The evolution of Ethernet from a primarily local-area networking technology to wide-area networks (WANs) is well under way, with a variety of carrier-level service types – including converged access and point-to-point and multipoint switched services – emerging from established carriers and independent networking companies alike.

As more service providers roll out these new WAN Ethernet offerings to meet rising demand from enterprise customers, however, they are finding that familiar technological and market-driven hurdles – such as long-term contracts, interoperability issues, and last-mile connectivity barriers – are slowing the spread of a technology that everyone agrees will be, in the long-term, the clear winner.

Both Infonetics Research Inc. and IDC have predicted that the market for Ethernet services will balloon from around $3 billion today to the $20 billion range in the next three years. To keep up with that growth, service providers are busy devising an array of creative short-term solutions to bring Ethernet WANs to customers hungry for higher bandwidth and simpler technology at lower costs.

Some of these technologies will, in all likelihood, wind up being seen as stop-gap measures once fiber-to-the-site networks spread to cover most of the geographic U.S. In the interim, however, during this initial growth phase, service providers and enterprise customers alike must grapple with a bewildering array of service levels, payment options, infrastructure types, and protocols.

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Driving the market for Ethernet-based wide-area services is rising demand from enterprise customers for more bandwidth at lower costs. In general, the shift to Ethernet WANs requires little upfront cost for enterprise customers, most of which have Ethernet LANs (local area networks) already installed at their premises.

When Willis Marti, associate director for networking at Texas A&M University , was looking for a solution to build out LEARN (the Lonestar Education And Research Network), a new statewide dark-fiber network for 33 universities in Texas, he quickly found that traditional ATM and frame relay technologies were unsuitable. Marti and his colleagues ended up choosing SBC’s {dirlink 4|158} – a dedicated, fiber-optic, point-to-point Gigabit Ethernet (Gig-E) LAN for within cities or regions. The network saw first light in July 2005, Marti says, and has been successful from the start.

“Going to Ethernet brought the cost of equipment and the cost of service way down,” he note. “It makes it a lot easier to make the case [to University officials] that it’s a better deal.”

Stuart Heath, who joined New York-based entertainment content provider Muze Inc. a little over a year ago as the director of information technology, looked at a similarly wide range of choices for connecting his central office in Manhattan to his collocation site in New Jersey, about four miles away.

“We heard about WilTel while looking for phone service, and we discovered their {dirlink 4|136} service,” recalls Heath. “We converted two T1 lines to a 100-Mbit/s point-to-point Ethernet connection. And we saved $4,000 a month in service costs alone.”

Now, Heath reports, Muze’s data-replication times have been shortened by at least a factor of three and in some cases even more. “We have four terabytes of [music] clips online, and to replicate the 30,000 that we update each week used to take 36 hours. Now it takes two.”

Muze and LEARN are among the growing numbers of enterprise customers making the shift from traditional ATM and frame relay networks to wide-area carrier-class Ethernet services – but in some ways they are exceptions to the rule. LEARN had the advantage of linking major universities in a state where educational institutions (thanks to Texas State Law 2128) get special discounts on communications services. And Muze, while it has huge bandwidth requirements, is a relatively small and flexible company that had little investment in long-term networking contracts or expensive equipment.

As the market for wide-area Ethernet services continues to take shape, service providers will resort to a variety of solutions using a combination of standing network infrastructure, leased access, and new connections to reach enterprise customers.

Running over copper, wireless or fiber optic networks, and utilizing an array of backbone technologies including Ethernet-over-Sonet, these solutions can be grouped into three general categories: converged access (a wide-area Ethernet connection over which several different services are provided), point-to-point services between two sites, and multipoint networks providing switched connections between multiple customer sites.

WilTel Communications Group Inc. , for example, after seeing its initial POP-to-POP Ethernet service (introduced in early 2003) stall because of prohibitively high costs in the local metro loop, this year introduced its managed {dirlink 4|136} service that provides multipoint, end-to-end service over an MPLS backbone with native Ethernet handoffs directly at the customer premises. The customer, says Paul Savill, WilTel’s VP for data services, gets a scaleable solution that starts with WAN connectivity of 1 Mbit/s up to hundreds of Mbit/s, and a Fast-E interface up to Gig-E. Totally transparent to the user, the network offers real-time online performance monitoring.

“We were looking last year at ways to overcome the problem with metro access,” explains Savill. “We knew there was a big need for E-WAN, if we could just reach the customer with an affordable solution.”

Pittsburgh-based Expedient went through no fewer than three connectivity options for its {dirlink 4|156} metro Ethernet service – including buying part of the optical-fiber assets of bankrupt Yipes Communications – before moving toward a converged-access service using Ethernet over copper, which can provide bandwidth up to the 20-Mbit/s range for much lower installation costs than establishing rooftop wireless connections or laying optical fiber. For locations beyond the metro area, Expedient’s network of dark fiber offers true Ethernet intercity connections in its core markets in the Northeast and South Florida.

“We found that if you’re going to invest X amount of dollars,” remarks Expedient VP of business development Mark McGinness, “you get a much higher subset of customers by getting into the RBOC [serving] wire centers, using copper T1 or T3 lines, than you do activating individual buildings.”

