Metro Ethernet and cellular backhaul are hot investment areas for service providers, as they continue to converge their data services onto Internet Protocol backbones, according to the latest report from Infonetics, “Service Provider Plans for IP/MPLS: North America, Europe, Asia Pacific.”

Broadband Internet access, metro Ethernet and IPTV are the top application drivers for IP traffic growth, the report states, and that is driving convergence onto IP. Metro Ethernet has gone from being the sixth investment driver to being number two.

“Carriers are experiencing decreases in legacy service revenue (ATM, frame relay, leased lines) and know the downward trend will continue, but they expect big increases from IP VPN, VoIP, and metro Ethernet revenue, and providers planning broadband and IPTV expect sizeable revenue increases from those services as well,” said Michael Howard, principal analyst at Infonetics Research, in a prepared statement. “A majority of carriers have started deploying significant numbers of Ethernet customer connections, and the study indicates that a good carrier Ethernet product is the best way to penetrate a new service provider account.”

One-hundred percent of European service providers responding to the story will use Ethernet for broadband aggregation this year or later, while 67% of Asian Pacific respondents and 60% of North American respondents said they would use Ethernet for aggregation, in place of ATM.

Building cellular backhaul networks to connect base stations is one of the hottest market segments now and will remain hot for the next five years, as wireless data and even video help, as well as overall wireless penetration growth, fuel carrier needs for next-generation networks and more efficient and less costly backhaul capacity. The survey found more than 50% of the study’s respondent service providers offer mobile voice and data services and all of those are building their own transport network to handle backhaul services, instead of using more costly leased facilities.