Optical/IP Networks

Carrier Ethernet Takes Flight

It's open season on Ethernet services.

This is the year that carrier Ethernet takes off, with operators across the board making big plans for Ethernet services, according to the Heavy Reading "2006 Survey of Ethernet Service Providers," released last week. (See HR: Carriers Gearing Up for Ethernet.) The trend could mark, at long last, the point where the industry permanently turns its back on legacy services like Frame Relay.

"It just makes less and less sense for industry players to invest sales, marketing, and R&D resources targeting the legacy market when such a dramatic transformation is taking place," Heavy Reading analyst Stan Hubbard writes in the report.

The survey, covering 126 service providers worldwide, flagged enterprise Ethernet services as the fastest growing business for most carriers. Every type of service that's defined by the MEF looks to fit into many carriers' plans, Hubbard writes, as more than 80 percent of the respondents expected to be offering such services by 2008.

"Market competition will heat up significantly in the coming quarters, as operators continue to expand their Ethernet portfolios and new players enter the market," Hubbard writes.

But wait -- if everyone is following guidelines like the MEF's E-Line (point-to-point) and E-LAN (point-to-multipoint) definitions, what is there to make services stand out?

Strangely enough, the question doesn't seem to bother carriers, as survey respondents seemed confident about making their services stand out. It's true that carrier Ethernet offers a spread of features to spice up carrier offerings -- service-level agreements, interworking with older traffic types like ATM, or 50-millisecond restoration, for example. But none of these are exactly secrets.

"It is difficult to see how competitive advantage can be won if these features are implemented industry-wide, but this is indicative of a market in an explosive growth phase, in which carriers believe they have many opportunities for differentiation," Hubbard writes.

The top competitive advantage, survey respondents believe, is the simple ability to reach any location through whatever last-mile means possible. That's not surprising, considering one roadblock Ethernet services face is reach -- that is, being able to reach potential customers with an Ethernet service. (See Ethernet Expo: Shop 'Til You Drop.)

Among the equipment vendors Cisco Systems Inc. (Nasdaq: CSCO) certainly has service providers' ears, with 48 percent of survey respondents marking the company as a perceived leader in carrier Ethernet equipment. But that's well down from last year's result of 70 percent. One difference: the rise of Alcatel (NYSE: ALA; Paris: CGEP:PA), which took 28 percent of the 2006 vote, up from 18 percent the year before.

— Craig Matsumoto, Senior Editor, Light Reading

Interested in learning more on this topic? Then come to our upcoming conference, Ethernet Expo 2006, a conference and exhibition focused on the evolution of Ethernet as a ubiquitous enabler of next-gen services in telecom networks, targeting residential and enterprise users. To be staged in New York City on October 23-25, admission is free for attendees meeting our prequalification criteria. For more information, click here.

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