10:10 AM -- Carrier Ethernet exchanges are emerging as a hot topic at the upcoming Ethernet Expo Americas 2010 on Nov. 2 and 3. Under the leadership of Carrier Ethernet rock star Nan Chen, the CENX Inc. team pioneered the concept of the Ethernet services exchange and became the first company to open its exchange for business in late 2009. In his role as the MEF’s president and board director, Nan will be giving an Expo keynote progress report on “Carrier Ethernet Globalization” during the morning of Nov. 3. His colleague, CENX CTO Chris Purdy, will be participating in the following session on the same day: “Carrier Ethernet Exchanges – The Catalyst for Market Growth.”

Below are highlights of a Q&A discussion that I had this week with Nan in his role as the president of CENX:

Heavy Reading: Over the past six or seven years, you personally have done a tremendous job in evangelizing the benefits of Carrier Ethernet network solutions and services. Ethernet services are now offered by more than 500 providers worldwide, but there are still a lot of customers out there who have not yet taken full advantage of the technology. What are some of the key challenges you see that could be impeding faster and more widespread adoption of Carrier Ethernet services, and what is CENX doing to address these challenges?

Nan Chen: The growth of Carrier Ethernet, both in equipment and services revenue, has definitely been phenomenal, from zero at the inception of MEF and Carrier Ethernet industry in 2001 to well over $20 billion in 2010. Clearly, it’s gratifying that our vision and effort have helped to create and shape a new industry, a foundation of next-generation networks and services for telecom and the Internet. This is just the beginning. The growth of Carrier Ethernet services has been largely within the well-understood domains of each of the service providers. The use of Carrier Ethernet services as the delivery of SLA-enabled applications instead of best-effort Internet delivery has begun and will grow organically.

CENX is, we believe, playing a key role in accelerating this growth by enabling successful interworking between providers large and small around the world with Carrier Ethernet service-level ubiquity. This will unlock the floodgates. As Ethernet services are delivered beyond network boundaries, the ability to create both technical and process interconnects between all types of service providers requires a new kind of approach well beyond plugging a connector into a port. CENX was born to address these new challenges for the industry. It requires expertise, focus, and leadership. CENX has exactly that: expertise in Carrier Ethernet, systems, and interconnect; a focus on end-to-end service delivery and execution; and leadership in the industry. We have what is likely the largest team of experts in the industry that is solely dedicated every day to driving the success of the Carrier Ethernet Exchange.

HR: Your recent press release from Oct. 11 indicates that CENX has now opened nine exchange sites in New York, Los Angeles, Chicago, London, Hong Kong, New Jersey, and Miami. Are you carrying traffic in these markets?

NC: Yes, and traffic is growing fast.

HR: How many service providers are participating in the CENX Carrier Ethernet Exchange? What does your mix look like in terms of the type of companies that are involved?

NC: This is a very interesting and telling question. We are fast approaching a triple-digit number in terms of service provider participation. CENX has surpassed 10,000,000 ESLs (Ethernet Service Locations) that can be searched on CENX Market and reachable via CENX Carrier Ethernet Exchanges around the world. In other words, network effect takes hold and critical mass is achieved. We have a great mixture of the world’s largest incumbent carriers, MSOs around the globe, and regional providers around the world. Each one may have different objectives of working with CENX. Some would like to expand their Carrier Ethernet service coverage cost-effectively, while others would like to wholesale their existing asset globally with a single connection to CENX.

In terms of applications, we have enabled a completely innovative use of Carrier Ethernet technology for our members beyond the delivery of simple end-to-end Ethernet services. With a single connection, service providers can use a CENX exchange for voice, video, IP, and mobile backhaul. Each application has its own quality of service and bandwidth profiles, and CENX can eliminate unnecessary parallel architectures of interconnects.

HR: Beyond geographic markets and the number of participating service providers, what do you believe are key factors that companies should consider when determining whether or not to be involved in a particular Ethernet exchange?

NC: This is probably the most important point for everyone to understand. Ethernet services delivered by service providers are not the same as a LAN-based Ethernet used in office or at home. For it to work at all, Ethernet networks and services used by service providers must be carrier-class. It’s taken the MEF 10,000-plus technical contributions that have yielded 30 standards to develop Carrier Ethernet, which is defined as Ethernet plus five carrier-class attributes. These are standardized services, scalability, reliability, service management, and quality of service. Therefore, it’s essential to choose an exchange that implements, supports, and facilitates every one of these five carrier-class attributes -- what the MEF calls a “Carrier Ethernet Exchange.” Otherwise, the integrity of the end-to-end service will be compromised. This reflects the collective consensus of the members of the MEF. As an innovator in the market, delivering the “Carrier Ethernet Exchange” has driven CENX’s vision, architecture, and capabilities, including unique integration services and unified off-net performance monitoring.

