to $85 billion in 2026—for the largest 5,000 companies globally. According to a new five-year market forecast from its WAN Market Size Report, MPLS’ contribution to the market revenue will decrease by 55% over five years.

TeleGeography’s research reveals that MPLS and access lines connecting MPLS ports accounted for 60% of global WAN revenue for the largest multinational organizations in 2021, but this is predicted to drop to 27% by 2026. 

As MPLS is replaced by lower-cost DIA, WAN revenues will likely continue to grow as enterprises select larger port sizes and add SD-WAN overlay services. 

“As enterprises continue down the path of digital transformation and cloud services become the standard, we see MPLS diminishing as the center of the WAN. Thus far, we’ve found DIA to be the most common choice for enterprises, as they still want carrier-grade SLAs and service reliability,” said Greg Bryan, Senior Manager of Enterprise Research at TeleGeography. “This could change if substantially more fiber-based broadband plans emerge in the next five years, but as things stand, it very much appears that DIA will replace many MPLS ports and switch places as the key revenue source.”

Regionally, East Asia will grow from 41% to 46% of the WAN market in 2026, driven mostly by China. Prices for China and East Asia will be heavily impacted by the shift to DIA, where it is a higher price relative to other geographies. 

On the other hand, The Middle East and North Africa will shrink from 9% to 6.5% of the market, while most other regions will remain unchanged.

China, the U.S., and India are forecasted to remain the top three countries by WAN revenue over the next five years, but other countries will change their relative influence on global totals.

“Our 2021 research revealed that East Asia dominates the world market, and this only increases in our latest forecast model. China is a huge market where many enterprises must have operations—often with significant bandwidth—despite the sky-high prices that come with the lack of competition,” Bryan continued. “As products switch away from MPLS and toward DIA, the different pricing dynamics of those services, especially how they are priced at higher bandwidths, impacts revenues. China will have the biggest increase among the top-ranked countries, but that will only be 3%.”