Big Names Eye Ethernet Over Copper

Big telecom equipment vendors might be ready to plunge into the Ethernet-over-copper market, according to the latest Light Reading Insider report.

Despite the interest it's drawn, Ethernet over copper "has not yet been targeted by the Tier 1 players who, where required, typically use original equipment manufacturers (OEMs), resell, or simply recommend a specialist third party's technology," analyst Simon Sherrington writes in the report, "Ethernet Over Copper: A Golden Opportunity."

Cisco Systems Inc. (Nasdaq: CSCO), for example, hasn't developed an Ethernet-over-copper system of its own. Instead, it's been recommending Hatteras Networks Inc. to customers that want the technology. (See AT&T Sets Copper Ethernet Course.)

"But growing evidence suggests that the larger vendors are monitoring this market -- and may be mulling acquisitions," Sherrington adds. Adtran Inc. (Nasdaq: ADTN) has already announced plans for Ethernet over copper, for instance, and Calix Inc. (NYSE: CALX) has teamed up with startup Aktino Inc. . (See Adtran Muscles Into Copper Ethernet and Aktino Lands Calix Partnership.)

The result could be consolidation, as larger equipment providers could look to add Ethernet-over-copper products to their portfolios through acquisition. Possible buyout candidates include companies like Actelis Networks Inc. , Aktino, and Hatteras.

Ethernet over copper is rapidly gaining interest among carriers as they attempt to reach small and medium-sized business customers and cost-effectively supply backhaul to DSLAMs and cell sites.

Among the factors driving growth is the increased demand by enterprise customers for medium-bandwidth Ethernet services. In many markets, small and medium-sized businesses that want high-bandwidth data connections have a choice between buying T1/E1 circuits or paying for much more expensive DS3 circuits.

That's because in most cases, fiber isn't available to these customers. "Fiber is quite literally out of most businesses' reach: Vendors consulted for this report estimate that it is available at only 9 percent to 13 percent of business sites," Sherrington writes.

The technology is also being used for cell-site and DSLAM backhaul traffic. The report notes that backhaul requirements for DSLAMs have grown dramatically, as has the need for more capacity and Ethernet interfaces for backhaul on cell sites.

As a result, "the ability to offer higher bandwidth over bonded dry copper or bonded circuits rather than traditional leased circuits is attractive for some operators," Sherrington writes.

Ethernet over copper has been popular with CLECs in Europe and the U.S., but the market is quickly accelerating with increased attention from Tier 1 carriers. That includes major contracts recently awarded by AT&T Inc. (NYSE: T), BT Group plc (NYSE: BT; London: BTA), and Verizon Enterprise Solutions .

— Ryan Lawler, Reporter, Light Reading

The report, Ethernet Over Copper: A Golden Opportunity, is available as part of an annual subscription (6 bimonthly issues) to Light Reading Insider, priced at $1,295. Individual reports are available for $900. For more information, or to subscribe, please visit: www.lightreading.com/insider.

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