The total demand for next generation network systems in the U.S. will rise at an average annual growth rate of 12.6% from $16.4 billion in 2002 to $29.7 billion in 2007.

This is the prediction of a soon-to-be-released study from Business Communications Company, Inc., based in Norwalk, Conn. The report is titled: "RG-262E Broadband Opportunities: A Mini Series - Next Generation Networks."

Next Generation Networks will be networks which have left behind their roots in old public circuit switched telephone networks designed for voice. They will seamlessly offer voice, video, and data transmission via packet switching at a speed exceeding double-digit gigabits per second

The report predicts that Enhanced Sonet, which accounted for just over 35.6% of total next-generation network revenues in 2002, will continue by a very slim margin to be the lead spending category in 2007. It will account that year for a total of $9.65 billion, or about 32.5% of all spending, growing at an average annual growth rate of just 10.6%, the slowest spending growth.

The report states that Enhanced Sonet's continued primacy will reflect its continued superiority in delivering voice traffic, its centrality in telecommunications carriers' legacy networks, and its proven reliability in traffic quality control, especially for long-haul networks. At the same time the report states that as limitations of the protocol for converged traffic become more obvious and competitive technologies become refined, Sonet will lose share even among telecommunications carriers. These weaknesses include Sonet's limited flexibility in adjusting to varied traffic type and demand, its slow provisioning and the fact that the platform was never designed to accommodate point to multi-point and/or bi-directional traffic.

The report states that enterprise networks for their part will largely eschew Sonet as an inferior technology for handling corporate data. In this market, Gigabit Ethernet solutions enabling corporate networks to access public networks will prove dominant.

The report says Gigabit Ethernet technology will prove to be a competitive low-cost solution for metro area networks. Given these strengths, Gigabit Ethernet, which accounted for just 28.3% of total next generation network spending in 2002, will, by 2007, account for 28.6% of spending growing at an average annual growth rate of nearly 13%.

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