Ethernet services

Neos, Level 3 Meet & Greet on Ethernet

The U.K.'s Neosnetworks, known for its "try anything" approach to selling Ethernet services (see Top Ten Service Providers to Watch and Europe Is Calling), has partnered with Level 3 Communications Inc. (Nasdaq: LVLT) in what could be a winning strategy for both in a challenging market.

Neos is tying its U.K.-based network into Level 3's backbone in order to offer ISPs a Europe-to-New York link at guaranteed rates (see Neos Delivers Level 3 IP). Level 3 says the nonexclusive agreement is one of many alliances it's forged (mostly unannounced, it seems) and plans to forge worldwide to reach ISPs that are out of its target range.

Neither Neos nor Level 3 had much to say on the deal at press time, despite repeated requests for information. Still, several points stand out in favor of the partnership:

  • Key market. Metro Ethernet services are a big telecom opportunity (see IDC Predicts Metro Ethernet Boom and Metro Ethernet), and the European market is said to be second only to Asia/Pacific in supporting Ethernet services. Any partnership that enhances service offerings here is likely to stimulate this growth.
  • Cost-effective. The move means both Neos and Level 3 can extend influence in their respective markets, without spending big bucks to build out more infrastructure. For its part, Neos gains European ISP customers, attracted by the ability to offer faster Internet backbone links. Level 3, despite the fact that it has its own suite of Ethernet services (see Level 3 Launches Ethernet), has carefully targeted a top-tier clientele, what it calls the "top 300 consumers of bandwidth." Those ISPs apparently aren't included in the ones Neos is concerned about.
  • Level 3 retains focus. Level 3 needs to keep its ducks in order right now, as it plans its merger with Genuity Inc. (Nasdaq: GENU) and sizes up the coming market challenges in light of ongoing concerns about its financials (see Level 3 President Sheds Shares). Having a shortcut to a hot market will enable the carriers' carrier to save time and money at a crucial juncture, without lessening its primary focus.
  • Growing Technologies. The alliance could serve to showcase the provisioning capabilities of Multiprotocol Label Switching (MPLS), which Level 3 has championed at standards bodies (see Juniper/Cisco Duke It Out Over MPLS). What's more, it's a chance for key vendors adopted by each carrier to showcase their wares -- Laurel Networks Inc. for Level 3, and Riverstone Networks Inc. (Nasdaq: RSTN) for Neos.
  • Proving ground for SLAs. A key feature of the agreement, according to Neos, is the U.K. provider's ability to offer customers "packet loss of less than 1% and target latency of 30ms to Europe and 40ms to New York." SLA claims have become the focus of much research lately (see Is Five 9s Reliability Really Reliable?), and Light Reading will hold a Webinar on the topic of "five 9s" reliability on January 23. SLAs like Neos's provide a means of examining what's doable and what remains to be done in terms of carrier guarantees.

On the downside, it remains to be seen whether Level 3 and Neos can sustain their viability in the challenging Ethernet market. Competition will only grow in the Ethernet services space. Level 3 faces an uphill climb as an established player with much on its plate. Neos must maintain its edge; it hasn't yet offered 10-Gbit/s services in Europe, for instance. At least one of its suppliers, Hitachi Ltd. (NYSE: HIT; Paris: PHA), was supposed to have updated its gear to support that speed by the end of 2002. (Inquiries went unanswered at press time.)

— Mary Jander, Senior Editor, Light Reading
BuckStopsHere 12/5/2012 | 12:55:02 AM
re: Neos, Level 3 Meet & Greet on Ethernet Who cares?
metroman 12/5/2012 | 12:55:01 AM
re: Neos, Level 3 Meet & Greet on Ethernet The 2 parties named in the title to the article might find it important.

Also anyone who doubted the use of Ethernet as a medium for transporting data for Regional and National delivery will see that the likes of Level 3 have verified it.

