THE MANY FACES OF CARRIER ETHERNET. Check it out:
(Telephony Via Thomson Dialog NewsEdge) AS ETHERNET BECOMES A POPULAR data service option in the carrier realm, differing strategies are emerging among service providers as to the best fit for this scalable, efficient and cost-effective technology.
Some of the variation is based on market position: Competitive service providers, for example, have been aggressive in pushing Ethernet as a low-cost attraction to new customers. But even among incumbents, there are different opinions on where Ethernet fits in the product portfolio, how quickly customers should migrate to this new service from legacy frame relay and ATM services, and whether new, lower-speed copper-based Ethernet service fits into the broader deployment plan.
Even in areas where service providers agree such as Ethernet's potential as the platform for convergence and for value-added services they face skepticism from industry analysts who have adopted a wait and see attitude toward this latest candidate for converged network nirvana.
It is perhaps an indication of Ethernet's arrival in the real world of the public network that what started as a straightforward big bandwidth service is now evolving into a myriad of options and choices, tailored to attract enterprise customers in an increasingly competitive market. Classes of service (COS), service level agreements (SLAs) and more bandwidth options have all become part of the carrier Ethernet picture.
If you rewind the clock a little bit, metro Ethernet was originally designed for the enterprise market, said Nimesh Shah, senior director of data product management for business markets at BellSouth. Then it started to evolve more.
BellSouth still was serving primarily education, health care and finance with its Ethernet offering, Shah said, but the applications for those sectors started to get more sophisticated, evolving into areas like medical imaging and financial transactions.
That's when we launched a premium service, with [committed information rate] capability, because that's what they are familiar with, he said. Then we continued to penetrate the market more broadly, and Ethernet went from being a Layer 2 networking protocol to moving into access. School systems were using it to support the administration but also for Internet backhaul to connect individual schools and libraries. Then we saw demand down market and focused on how do we expand the market to medium and small businesses, which is where we now offer mid-band service using copper and fiber.
ONE PRIME EXAMPLE OF ETHERNET'S EVOLUTION is the current crop of new services, based on bonded copper technology from companies such as Hatteras Networks and Actelis Networks. Service providers such as BellSouth and XO Communications are embracing the new mid-band Ethernet services, at speeds between 2 Mb/s and 10 Mb/s, as a means of serving small and medium-sized businesses that don't inhabit buildings served by fiber.
Rich Klapman, product director of Ethernet access services for AT&T, which has not yet announced the copper-based service, said his company is excited about the potential of mid-band Ethernet. As long as it fills the right performance characteristics, then it is something we can sell, he said. You could go more down market if you go down to 2 Mb/s, whereas today our Optiman service supports down to 5 Mb/s.
By extending the reach of Ethernet, copper-based technology opens up some new markets.
Ethernet has had one big Achilles' heel: Until recently, you had to have fiber to get it, said David Hold, an analyst for Current Analysis. There are now some carriers deploying over copper. We are seeing some of the copper bonding to produce low-speed Ethernet for sub-10 Mb/s.
But not everyone is a fan. Verizon, for one, is focusing on using its fiber infrastructure.
Ethernet over copper is kind of DSL, said Ron Kaplan, an analyst for IDC. It's very similar to DSL. I can see that it is important for some companies, like BellSouth. But enterprise LANs operate at 10 [Mb/s] and 100 Mb/s, so I don't think a 2 Mb/s service is going to work for a lot of customers. You can't really compare what Verizon and AT&T are doing to a 2 Mb/s service.
Optimum Lightspan, a CLEC operating in New York and owned by Cablevision, doesn't have time to ponder copper. The company is too busy adding buildings to its fiber network.
We will light well over 200 buildings this year, which is 40% over budget, but they are all success-based builds, said Kevin Curran, senior vice president of marketing for Optimum Lightspan. We are acquiring 30 new customers a month, acquiring 20 to 40 buildings a month. We will reach [more than] 2000 lit buildings in this very dense geographic area by October.
The key to the company's success, he said, has been devising a standardized pricing plan and cutting its 70-day selling cycle by more than 20%.
THERE ALSO ARE DIFFERING STRATEGIES among service providers for how to effectively transition customers from the frame relay and ATM services to which they've become accustomed to Ethernet and IP offerings.
Bell Canada decided in 2003 to take a straightforward approach to the transition issue. After studying the success of Ethernet services in Europe, the company decided to stop selling its frame relay and ATM offerings in favor of its next-generation offering. Today, 60% of its data revenues come from its next-generation services.
Our strategy is to focus on platforms, and right now, we are focusing on ATM and frame relay working with our customers to help them see the value of [next-generation services] as their business evolves, said Paul Rove, vice president of enterprise marketing for Bell Canada. At some point, he added, Bell Canada will exit the legacy data market. It is not a strategy in which we let them die slowly. We will proactively move we're just not there yet.
At AT&T, the expected transition may be slower. Nothing ever goes away in our business, Klapman said. We are seeing adoption at the edges. There was tire kicking two to three years ago, and now we are seeing adoption. But stuff will coexist. We see an evolution. We have a very large global MPLS network, and we see Ethernet mostly kicking in at the hub sites where our customers have clusters of locations.
