Carrier Channel: Gigabit Ethernet Race Picks Up Speed

Posted: 6/2003

Gigabit Ethernet Race Picks Up Speed

By Khali Henderson

Gigabit Ethernet is at a crossroads. At once it is finding a market among large enterprises, but lacking in sellers. Most of the entrepreneurial champions of high-speed Ethernet technology in the metro -- the so-called EtherLECs -- were stopped in their tracks by telecom's downturn and are now but a few. The Bells, at long last, have picked up the baton, but their speed is slowed by the drag of both their size, reluctance to cannibalize existing business and the lack of competitors breathing down their necks.

While many service providers will build out their own networks (IDC predicts metro Ethernet equipment revenue to increase 39 percent over the next five years), others also are looking to a few fiber-based wholesale carriers to help them bring Ethernet across the finish line.

Pacers in the race have long been startups. Some of them -- like Telseon and Sphera Optical Networks -- were purchased while others failed or like Yipes filed for Chapter 11 bankruptcy protection. With the rare exception -- notably MetNet Communications Inc., the new venture from Yipes co-founder and Metro Ethernet Forum Chairman Ron Young -- new entrants to the space are unlikely to retake the lead. They can be credited with getting the race started.

"The startups and the initiatives over the past few years have awakened the [incumbent] carriers and pushed them to realize that if they don't offer a low-cost, flexible, granular type of optical Ethernet service two things will happen: The customers will buy it from someone else or they will do it themselves," says Nortel Networks' Bob Mott, co-chair of the Metro Ethernet Forum's Collateral Committee.

Mott says enterprises in the government, higher education, medical and financial verticals are among those that have taken matters into their own hands. Some like the City of Roanoke have implemented optical Ethernet equipment themselves to support internal as well as e-government applications. Others, like Blue Cross and Blue Shield of North Carolina (BCBSNC), have turned to regional wholesalers like Progress Telecom to link their data centers.

"There is certainly demand that is not being addressed today," says Paul Aiello, vice president, sales and marketing for Progress Telecom. "Depending on who your serving LEC is, where they are in the product development, availability or product spectrum varies dramatically."

SBC Communications Inc. is an example of an ILEC that is moving forward. In late January SBC announced plans for PremierSERV Ethernet Optical Network, a switched gigabit Ethernet product that will provide businesses with flexible bandwidth options up to 1gbps for dedicated Internet access or transparent LAN services. It will support nearly any data transport configuration including point-to-point, point-to-multipoint or multipoint-to-multipoint.

In another example, the wholesale division of Verizon Communications Inc. offers carrier customers a LAN Extension Service based on Ethernet.

"In the last year all of the [incumbent] service providers have realized that somebody else is going to cannibalize their T1 revenue -- either the startups or the enterprises themselves -- so they've started to initially trial some of these activities," says Mott.

They also joined the MEF, he says, and notes Verizon and Korea Telecom this year joined SBC, BellSouth Corp. and France Telecom as ILECs/PTTs among the two-year-old group's membership.

Despite some false starts, the end-to-end Ethernet network proposition remains on track: Since nearly all LAN traffic starts and ends on Ethernet, it makes sense to extend it to metropolitan area networks (MANs) and even between them in wide area networks (WANs).

"In the next 10 years, Ethernet will inexorably take over the metro," says Michael Howard, principal analyst and co-founder of Infonetics Research. "Of course, there will never be a wholesale change because of the SONET/SDH installed base, but every year Ethernet will account for a larger portion of metro capex."

This spending, he notes, is driven by customer demand for lower prices and incremental bandwidth.

"For an end user, Ethernet is a tremendous solution," says Boyd Chastant, senior product manager for OnFiber Communications Inc., which sells wholesale and retail optical Ethernet services in 12 U.S. markets. "They are familiar with it, the costs are likely cheaper [and] they can manage it with tools they likely have in their own infrastructure.

"The challenge for carriers is -- especially the long-haul and established carriers -- many of them have an embedded infrastructure that they have had in place for a while. The question is, can I deploy Ethernet for that existing infrastructure and can I do it cost effectively or do I need to deploy a new infrastructure to support Ethernet?"

Given today's inhospitable economic environment, carriers are having trouble justifying capital expenditures for new builds, so they are trying to put Ethernet over an existing network. "The problem there is that you don't necessarily get the efficiency out of it," Chastant says.

As an alternative, he says many carriers coming to OnFiber to "to figure out how they can incorporate our local loops into their Ethernet offering."

Still, Chastant says it's a small set of providers -- primarily carriers and hosting companies serving large content providers and media companies -- that are purchasing OnFiber's Ethernet services, which include connectivity solutions between major traffic aggregation points -- such as data centers, carrier hotels, and other service provider PoPs -- throughout each metro network as well as fiber-optic local loop connectivity.

"We are enabling an extension of these carriers' networks," Chastant says. "They may have a PoP within the market where they can support IP and potentially VoIP and other applications. We give them connectivity back to that PoP from numerous other data centers and locations in the market. We expand the range they can sell into."

Ethernet at gigabit data rates has established itself in the MAN and is beginning to extend into the WAN, notes research firm Pioneer Consulting LLC.

Progress Telecom, which operates in six metro markets along the eastern coast of the United States, rolled out wholesale gigabit Ethernet transport last summer and is introducing a 100mbps service to extend its carrier customers reach into tier 2 and 3 markets surrounding its PoPs.

An ISP entering a new market will not have a high enough concentration of customers to warrant a 1gbps port "They want to be able to connect that to a 100mbps port so that they can oversubscribe it and be selling lower capacity -- 10mbps, 3mbps, whatever they need," says Progress Telecom's Aiello. "We allow them to aggregate 10 100mbps pipes into that GigE pipe in a way that is very cost effective," he adds, noting that Ethernet cards are a tenth of the cost of a SONET card.

Aiello says Progress Telecom is testing the service in the Orlando area with an ISP customer and he expects the service to be rolled out to each of the company's markets in the near future.

In another example, WilTel Communications LLC announced in February the launch of its Ethernet Wide Area Network (EWAN) transport service, a point-to-point and point-to-multipoint Layer 2 technology providing transparent Ethernet transport at speeds up to 1gbps and bridging functionality primarily for WANs as a low-cost replacement or alternative to Layer 1 SONET infrastructure.

EWAN leverages multiple transport technologies to integrate with traditional services such as ATM, frame relay, dedicated Internet access and IP VPN. EWAN on-ramps are located in the following cities: Anaheim, Atlanta, Chicago, Dallas, Miami, New York, San Francisco, Santa Clara, Washington D.C. and London.

Pioneer Consulting says the evolution to 10 gigabit Ethernet, which began last year, will speed Ethernet's extension into the WAN.