Ethernet Gets Off the Island

There is no denying that Carrier Ethernet has a strong value proposition for users and network operators alike, but one factor has limited that potential value for many service deployments: Service connectivity between different operators and services is not easy. Until recently, interconnection agreements between Carrier Ethernet service providers that often used different service variants and class-of-service (CoS) structures have typically been complex, costly and time-consuming, taking at best several months to negotiate and implement.

But that is all changing. Ethernet service providers can now connect their individual islands of metro Ethernet services in a robust and efficient way. Last year’s adoption of the formal, industry-wide External Network-to-Network Interface (E-NNI) standard by the MEF has led to the creation of new competitive Carrier Ethernet exchanges (CEEs), which promise to further transcend challenges of Ethernet service interconnectivity and interoperability.

The latest Heavy Reading Insider , "Carrier Ethernet Exchanges: Who's Doing What," looks closely at the first five emerging CEEs across a wide range of criteria, reviewing strengths and weaknesses, customer numbers, differentiators and technology partners. The report analyzes CEE initiatives from ancotel , CENX Inc. , Equinix Inc. (Nasdaq: EQIX), Neutral Tandem Inc. (Nasdaq: TNDM) and Telx Group Inc.

CEEs are especially critical for smaller service providers, because they offer the potential for dramatically and relatively inexpensively expanding market reach. The "many-to-many" E-NNIs that CEEs offer provide smaller operators with major efficiency benefits in cost and time over laboriously implemented one-to-one agreements. These exchanges deploy technology to translate seamlessly between service variations as carriers migrate toward ever-newer versions of the Ethernet standard and offer "mapping" between different CoS systems. By facilitating interoperability, they offer the larger market the likelihood of expanded competition, with more customer options at lower prices from more players in more places.

Exchanges are lowering entry barriers into new markets for many carriers. For larger, incumbent carriers, they offer major benefits in more efficient Ethernet wholesaling. But the rise of CEEs is not all good news for the big operators. Most incumbents already have the bilateral agreements they need for Ethernet service interconnection. For incumbents, exchanges raise the specter of new competitive threats by leveling the playing field, facilitating greater Ethernet reach by smaller players and eroding dominant players' inherent advantages.

— Steve Koppman, Analyst at Large, Heavy Reading Insider

Carrier Ethernet Exchanges: Who's Doing What, a 19-page report, is available as part of an annual subscription (12 monthly issues) to Heavy Reading Insider, priced at $1,595. This report is available for $900. To subscribe, please visit: www.heavyreading.com/insider.

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