& cplSiteName &

UK: Ethernet's Crowded House

Light Reading
News Analysis
Light Reading
11/29/2004

Demand for Ethernet services continues to boom in the U.K., but Europe’s most competitive market can make things tough for service providers, a trend that’s reflected in a global directory of Ethernet services being compiled by Light Reading.

That directory shows that at least 42 companies offer some form of Ethernet service in the U.K., from niche players such as AboveNet Inc., which operates in London as a link for its US coverage, to tiny ISPs offering Ethernet-based Internet access, to large carriers such as BT Group plc (NYSE: BTY; London: BTA) offering service nationwide.

With Ethernet services still in their early phase, providers often have little to differentiate their line-up of basic Internet and point-to-point services aside from price, which is under pressure in the U.K. because of the sheer number of players.

“It’s a very active market with lots of players,” says Barry Goddard, private circuits U.K. portfolio manager at BT Retail. “And there’s a lot of dark fiber in the ground.”

It seems unlikely that number of players can be sustained, though. Neil Rickard, research vice president at Gartner Inc., says that having about 13 major players offering Ethernet services is “ridiculous,” especially when compared with other European countries that tend to have three or four. “We’ve been saying for a year now that the market needs to consolidate,” he says, citing BT’s acquisition of Infonet Services Corp. (NYSE: IN) as a step in the right direction (see BT Buys Infonet).

But while the market remains so competitive it's likely that prices will continue to fall. Goddard at BT Retail admits the U.K. incumbent carrier hasn’t been immune to the pricing pressures, and has had to remain "very competitive as customers become more astute."

Another player that has experienced the pricing pressure is alternative operator Exponential-e Ltd., which has had to scale down its revenue projections this year. Managing director Lee Wade was all wide-eyed optimism in February when he forecast revenues for the year of £5.5 million ($10.4 million) from 450 customers (see Exponential-e: What Yipes Wasn't). But a few months later he told a different story: “Did I say that? I must’ve been in dreamland.” Wade still expects to end the year with 450 customers, but his revenue projection is now £4 million ($7.6 million).

And at COLT Telecom Group plc (Nasdaq: COLT; London: CTM.L), “price erosion” is routinely cited in earnings reports, prompting the pan-European operator to announce a new business strategy with much fanfare about new services and innovation (see COLT Posts Loss, Outlines Plans and COLT Claims Meshed Ethernet Service First).

But maybe the prices are artificially high, and need to be cut. Talking at the launch of COLT's new Ethernet offerings, Gartner's Rickard noted that operators are pricing Ethernet services to avoid cannibalization.

“They’ve got a nice, big, juicy leased line revenue base and they don’t want to compromise that,” said Rickard. “So they tend to price Ethernet services higher than is perhaps necessary."



According to research from Heavy Reading, such tactics will stifle service uptake, as enterprise customers, while keen on the features offered by Ethernet, don't want to pay a premium for them (see Enterprises: We Want Our Ethernet!).

So how are the carriers responding? COLT says its new strategy is to compete by giving customers more advanced services than its competitors with coverage across Europe, and that it has responded to feedback from customers with its hub and spoke, switched Ethernet VPN, and switched Gigabit IP services.

Paul David, managing director of products and innovation at COLT says customers have been constrained for the past few years by a lack of choice, as everyone was offering the same sort of service in the same way. "COLT is trying to take a fresh approach and offer the customers something a little bit different."

Light Reading's Ethernet directory backs up David's assertion, as it shows the majority of U.K. Ethernet services are metropolitan private line offerings. But as the table below shows, there are plenty of operators hoping to differentiate themselves by marketing metro and wide-area multipoint services.