HR: You advertise that with a single connection to the CENX exchange a service provider buyer literally can reach locations all over the world. Do you handle that long-haul connection between your metro markets, or is that something a buyer would work out with a long-haul operator within your exchange?

NC: With a single connection to a CENX exchange, CENX members could reach more than 10 million ESLs all over the world because our Carrier Ethernet Exchange is logically a single exchange covering the world. In addition, all of our exchanges are interconnected by our members’ networks -- not by a proprietary CENX network, which would have been in competition with our members. CENX is carrier-neutral and colo/data-center neutral. We facilitate connectivity via a variety of service provider members when a buyer wants to connect to an ESL reachable at an exchange other than where the buyer is physically connected.

HR: What is the average length of time that it takes for a service provider to get up and running as a member of your exchange? Can you walk us through the basic process?

NC: Our goal is 30 days for a first connection and two to five days, or less, to integrate buyer-seller partners who are already connected members.

We have a very well-engineered process that leverages all of our Carrier Ethernet and operational experience with the focus on eliminating the complexity, stress, and hard work from our members. Instead of providers taking months of technical iterations to qualify each wholesale access provider, CENX replaces this repetitive ordeal with a one-time exercise by preprocessing their specifications and understanding technical, administrative, and logistical requirements and processes. Secondly, we lead and conduct prequalification testing to map the service capabilities, establishing preferred approaches on service mapping and integration. Again, it’s done once through a normalized interface that allows our business to scale and members to save massive costs and time. Final integration is completed with a series of comprehensive Carrier Ethernet integration tests.

HR: I really like the idea that a service-provider buyer could sign into the CENX Market Web portal and have access to service profile information like class of service, availability, and bandwidth options. Once you reach a critical mass in terms of participating companies, it would seem that this could put some pressure on sellers to upgrade their portfolios to ensure that they remain competitive. Do you agree, or are we too early in the game to be making guesses about how this will impact competition?

NC: Yes, all 10 million ESLs in CENX Market are normalized over parameters, such as bandwidth and performance profiles, which allow buyers to make informed decisions. Sellers naturally will want to provide differentiated services on CENX Market, but it doesn’t alter innate characteristics or advantages of each provider, based upon their coverage, service offerings, and unique location.

A key factor in the development of the exchange concept with our leading service provider members has been the creation of best practices for the provisioning of wholesale services. CENX provides a superset of all requirements. We also have an important role in helping every service provider evolve and migrate their service offerings to meet these new application and customer prerequisites. This is an important part of our partnership with members. It’s not pressure -- it’s about helping them develop state-of-the-art Ethernet services.

HR: Nan, what is your long-term vision of the Carrier Ethernet exchange? Is it here to stay?

NC: If you believe in Carrier Ethernet and that exchanges (stock, mercantile, telephony) always make a given market more efficient, then Carrier Ethernet exchanges are here to stay. Furthermore, the vision of the Carrier Ethernet exchange is to interconnect all world’s carrier networks together to deliver global ubiquity of carrier Ethernet, a foundation of next-generation networks and services for telecommunications and the Internet. One way to think about the vision is as follows: As Carrier Ethernet replaces Sonet/SDH-based TDM/telephony networks, Carrier Ethernet exchanges will replace all TDM interconnects and telephony tandems, enabling Carrier Ethernet on-demand, QoS-enabled, any-to-any connectivity -- much like what today’s TDM/telephony networks have perfected where any end-point (telephone) could reach any other (telephone) in real time, with potentially multiple carriers in between. That’s the vision of our Carrier Ethernet Exchange. Hopefully it won’t take us 100 years to achieve it, like telephony did.

HR: Nan, it’s always a pleasure to chat. I look forward to seeing you at the Expo.



— Stan "EtherMan" Hubbard, Senior Analyst, Heavy Reading, and Chairman, Ethernet Expo Americas 2010

Interested in learning more on this topic? Then come to Ethernet Americas 2010, Light Reading's eleventh Ethernet event, designed to meet the information needs of service providers and enterprises that are working out what next-generation services and applications to deploy, and what infrastructures will help them do this in the most cost-effective and productive manner. To be staged in New York, Nov. 2 & 3, admission is free for attendees meeting our prequalification criteria. For more information, or to register, click here.