Metro Ethernet Growing, Squeezing Carrier Pipes
That's according to Rick Malone, principal at Vertical Systems Group , which this week released both its 2009 US Business Ethernet Leaderboard and its 2009 Global US Business Ethernet Leaderboard.
The Ethernet market, while not yet a mass market, has become much more competitive, and with that has come price pressure on basic services such as Direct Internet Access and metro Local Area Network offerings that are Ethernet-based, as well as efforts to speed installation, Malone said.
"The rate of installation is actually at a nice clip in 2009, even for weak economic times," Malone said. "We are seeing improved cycle times in terms of getting people installed, and that has resulted in capacity shortages, and that is something we haven't seen before in the core."
Where once the bottleneck in delivering Ethernet was in the access network, now service providers need to add engineering resources to insure that there is enough capacity in the network core to support continued growth of Ethernet, as it becomes a strategic offering, Malone said.
"Service providers are doing a much better job at the point of sale in terms of getting things installed," he said. "In the past, a lot of this stuff has been special order, where they sent SWAT teams in, but now they are rolling it out to the point where there is know-how in most of the geographical regions they are covering, which improves their ability to get it installed but puts pressure on the core."
Bandwidth demand also jumped, moving up faster in the past six months than in previous periods between the biannual reports. "That is something we want to watch," Malone said.
Who's leading the market?
AT&T Inc. (NYSE: T) and Verizon Enterprise Solutions remained as the top two US Ethernet providers and have assumed the third and fourth positions in the global scoreboard, which ranks service providers based on the number of Ethernet ports sold outside their home turf. The global ranking reflects efforts by AT&T and Verizon to focus on multinational corporations for their Ethernet offerings, Malone said.
The global leaders were Orange Business Services and Colt Technology Services Group Ltd , who both have predominant business in Europe.
Within the US, competitive carriers and cable MSOs gained on incumbents in general, Malone said. Rounding out the US top 10 were: tw telecom inc. (Nasdaq: TWTC), Cox Communications Inc. , Qwest Communications International Inc. (NYSE: Q), XO Communications Inc. , Time Warner Cable Inc. (NYSE: TWC), Cogent Communications Holdings Inc. (Nasdaq: CCOI), and Level 3 Communications Inc. (NYSE: LVLT).
But Malone believes cable companies fell back in the last six months of 2009, because -- with the exception of Cox -- they are more focused on the DIA segment of the market, which is becoming more commoditized and therefore under heavier price pressure.
"What we are seeing is they may be footprint constrained. There may be applications that need fiber footprint that they may not have. It's not a trend yet, but it's something that we are looking at," Malone said. "With the exception of Cox, their penetration as a group has not kept up with competitive providers or the incumbents."
Rounding out the top five in the global scoreboard was NTT Communications Corp. (NYSE: NTT).
— Carol Wilson, Chief Editor, Events, Light Reading