Similarly, optical networking provider Looking Glass Networks Inc. 's {dirlink 4|69} service, introduced in 2002, offers both switched and non-switched architectures: an Ethernet-over-Sonet implementation with bandwidths up to 1 Gbit/s, and a 10-Gbit/s service over WDM. Both are fully transparent to any protocol or VLAN tags, and include all three service types: converged access, point-to-point, and multipoint.

While Ethernet services currently account for only 4 percent of Looking Glass’s total network bandwidth, says Looking Glass senior director for network engineering and technology Steve Plote, it’s the company’s fastest growing business segment. So far, though, the service has caught on mostly in the wholesale market: “Most of our enterprise customers are still buying traditional T1s or DSEs.”

Hoping to leverage their existing national and regional networks with high-margin products as revenues from voice traffic dwindle, both the incumbent phone companies and the CLECs have begun developing Ethernet services that transport data and connect with the end user, using a variety of technologies.

AT&T Inc. (NYSE: T), for example, with one of the broadest Ethernet services portfolios in the industry, according to Heavy Reading, has adopted a multi-pronged “build, buy, and break-through” approach to providing Ethernet services. AT&T is leveraging its existing fiber network, reaching out to other incumbent carriers to lease their to-the-curb networks and deploying new technology such as WiMax wireless Ethernet networks. With a total of 10 versions, including its {dirlink 4|11} and its {dirlink 4|363} and {dirlink 4|364}, AT&T also offers all three types of Ethernet service.

“We’re the No. 1 CLEC,” points out Richard Klapman, AT&T’s group manager for converged packet access services, “but we only reach something like 10 percent of the important buildings in the U.S. If another carrier has fiber to the customer’s site, it’s a win-win proposition – we get to bring Ethernet services to the building, and they can leverage the fiber in the ground that was laid during the bubble.”

BellSouth Corp. (NYSE: BLS), meanwhile, will be adding a Virtual Ethernet Service to its {dirlink 4|17}in the first half of 2006, running over an MPLS backbone. Offering four classes of service depending on how many virtual LANs the customer requires, BellSouth’s virtual Ethernet will provide customers with almost unlimited choice in terms of bandwidth and connectivity, plus ironclad service guarantees. The company is also in technical trials on a long-haul Ethernet-over-Sonet service with a partner to be named later.

A multipoint network service, the VES “is essentially real Ethernet with class-of-service on steroids,” says BellSouth's senior product manager for metro Ethernet services, Fred Borchuck. “It offers a tremendous range of choices, with very powerful Ethernet access to customers who want a VPN.”

Verizon Communications Inc. (NYSE: VZ) has added to its {dirlink 4|356} – offering three classes of service, for standard, priority, and real-time data – a point-to-point Ethernet private line service that will support so-called “hard” service-level agreements for guaranteed bandwidth, latency, and jitter requirements.

"We’ve gone from a defensive play at Verizon,” says Michael Tighe, director of advanced data products and services, “where Ethernet was very much a last resort if our frame relay and ATM services weren’t cutting it, to an offensive play.”

XO Communications Inc. , which recently announced that it will become a private company wholly owned by Carl Icahn, is in trials on an Ethernet-over-copper solution for its {dirlink 4|112} and {dirlink 4|50} services. Offering 10-Mbit/s, 100-Mbit/s, and 1-Gbit/s connectivity, XO’s Ethernet-over-copper services will allow the company to greatly increase its network footprint, according to Garrett Hess, XO’s senior product manager for data services.

“There’s a handful of manufacturers who offer boxes that take existing copper pairs and turn each pair into 2.3 Megs of bandwidth, as long as the customer is within 9,000 feet of the LEC wire center,” Hess explains. “We’ve still been hamstrung by reach, and using copper plus other methods will allow us to remove those obstacles.”

Like other service providers, Verizon’s Michael Tighe reports annual growth rates of around 60 to 70 percent for Ethernet ports and 50 percent for revenue from Ethernet services. That accords with Heavy Reading analyst Stan Hubbard’s contention that “Ethernet is well on its way to becoming the technology of choice for network access, metro transport, and traffic aggregation.” The hurdles to wider deployment of Ethernet services, however, remain formidable, and will continue to slow its adoption over the next 18 to 24 months.

They include interoperability issues: Carriers in many instances remain reluctant or even unable to effectively share their fiber networks, and because so many versions and flavors of Ethernet have grown up in its 30 years of existence, “the threads and the pipes don’t always fit together” in long-haul networks, as Klapman puts it. And there remains a dearth of fiber-to-the-curb in many markets. The main sticking point, though, may be plain old human nature: many enterprise network managers, having gone through years of effort, expense, and mental anguish to get their legacy ATM or frame relay networks up to current speeds, are reluctant to begin a new transition to Ethernet-based services until existing contracts are up or equipment needs replacing.

“One big problem is that Ethernet carriers go into a shop and the network guy says ‘Hey, we’ve got a three-year contract, come back in two years,’ ” says Muze’s Stuart Heath. “It’s like the old Marx brothers line: ‘We’re very pleased with the iceman we have now – he keeps the house nice and warm.’ ”

“Many people say Ethernet is going to take over the world, it’s only a matter of time,” says Looking Glass’s Steve Plote. “But there is still a lot of work to be done.”