Fast growing demand for bandwidth between internal departments, and between external customers and suppliers, is driving demand for wide area network (Wan) bandwidth and, in particular, for metro Ethernet services in North America and western Europe, newly published research has claimed.

The survey by analyst firm RHK found that, although IT budgets continue to be constrained, enterprises Wan users are willing to increase wide area communication spend if the services can maintain or reduce overall IT spend.

This seeming paradox, according to the report, exists because respondents indicated that by increasing Wan expenditure with higher bandwidth metro Ethernet services they can offset these additional costs through other IT efficiency improvements.

Respondents reported that increasing bandwidth to branch office sites allowed them to remove servers from the remote locations and to consolidate them at head office locations, so offering a net saving overall after the reduced cost of managing remote servers was considered against the higher Wan charges.

The study, commissioned by the Metro Ethernet Forum, claimed that Ethernet services are enabling enhanced business practices and methods of operations by allowing firms to deploy technologies such as voice over IP.

"Many of the end users in this study have deployed new business applications and are evaluating new ways of conducting internal and external operations," said RHK analyst Brian Van Steen.

"The undertaking of these new business practices is, most importantly, allowing end users to increase revenues (in the case of for-profit companies) and improve customer service.

"These Ethernet-supported initiatives are also allowing end users to reduce line item expenses while also improving productivity in multiple business areas."

The study also claimed that unfulfilled demand for Wan Ethernet services exists due to a lack of availability across a broad geographic base.

"For service providers, the central issue that needs to be addressed is a lack of availability of Ethernet services," the RHK study stated.

"Many of these new business applications require equivalent end user experiences at all locations, and many of these applications require bandwidth that traditional services cannot support.

"End users who cannot get Ethernet services to all needed locations are not contracting for Ethernet services; they want the service and are waiting for availability to all locations."