Largest 5,000 enterprises to increase WAN spend by 44% by 2026

The wide-area networking (WAN) market received a massive spur during the pandemic when enterprises had to pivot quickly to support remote working for employees according to work-from-home orders, and research from telecommunications market research and consulting firm TeleGeography is predicting strong WAN growth will sustain until at least 2026.

According to TeleGeography’s five-year market forecast WAN market size report, the global WAN market will grow by around 44% – from $59bn in 2021 to $85bn in 2026 – for the largest 5,000 companies globally.

At the same time, as firms evolve from legacy networking topologies and on-premise datacentres are phased out, the contribution to market revenue from multi-protocol label switching (MPLS) is forecast to decrease by 55% over five years.

TeleGeography’s research also reveals that MPLS and access lines connecting MPLS ports accounted for 60% of global WAN revenue for the largest multi-national organisations in 2021, but this is predicted to drop to 27% by 2026. As MPLS is replaced by lower-cost dedicated internet access (DIA), WAN revenues will likely continue to grow as enterprises select larger port sizes and add software-defined wide area network (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 centre of the WAN. Thus far, we’ve found DIA to be the most common choice for enterprises, as they still want carrier-grade SLAs [service-level agreements] 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.”

Looking regionally, the analyst observed that 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 affected by the shift to DIA, where it is a higher price relative to other geographies.

By contrast, 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 US, 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 added.

“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%.”