Table 1: Multipoint Ethernet services in the UK

Service Provider Service Name UK Coverage MAN or WAN
AboveNet Inc. CWDM London MAN
BT Group plc IP Clear Flex All cities Both
BT Group plc IP Clear GigE All cities Both
BT Group plc MegaStream Ethernet All country Both
BT Group plc WaveStream Services (optical) All cities Both
COLT Telecom Group plc LANLink Hub and Spoke London | Birmingham | Manchester Both
COLT Telecom Group plc Switched Ethernet VPN London | Birmingham | Manchester Both
COLT Telecom Group plc Switched Gigabit IP London | Birmingham | Manchester Both
Easynet Ethernet Anywhere Basingstoke | Brighton | Bristol | Cambridge | Carlisle | Coventry | Edinburgh | Glasgow | Gloucester | Hayes | Leeds | Leicester | Liverpool | London | Manchester | Middlesbrough | Milton Keynes | Newbury | Newcastle | Nottingham | Reading | Sheffield | Slough | Stoke | Taunton | Warwick | Woking | Wolverhampton
Exponential-e PowerConnect Bristol | Birmingham | Leeds | London | Manchester | Newcastle | Nottingham | Reading | Swindon Both
Exponential-e PowerLink Bristol | Birmingham | Leeds | London | Manchester | Newcastle | Nottingham | Reading | Swindon Both
Exponential-e PowerPeer Bristol | Birmingham | Leeds | London | Manchester | Newcastle | Nottingham | Reading | Swindon WAN
Exponential-e PowerStar Bristol | Birmingham | Leeds | London | Manchester | Newcastle | Nottingham | Reading | Swindon Both
Exponential-e PowerVPN Bristol | Birmingham | Leeds | London | Manchester | Newcastle | Nottingham | Reading | Swindon Both
Fibernet Ethersphere All cities Both
hSo hSo Connect All cities Both
InTechnology plc LANnet Banbury | Birmingham | Brighton | Bristol | Carlisle | Croydon | Edinburgh | Glasgow | Harrogate | Leeds | Leicester | London | Manchester | Middlesborough | Milton Keynes | Newcastle | Northampton | Nottingham | Preston | Reading | Sheffield | Slough | York MAN
Interoute Ethernet Private Line London Both
Level 3 Communications Inc. (3)Flex Ethernet All cities Both
MCI UK Private Line Ethernet All cities Both
NTL EtherVPN All cities Both
PacketExchange Ltd. DireXion London Both
PacketExchange Ltd. ProXimity London Both
Sprint SprintLink Virtual LAN Service (VLS) All cities WAN
Stealth Communications Inc. TLS London Both
Telecomplete Ltd. Long Reach Ethernet All cities WAN
Telecomplete Ltd. Metro VLAN London MAN
Telewest Business Evolved Ethernet All cities Both
TeliaSonera International Carrier L2Connect London Both
THUS plc City Ethernet All cities MAN
THUS plc National Ethernet All cities Both
Tyco Telecommunictions (US) Inc. Global Ethernet London WAN
XchangePoint Europe Metro VPH London MAN
Your Communications LAN Speed (national) All cities WAN




— Nicole Willing, Reporter, Light Reading

(3)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
particle_man
particle_man
12/5/2012 | 1:02:18 AM
re: UK: Ethernet's Crowded House
"It seems unlikely that number of players can be sustained, though. Neil Rickard, research vice president at Gartner Inc., says that having about 13 major players offering Ethernet services is G«£ridiculous,G«• especially when compared with other European countries that tend to have three or four. G«£WeG«÷ve been saying for a year now that the market needs to consolidate,G«• "

How does this compare to the number of players offering voice services? Ethernet could become a standard and ubiquitous offering. In this case most if not all carriers would offer it.
materialgirl
materialgirl
12/5/2012 | 1:02:09 AM
re: UK: Ethernet's Crowded House
Ethernet will become standard. However, with no way to compete other than on price, market consolidation to 1-3 players is inevitable.
particle_man
particle_man
12/5/2012 | 1:02:08 AM
re: UK: Ethernet's Crowded House
Well, if that's the case, why are there more than three LD companies? Actually ISPs may be a better example.
Featured Video
Upcoming Live Events
October 22, 2019, Los Angeles, CA
November 5, 2019, London, England
November 7, 2019, London, UK
November 14, 2019, Maritim Hotel, Berlin
December 3-5, 2019, Vienna, Austria
December 3, 2019, New York, New York
March 16-18, 2020, Embassy Suites, Denver, Colorado
May 18-20, 2020, Irving Convention Center, Dallas, TX
All Upcoming Live Events
Partner Perspectives - content from our sponsors
Sports Venues: Where 5G Brings a Truly Immersive Experience
By Peter Linder, 5G Evangelist, North America, Ericsson
Multiband Microwave Provides High Capacity & High Reliability for 5G Transport
By Don Frey, Principal Analyst, Transport & Routing, Ovum
All Partner Perspectives