MPLS VPN and SMB Growth Help to Expand Latin American Data Communication Services Market

By Rajani Baburajan, TMCnet Contributor

The cost competitiveness of MPLS VPN services and the greater requirement for dedicated access among small and medium-sized business (SMBs) have helped to push the Latin American data communications services market forward, according to a new report from Frost & Sullivan (News - Alert).

The market is also growing due to a positive economic outlook as well as a higher demand for network services by local and multinational enterprises.

The analyst firm revealed that the Latin American data communications services market has earned revenues of $6.34 billion in 2012 and estimates this number to reach $8.44 billion in 2017.

The SMB segment has shown great interest towards modernizing their networks mainly due to their desire to improve efficiency. This in turn is ramping up the adoption of dedicated IP and multi protocol label switching virtual private network (MPLS VPN) in the SMB segment.

MPLS VPN connectivity allows for the broad availability of key data communications services. Findings reveal that many small and medium-sized businesses in the retail sector specifically are now migrating from legacy technologies to MPLS VPN for its cost competiveness.

"The market is clearly leaning toward more hybrid networks, as the ultimate purpose of implementing a VPN network is to support any-to-any connectivity," said Frost & Sullivan Information & Communication Technologies research analyst Otávio Martins, in a statement. "Service providers will use a combination of technologies to support inter-networking between distributed company locations."

Martins went on to highlight that verticals such as finance, retail, logistics, and government, with numerous branches nationwide, will sustain the demand for data communication services.

Moreover, the rapid expansion of the data communications market in Latin America is also driven by data center consolidations and greater reliance on bandwidth-intensive applications.

Yet, as bandwidth is now available for a lower price, selling more bandwidth no longer generates a sufficient profit. To remain successful in the market, network operators have to monetize the data solution offering's value-added services such as telepresence, managed services, unified communications, Software-as-a-Service (SaaS (News - Alert)), and cloud applications, Frost & Sullivan concluded.