RBOCs Moving on MidBand Ethernet?
No contracts have been announced, but competitive forces and the arrival of new technical standards are driving the RBOCs to seriously evaluate the “Ethernet-over-anything” solutions offered by Hatteras Networks Inc., Overture Networks Inc., Ceterus Networks Inc., Anda Networks Inc., Actelis Networks Inc., Covaro Networks Inc., and others (see Covaro Intros Ethernet Demarcation).
Ethernet is typically delivered over fiber optic cable, but the companies listed above allow carriers to deliver Ethernet service over existing mediums such as T1, T3, or DS3 bonded copper lines. Without the expense of laying new fiber, the business of selling midband Ethernet becomes profitable for the network operator.
"They can use a combination of their own fiber and copper networks to deliver Ethernet to more enterprise locations, and they can also extend Ethernet services by leasing local loops from other carriers," says Heavy Reading senior analyst Stan Hubbard. "Operators can now deliver relatively low-speed Ethernet services [10 Mbit/s to 45 Mbit/s] that are competitive against traditional Frame Relay, T1, and T3 data offerings to anywhere you can get a copper connection," Hubbard says (see Ethernet Goes Wide at Supercomm).
The market for enterprise Ethernet began with large “million-dollar-a-month” enterprise customers demanding high bandwidth Ethernet service from carriers, according to Covaro's VP of marketing, Fred Ellefson, but has moved “down market” during the past few years into the small and medium-sized enterprise (SME) market.
These accounts require less bandwidth, and the margins are much lower, so carriers cannot cost-effectively drop new fiber over which to deliver Ethernet. Only about 10 percent of the U.S. SME market has fiber access today, analysts say.
Until about two years ago, conventional wisdom had it that the RBOCs weren’t eager to roll out Ethernet service because it would cannibalize the more expensive T1, T3, and Frame Relay services sold to enterprise customers.
“There was an unwritten rule that carriers would tell their sales reps not to sell enterprise Ethernet of fewer than 10 Mbit/s to businesses,” says Hatteras VP of marketing Chris Cook (see MTS Standardizes on Hatteras ).
Cook says that the ratification last year of 802.3ah, the Institute of Electrical and Electronics Engineers Inc. (IEEE)'s umbrella standard for Ethernet over copper, further increased the credibility of the technology in the eyes of the RBOCs (see Startups Rally 'Round EFM).
Meanwhile, demand for support of next-generation services in the enterprise -- such as VOIP, distributed WANs, and IP video conferencing -- has increased the demand for Ethernet among enterprise customers.
Competitive pressure is also pushing the RBOCs toward midband Ethernet. Hubbard explains that, to date, smaller service providers have been the most aggressive at deploying the gear needed to deliver Ethernet to the SME market.
The RBOCs have been reluctant to offer Ethernet service below the 10-Mbit/s level because the cost of planting the fiber was prohibitive, Cook says. But he claims Ethernet-over-copper solutions like the Hatteras product will allow RBOCs to service the SME market and make money doing it.
Cook believes the idea of delivering midband Ethernet to the SME market is not new to RBOCs. “I think they’ve all been looking at for a long time,” Cook says. “But the fact that the smaller carriers are moving forward with their offerings -- that coupled with the release of the standard last year -- is causing the larger carriers to really look at the technology...
“A customer without fiber to the premises can now get the economics and benefits of higher bandwidth, and it allows us to broaden our market and leverage the existing plant."
— Mark Sullivan, Reporter, Light Reading
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