Ethernet Exchange Smackdown?

4:15 PM -- NEW YORK -- Ethernet Expo Americas 2010 -- The crowds at this event are impressive -- carrying a full plate of food through the exhibit hall at the lunch break put several suit coats in jeopardy of being doused by raspberry vinaigrette dressing.

The session I'm most anticipating is actually on Wednesday morning when my Heavy Reading colleague Stan Hubbard is moderating a meeting of the major Ethernet Exchange players in what should be a lively discussion of this relatively new segment of the market. CENX Inc. , Equinix Inc. (Nasdaq: EQIX), Neutral Tandem Inc. (Nasdaq: TNDM), and Telx Group Inc. are all vying to capture service provider business, making this panel an Ethernet Exchange smackdown.

It's hard to believe that it was only a year ago, at this event, that Nan Chen announced the formation of CENX. This week, that company announced a new milestone: 15 million ESL (Ethernet Service Locations) served via its Carrier Ethernet Exchanges around the world. (See CENX Taps Shriver .)

"We see the significant momentum in terms of service providers and carriers wanting to leverage CENX Carrier Ethernet Exchange to locations that otherwise wouldn't be possible financially," Chen says. "Buyers are able to have peace of mind because all those locations can be monitored, and they know the monitoring is taking place because we deliver specific parameters to their NOC."

A week earlier, Telx had its own good news -- its expansion plans are actually ahead of schedule, due to what the company says is heavy customer demand. (See Telx Early to Ethernet Exchange Expansion.)

But the faces on tomorrow's panel won't be all smiles. For one thing, the Ethernet Exchange folks will have to address some skepticism on the part of service providers as to exactly where an Ethernet Exchange can help. (See Larger SPs Still Browsing Ethernet Exchanges.)

That skepticism was on display here today during a panel of Ethernet service providers. One of those panelists, Richard Klapman, director of Ethernet access product management for AT&T Inc. (NYSE: T), says he needs to be convinced of the viability of the exchanges.

"Since I have 99.7 percent footprint coverage, what additional sites do they have to support me?" Klapman queries.

Using an Ethernet exchange does not relieve AT&T of the need for bilateral agreements with every service provider with whom it works, Klapman says, and until that matter is resolved, using an exchange might actually make life harder for his service delivery folks.

"My service delivery organization is trying to get to five nines of delivery and scale," Klapman says. Currently they use an automated process for Access Service Requests (ASRs) to provision and maintain bilateral deals with other carriers. Unless and until an Ethernet Exchange can automate that bilateral deal-making as well, AT&T likely won't bite.

Verizon Enterprise Solutions is using Ethernet Exchanges to fill gaps in its Ethernet coverage area, says Jeff Schwartz, group manager of Global Ethernet WAN Services, but it already has relationships with 125 other carriers globally, so its experience might be different from most.

Mike Rouleau, SVP Business Development & Strategy, tw telecom inc. (Nasdaq: TWTC), says his company is still evaluating where an Ethernet Exchange might or might not help.

"It's still very early for this market," Rouleau says.

That's grist for tomorrow morning's panel to chew on, to be sure. I'll be sure to let you know what they say.

— Carol Wilson, Chief Editor, Events, Light Reading

Interested in learning more on this topic? Then come to Ethernet Expo Americas 2010, Light Reading's eleventh Ethernet event, designed to meet the information needs of service providers and enterprises that are working out what next-generation services and applications to deploy, and what infrastructures will help them do this in the most cost-effective and productive manner. To be staged in New York, Nov. 2 & 3, admission is free for attendees meeting our prequalification criteria. For more information, or to register, click here.

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