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Carrier Plans for Ethernet
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Infonetics Research regularly interviews service providers of all types around the world for detailed studies of their plans and strategies In this section, I bring you some results that highlight current service provider trends As service providers shift their focus from legacy services (ATM, Frame Relay, leased lines) to ever-increasing optical and Ethernet traffic, they rely more heavily on new, innovative technologies and face the challenge of maintaining and upgrading their optical
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Worldwide Ethernet Services Revenue EMEA 32% North America 21%
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Asia Pacific 43%
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Figure 31 Worldwide Ethernet services revenue in 2006
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networks while defining and deploying new Ethernet services In 2006, Infonetics published Service Provider Plans for Metro Optical and Ethernet: North America, Europe, and Asia Pacific 2006, a study conducted to determine the metro optical and Ethernet equipment requirements and network implementation plans of service providers over the next year The study found that service providers are offering a surprising number of network-based services over Ethernet, including voice, video, and storage Ethernet is used not only to collect and move Ethernet traffic, but also for IP and legacy services and to move data among customers and POPs and COs Service Providers have now made considerable investments in Carrier Ethernet and are considering what the most efficient approach for offering Ethernet services is Most providers still use several types of networks to offer Ethernet A majority of carriers leverage their installed infrastructure to offer Ethernet services over SONET/SDH rings; this is a staple in carrier networks, but Ethernet is growing in the access space to the detriment and displacement of SONET/SDH, which is beginning to lose favor as measured in many data points in this study In fact, Ethernet over WDM will be offered by more respondents in and after 2007 (92 percent) than is Ethernet over SONET/SDH (80 percent) Building a separate Ethernet overlay network is the choice of over half of the Service Providers Many large companies are willing to pay for the resiliency of SONET/SDH, but small and medium companies expect to pay lower prices for Ethernet services and need alternate paths To reach small and medium businesses, Service Providers are using Ethernet over IP/MPLS and Ethernet overlay networks that have lower costs but with many hard SLA and resiliency options with carrier-class Ethernet products Infonetics asked respondents to name the Ethernet services they offered besides connectivity and bandwidth, in other words, what services are offered over their connections The results are shown in Figure 32 By 2007, 84 percent of the respondents will offer packetized voice as an Ethernet service, and 84 percent will offer Ethernet Private Line In 2007, several other popular offerings involve data storage and recovery: storage backup (72 percent) SAN extension (64 percent), and data-center mirroring (72 percent) Security services offered are also popular: stateful firewall (80 percent), encryption (68 percent), DoS prevention (72 percent), and URL filtering (48 percent)
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The Ethernet Market Opportunity
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Ethernet Network Based Services Pr iva D te at In alin te Br ce e ra oa ov nt ct U er dc er ive R En L as m Et cr ga fil irr tv he yp te or m id rn r in tio in in eo et g g g n
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84% 84% 80% 72% 72% 72% 68% 64% 64% 60% 52% 48% 48% 48% 40% 32% 0% 20% 40% 60% 80% 100% Percent of Respondents
Services offered over Ethernet (besides connectivity and bandwidth)
Video services are popular, with triple play offered by 64 percent, broadcast video by 60 percent, video on demand by 52 percent, and video conferencing by 48 percent The breadth and variety of service offerings exemplify one of the primary strengths of Ethernet: the ability to provision and deliver new services faster because Ethernet at Layer 2 is agnostic and impervious to services riding on Layer 3 IP or other protocols at Layer 4 and above All services in the list show increasing numbers of respondents using them between 2006 and 2007 This study has been performed three years running, and in general, these services are being adopted as predicted in the previous year s study Customers want Ethernet services, and service providers know it When the study respondents estimated the level of demand they expect from their customers for technologies and applications, Ethernet for Internet connections came in first at 92 percent Respondents rated the level of demand they expected for various technologies and applications in the next 12 months on a scale of 1 to 7, where 1 is no demand and 7 is high demand The results are shown in Figure 33 Service Providers have discovered the limits of Frame Relay and ATM, as well as the costs, and they are anxious to move on In 2005, a major barrier for carriers to offer Ethernet services was the worry that they would cannibalize ATM, Frame Relay, and leased-line service revenue Cannibalization was a major issue for most providers with these legacy services, but as of 2006, most carriers no longer worry about cannibalization, because they found that they had to go with Ethernet or lose customers to competitors Most providers use two strategies to lead with Ethernet services: (1) overcome a legacy limitation (eg, Frame Relay 45M) by
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