But investment in ATM falls through the floor.

Worldwide service provider equipment revenue jumped 33 percent from US$7.2bn to US$9.6bn between 2005 and 2006 fuelled by surging demand for carrier Ethernet switches and IP routers, according to analyst reports.

Infonetics Research said that strong annual growth in the overall market is " especially impressive" considering that multi-service ATM switch revenue dropped 32 percent to US$1.3bn during the same period.

"As ATM investment steeply declines, investment in the edge continues to grow, with IP edge routers growing at a fast clip between 2006 to 2010 and carrier Ethernet switches growing three times as fast," said Michael Howard, principal analyst and co-founder of Infonetics Research.

"Carriers continue to transition to IP, as witnessed by the many IP network transformation projects around the globe, to increase bandwidth for video and other advanced applications.

"Carrier Ethernet switches and IP edge routers are now a big part of this transformation."

The research indicates that the overall market rose seven per cent from the third to the fourth quarters of 2006, and is forecast to grow 136 per cent to $13bn between 2006 and 2010.

Cisco Systems increased its service provider router and switch sales by more than US$1.5bn between 2005 and 2006, maintaining its lead in the market both and accounting for about half of worldwide revenue.

Alcatel-Lucent held second position for worldwide revenue in the overall market, followed by Juniper Networks, in the fourth quarter of 2006 and for the full year.