Carriers do agree on what is attracting customers to Ethernet the ability to get more bandwidth for the buck, using a technology with which they are very familiar and eliminating the cost, equipment and process of converting their familiar Ethernet local area network traffic into a TDM data format for transport all factor into the customer appeal.
Some more aggressive competitors already have taken the service a step further, using Ethernet virtual private line service (VPLS) to offer long-haul, any-to-any or city-to-city service. The list includes Mesergy, Time Warner Telecom and Yipes and, by year's end, Verizon.
We are extending their LANs all the way across town, and with a VPLS solution, we can take customers' Ethernet city-to-city as well, said Michael Rouleau, senior vice president of business development and strategy for Time Warner Telecom, which launched its commercial Ethernet services in 2003. This gives our customers one common infrastructure they can manage. We see more and more of them moving to a converged strategy, where they are managing their internal data, delivering Internet access and now starting to delve into VoIP over their PBX systems all over the same Ethernet network.
CONVERGENCE IS AN EMERGING THEME for Ethernet, according to service providers, which see their customers eager to collapse multiple networks onto a single Ethernet backbone something they can't do with their existing frame relay and ATM services. In addition, carriers say they expect to move up the value chain and sell their customers additional services like hosting, storage and more, using Ethernet as the platform.
Analysts, however, are skeptical about the move up the value chain.
Carriers have been talking about that for years, said Current Analysis' Hold. The majority of customers tend to opt for unmanaged services because they are cheaper, while service providers want to sell managed services with higher margin. Ethernet might help with some applications such as remote storage.
One problem, said IDC's Kaplan, is that Ethernet is already a competitive service, and prices can get squeezed.
A lot of Ethernet offerings are actually a competitive reaction, he said. The start-ups start offering someone something, but the big players aren't interested until it gets popular, and then they offer the same service. They are earning more money by offering more bandwidth at a lower price, but because of the competitive nature of telecom, they have to do it.
It is also the service providers' job to spread the word about Ethernet's value and potential as more than a lower-cost replacement for existing services, said Dick Tomlinson, executive vice president of New Paradigm Resources Group.
The customers aren't picking up yet on more advanced features they are using it to replace [legacy] services, he said. It's a problem for all carriers. The end users just haven't gotten comfortable with bundling multiple services onto the same port. I think there are things they can do to get the customer more comfortable with the advanced features of Ethernet, but it is going to take a while. There needs to be more case studies of companies that have successfully utilized Ethernet in a way that provides total lower cost of service, even if it doesn't produce an upfront lower cost.
BellSouth's new Virtual BellSouth Metro Ethernet Service addresses that issue by introducing classes of service that allow customers to easily assign priorities to different types of traffic being carried over the same Ethernet port, Shah said.
AS ETHERNET PROLIFERATES, it will allow service providers to operate more efficiently and thus deliver services at those lower price points, said Bell Canada's Rove.
When you can manage a metro Ethernet with a concentrated number of nodes, it becomes efficient for the service provider so you can offer a better value proposition in terms of price, he said.
Another point of agreement among the service providers is the need for network-to-network interfaces (NNIs) that will allow Ethernet to be deployed on an end-to-end basis for customers across the country over multi-carrier networks.
Vanco, a virtual network operator, is basing its value proposition on the ability to do that, creating process based on its relationships with service providers globally. It expects to offer an Ethernet service of that ilk soon. Today, Ethernet accounts for only 5% of the company's revenues, but that is expected to grow as the end-to-end capabilities expand.
We design solutions to handle the switching and routing of the traffic to different providers' networks, said Ciaran Roche, Vanco's lead technical consultant. We have been testing NNIs for quite a while. The standardization has dragged on for so long, there are a lot of different variants. That's a key obstacle to the formation of on NNI. We have the ability to integrate different types of networks, including at Layer 2 and at Layer 3 with IP, but it's better when you can do it at Layer 2. Technically, we have the capability to [tie together] Ethernet, and by the end of this year and early next year, you will see us knitting together some of their service providers.
Just as early demand for Ethernet produced best-effort services and the later evolution has led to today's quality of service offerings, with SLAs and COS options, it seems likely that growing demand for seamless global Ethernet connections will lead service providers in that direction as well.
LIST OF METRO ETHERNET CARRIERS IN THE U.S.
ILECS
AT&TBELLSOUTHCINCINNATI BELLEMBARQQWESTVERIZONWINDSTREAM
CABLE MSOS
CHARTERCOXGENERAL COMMUNICATIONS INC. (GCI)TIME WARNER CABLE
COMPETITIVE CARRIERS
ABOVENETALPHEUS COMMUNICATIONSAMERICAN FIBER SYSTEMSCOGENT COMMUNICATIONS INC.EXPEDIENTIP NETWORKSLEVEL 3 COMMUNICATIONS INC.MCLEODUSAMET-NET COMMUNICATIONSONE COMMUNICATIONSONFIBEROPTIMUM LIGHTPATHPPL TELCOMTDS METROCOMTIME WARNER TELECOMXO COMMUNICATIONSXSPEDIUSYIPES ENTERPRISE SERVICES INC.
Source: New Paradigm Resources Group
Copyright 2006 by Prism Business Information. All rights reserved.www.prismb2b.com
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