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According to a recent study by AMI partners, Small and Medium Businesses despite moving relatively slow, will spend over $30 Billion in 2007 in the US alone for (converged and unified) IP communications and other managed services, and this is expected to grow at a CAGR of over 15% until 2010 Given this substantial opportunity, Service Providers, especially the Cable MSOs (for whom this is a relatively new market opportunity while for traditional Service Providers this remains a profitable segment) are sure to pursue this vigorously This will inevitably translate in to accelerated fiber deployment since Service Providers will have to offer a host of new value-added services (and consequently, new streams of revenues) while optimizing their delivery costs Carrier Ethernet delivered natively over fiber provides for an optimal converged solution which can also scale (and hence ensure that the Service Provider is well positioned to retain the customers) Fiber deployment, at least in the US, though reasonably widespread, still has a long way to go Only about 11 percent or so of the buildings in the US are connected via fiber,
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but there is a considerable effort underway to extend this coverage quite rapidly Verizon s FIOS (albeit mostly focused on residential communities) and almost all cable companies in the US are aggressively deploying fiber in all metropolitan areas This situation is also consistent with other countries, although wireless options such as FSO and WiMax are being considered actively especially in developing countries
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Competition There is widespread competition amongst Service Providers to deliver a new generation of packet applications (discussed above); with blurring of the boundaries between the traditional Telephony providers, Cable providers and the type of services they deliver, competition will especially intensify to capture the customers Of course, profitability (economics, see above) is another factor Thus, to deliver the new set of packet optimized applications profitably will force the Service Providers to embrace a platform that will do both; hence Carrier Ethernet demand will increase In the US alone over 200 or so Service Providers are offering applications over Ethernet services currently With Carrier Ethernet demand growth exceeding even optimistic projections, and the addressable market growing substantially (estimated to be well over $20B by 2009), these and new Service Providers will invariably pursue such services even more aggressively, leading to intense competition Furthermore, the retarding market for substitutes such as ATM and Frame Relay, even though relatively huge compared to Carrier Ethernet, will make them a less compelling part of a Service Provider s portfolio Standardization
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Several standardization activities are underway that will further solidify the standing of Carrier Ethernet They are briefly noted here and are designed to enable Carrier Ethernet to make further inroads in to the Service Provider network especially deeper in the MAN/WAN
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Ethernet OAM Technically, the Ethernet OAM (notably IEEE 8021ag) is not yet ratified; once this is finalized, OAM functionality will be more widely incorporated in products Ethernet in WAN The MEF has begun work on ensuring Ethernet is viable deeper in the Service Provider networks This will greatly guide the deployment of Ethernet beyond the MAN/access where it is largely concentrated Provider Backbone Bridge (PBB) This is the IEEE 8021ah standard (currently underway) that enables a MAC-in-MAC encapsulation Basically, this creates separate customer and Service Provider domains by encapsulating customer/ end user MAC addresses with Service Provider based MAC addresses This approach will remove the scaling limitations traditionally posed by Ethernet, and extend the number of service instances from over 4K to several million Provider Backbone Bridging Transport Engineering (PBB-TE) The IEEE 8021Qay standard is addressing PBB-TE, which is focused on providing Point-to-Point Ethernet tunnels across a metro and beyond These connections will ensure a solid QoS and effectively simulate a circuit switched path, and are
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