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AT&T Gets Hip to Switched Ethernet

AT&T is markedly aggressive in its metro Ethernet service rollout. The race with ILECs is on!

September 29, 2003

4 Min Read
AT&T Gets Hip to Switched Ethernet

AT&T Corp. (NYSE: T) unveiled switched metro Ethernet services across the U.S. today (see AT&T Launches Local Ethernet). The move is key to helping AT&T compete against ILECs and independent carriers for a slice of the action in metro services. The question is: Can AT&T move quickly enough to solidify its position?

The new services, verbosely dubbed AT&T Ethernet Switched Service -- Metropolitan Area Network, are offered throughout AT&T's U.S. footprint. Businesses can order access for data, voice, and video at rates from 50 Mbit/s to 1 Gbit/s in mesh and virtual LAN configurations. The switched architecture gives customers more flexibility in backing up their networks and adding new users.

Ethernet metro services are growing in significance. More explosive growth has been hindered mainly by the availability of fiber in U.S. cities (see Access Is Fiber-Starved). AT&T, which claims to have 6,400 office buildings hooked to fiber in its U.S. network, sees itself positioned well against the regional Bells, whose fiber connections have given them first-mover advantage in offering metro Ethernet.

"All the RBOCs have quite extensive metro Ethernet service offerings... They have the most market share because they have their own fiber connections," says Ron Kaplan, a research manager at IDC.

Switched Ethernet, also known as transparent LAN service, looks to be shaping up as a distinguishing feature of carriers with serious Ethernet intentions, but offerings are still fairly limited. Sprint Corp. (NYSE: FON) offers switched Ethernet services at rates to 1 Gbit/s in parts of Florida and in Las Vegas, Nevada. The IXC says it plans more city rollouts, but additions will be gradual.

On the RBOC side, BellSouth Corp. (NYSE: BLS) offers transparent Ethernet LAN service in its regional network now, with no plans yet to extend it elsewhere. SBC Communications Inc. (NYSE: SBC) says it's in trials and will roll out to selected cities beginning at the end of this year. Qwest Communications International Inc. (NYSE: Q) and Verizon Communications Inc. (NYSE: VZ) could not be reached by press time.

Only a handful of other carriers offer switched Ethernet in U.S. metro areas. Among these, however, is independent carrier Time Warner Telecom Inc. (Nasdaq: TWTC), a formidable rival for any incumbent (see Time Warner Wins MetroE Deal).

In a presentation to press and analysts today, AT&T Ethernet services director Franco Callocchia acknowledged Ethernet as key to the carrier's strategy to build on its nationwide IP network (see AT&T Talks Up IP VPNs).

AT&T has offered Ethernet access for business customers since 2001. It also offers point-to-point Ethernet services and Ethernet connectivity on Sonet rings. Ethernet links into ATM and Frame Relay services are in beta trials but aren't due for general availability until 2005.

AT&T still has a lot of work to do, though, and the carrier could lose ground to rivals, depending on how long it takes to get it done. For one thing, the new switched Ethernet MAN service is only good within cities such as Chicago or Boston. To link networks among multiple cities, businesses still need to order AT&T's point-to-point Ethernet private lines. AT&T spokespeople don't know when intercity "WAN interconnectivity" will be available.

Other issues linger. AT&T says it hasn't had time to set any universal pricing, standardize terms of service-level agreements, or add the new service to its Integrated Global Enterprise Management System (IGEMS). It also does not offer QOS (quality of service) control, which would allow customers to assign priorities to specific types of network traffic -- giving video the lion's share of bandwidth, for instance. For that, AT&T is still using ATM.

As for customers, AT&T says the new switched Ethernet MAN service is being offered by request. It won't quantify how many companies have signed up, but the press release boasts Securities Industry Automation Corp. (SIAC) as a taker. A spokesperson says AT&T has "hundreds" of customers for its other metro Ethernet offerings.

AT&T won't name its vendors for any of its metro Ethernet services. But its common industry knowledge that Cisco Systems Inc. (Nasdaq: CSCO) and Nortel Networks Corp. (NYSE/Toronto: NT) play a role (see AT&T Closer to 'One' With Itself). The carrier is also mum about other service providers it's tapped to extend Ethernet in specific areas.

— Mary Jander, Senior Editor, Light Reading

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