After several years of promising but sluggish uptake, Carrier Ethernet services are finally starting to generate some heat, judging from recent analyst reports and carrier announcements.
Nemertes Research, for example, says that use of various flavors of Ethernet services across all industries has grown 73% this year, compared to growth rates of under 50% since 2004. Carrier Ethernet services are especially taking root in the government and higher-education sectors, Nemertes says.
In terms of dollars, Infonetics Research says worldwide service provider revenue for Ethernet services grew 36% sequentially in 2008 to $16.9 billion. That's set to nearly double to $33 billion by 2013. The Asia Pacific accounts for the biggest regional share of the 2008 global tally, although Infonetics says North America could eat away that over the next few years.
Either way, the current trends led a panel at the Metro Ethernet Forum's 3Q09 meeting to conclude that Ethernet services have proven resistant (if not immune) to the economic recession in terms of growth and uptake, according to Ovum analyst Ian Redpath.
"Enterprise customers have an acute cost focus and are looking for services that offer improved cost per bit performance. Enterprises are continuing to transition from the more costly legacy services to Ethernet," he said in a research note.
Infonetics co-founder and principal analyst Michael Howard agrees. "In spite of the downturn, and in part because of it, uptake of IP MPLS VPN and Ethernet services is growing at a healthy pace as companies seek to increase efficiencies and decrease costs."
Certainly carriers in Asia have been busy announcing rollouts and extensions of their Ethernet offerings. In the last few months alone, Tata Communications, Reliance Globalcom, Cable & Wireless and Telstra have extended their Ethernet service portfolios. And as we went to press, Pacnet was preparing to launch a specialty Ethernet service aimed at trading floor hubs.
"Information flows very fast between these hubs, and a fraction of a millisecond could cost someone hundreds of millions of dollars," says Pacnet chief Bill Barney. "What we're offering them is not all that different from our existing Ethernet service, but what's very different is that we optimize the routes so that everyone's on the fastest possible route, plus we guarantee it with a meaty, toothy SLA that says it's not only going to be up, but up at the speed we say it is."
The downside to the Ethernet services story is that, even as various market forces conspire to drive Ethernet's carrier pedigree higher than ever, Ethernet is still being held back from its true global potential by one of its chief technical limitations - handing off traffic to other carriers' networks. And while a standardized solution is on the horizon and on schedule for completion by the end of the year, carriers have made it clear they can't wait.