ATM has proven very successful in the WAN scenario and numerous telecommunication providers have implemented ATM in their wide-area network cores. Many ADSL implementations also use ATM. However, ATM has failed to gain wide use as a LAN technology, and its complexity has held back its full deployment as the single integrating network technology in the way that its inventors originally intended. Since there will always be both brand-new and obsolescent link-layer technologies, particularly in the LAN area, not all of them will fit neatly into the synchronous optical networking model for which ATM was designed. Therefore, a protocol is needed to provide a unifying layer over both ATM and non-ATM link layers, as ATM itself cannot fill that role. IP already does that; therefore, there is often no point in implementing ATM at the network layer.
In addition, the need for cells to reduce jitter has declined as transport speeds increased (see below), and improvements in Voice over IP (VoIP) have made the integration of speech and data possible at the IP layer, again removing the incentive for ubiquitous deployment of ATM. Most Telcos are now planning to integrate their voice network activities into their IP networks, rather than their IP networks into the voice infrastructure.
Many technically sound ideas from ATM were adopted by MPLS, a generic Layer 2 packet switching protocol. ATM remains widely deployed, and is used as a multiplexing service in DSL networks, where its compromises fit DSL's low-data-rate needs well. In turn, DSL networks support IP (and IP services such as VoIP) via PPP over ATM and Ethernet over ATM (RFC 2684).
ATM will remain deployed for some time in higher-speed interconnects where carriers have already committed themselves to existing ATM deployments; ATM is used here as a way of unifying PDH/SDH traffic and packet-switched traffic under a single infrastructure. However, ATM is increasingly challenged by speed and traffic shaping requirements of converged networks. In particular, the complexity of SAR imposes a performance bottleneck, as the fastest SARs known run at 10 Gbit/s and have limited traffic shaping capabilities. Currently it seems likely that gigabit Ethernet implementations (10Gbit-Ethernet, Metro Ethernet) will replace ATM as a technology of choice in new WAN implementions.
this source taken from http://en.wikipedia.org/wiki/Asynchronous_Transfer_Mode
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