Level 3 customers can extend IP transit/transport services to the Neos POPs and beyond, taking away the need to be colocated with them. This virtual co-location will be a big issue for the IX community as nationwide Ethernet removes most of the need for physical colocation.

The Neos service is much lower cost than a BT leased line or WDM service and is as transparent. Level 3 only need to use a single physical interface to aggregate many customers who arrive on the Neos peering connection rather than many interfaces. Everyone wins with lower cost service delivery.

So what? It means that a Service Provider has thought about the needs of it's customers and gone out and delivered what they want. It's a novel concept but one that just might catch on in these trying times. Not just another 2547 BGP VPN implementation to fill the coffers of Cisco and empty the pockets of the SP. Something that might actually attract customers for it's simplicity if nothing else.

(not employed by either Level 3 or Neos)
road__runner 12/5/2012 | 12:54:57 AM
re: Neos, Level 3 Meet & Greet on Ethernet Metroman
(not employed by either Level 3 or Neos)

RR> you forgot to mention:(but well known
RR> pumper for "R..")

RR> There are plenty of simple or complex
RR> ethernet architectures carrying live traffic
RR> today. Perhaps you can provide some actual
RR> facts (instead of vague trivialities)
RR> to support why this particular
RR> solution has any advantages over the many
RR> other simple or complex alternatives that
RR> already exist ?

RR> If this is much cheaper than a BT leased line
RR> is that because of the basic pricing policy
RR> differences between BT and Neos ? or is
RR> there something magical in the equipment that
RR> allows this to be much cheaper than a BT
RR> leased line ? A line is a line is a line ...
RR> Any vendor can provide single or multiple
RR> interface based solutions. Why even mention
RR> that as a differentiator ?
metroman 12/5/2012 | 12:54:45 AM
re: Neos, Level 3 Meet & Greet on Ethernet RR

My points are vague as I don't have specific knowledge that would allow me to explain why. This is information that is proprietary to the operators themselves.

I would have thought though that an organisation that builds a nationwide Ethernet network (probably over some DWDM infrastructure) can do so at significantly lower operational and capital cost than BT can build an SDH infrastructure. Therefore they are able to sell a "pipe" at a much lower cost and still retain a high overall margin for the service.

The question was "So What?" I was attempting to show that there was merit in the story.

One of the things that is missed is that Ethernet is typically a "last mile" or Metro deployment. The traffic either stays local to the POP or Metro as Ethernet or is transported over a traditional transport or IP core. Neos describe themselves differently as they claim to have an end-to-end Ethernet network, this will provide them with significant cost savings as in my experience Ethernet (gigabit) is between 10 and 20% of the price per Mbps of POS based solutions.

The reason for mentioning the "single or multiple interface" issue is that if you are carrying your customer traffic over leased lines you will typically need multiple interfaces or high speed channelised interfaces. By carrying their traffic across a Nationwide Ethernet network they do not require either high cost channelised interfaces or unique interfaces per customer on the Level 3 router. No complex BGP configuration would be required on the Neos side (as it is at the ethernet layer not IP) and therefore the overall cost to Level 3 and Neos is very low to deliver the service.

If you reduce the number of physical ports and remove high cost channelsied ports in favour of low cost Gigabit Ethernet ports, at the same time you deliver the service across a low cost end-to-end Ethernet network, it seems to me that you would be able to offer the service at a much lower cost.

If you are that interested I suggest that you speak to the operators themselves. I am only reading between the lines.

(didn't mention R.... once!)
BuckStopsHere 12/5/2012 | 12:54:43 AM
re: Neos, Level 3 Meet & Greet on Ethernet Since I started this, let me clarify my point. This article does not mention anyone building anything new or discovering any new business model. In fact, all that has happened here is that one company has run some fiber jumpers from their cage over to the other's cage. So, I repeat...who cares?
metroman 12/5/2012 | 12:54:42 AM
re: Neos, Level 3 Meet & Greet on Ethernet You know what, I've been working on MPLS, Ethernet, IP and VPNs and it was all just fibre jumpers.... What a waste of time.

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