Neutral Tandem Takes on Ethernet Peering

Neutral Tandem Inc. (Nasdaq: TNDM) is taking a Service Provider Information Technology (SPIT) approach to Ethernet peering, vowing that its North American Ethernet Exchange will break new ground in IT tools for carriers.

The approach isn't unique: CENX Inc. appears to be taking the idea even further. But it's particularly important to Neutral Tandem, a nine-year-old company in the crossconnect business, because CEO Rian Wren sees it as the company's ticket to attracting Tier 1 operators and graduating into the IP world.

It's another example of how new types of information technology are becoming crucial in telecom. (See The SPIT Manifesto.)

And Ethernet peering services -- the interconnection points where carriers can hand off Ethernet services to one another -- looks to be fertile ground for more sophisticated customer interfaces.

Neutral Tandem's day job is in the business of transit -- interconnecting CLECs and mobile operators, providing a service that competes with exchanges run by the Tier 1s. But that work is all about phone numbers. Neutral Tandem doesn't want to be left behind as the world goes to IP and Ethernet. So, the company is starting an Ethernet exchange, launching in 14 US cities, probably later this quarter, Wren says. (See Neutral Tandem Plans Ethernet eXchange.)

The exchange will certainly include smaller carriers as customers, but Wren wants the big fish, too. To get them, he thinks he needs that IT overhaul. In fact, IT has made up the bulk of the company's hiring lately, he says.

Neutral Tandem aims to create a platform that will give carriers remote access to Neutral Tandem's network. Carriers would be able to do their own provisioning and even launch their own test signals onto the network.

"What's going to be successful for those guys is if you make these switches look like they're owned by the carriers," Wren tells Light Reading. "I worked for AT&T Inc. (NYSE: T) for 20 years. I know what they want. They want the ability to control and manage everything in this network."

Equinix Inc. (Nasdaq: EQIX), which recently took its competing Ethernet peering service out of beta, isn't giving that kind of freedom at first. But it wouldn't be surprising to see it quickly create strong tools for its carrier customers. (See Ethernet Europe: Equinix Opens Ethernet Exchange Doors .)

CENX, though, appears to be taking the concept further than Neutral Tandem is. The startup aims to simplify, not just the physical hooking-up of services, but the business aspects as well, CEO Nan Chen tells Light Reading in an email. For instance, carriers would be able to bill one another through CENX's service. (See Ethernet Gets a CENX View.)

— Craig Matsumoto, West Coast Editor, Light Reading