RAD provides a good example of a small vendor doing well in the EAD niche and looking to provide a low-cost, but still feature-rich, set of products that exposes the company to a wider range of markets. The company provides critical fault location and performance-monitoring features, integrating service access and demarcation into a single product for developed markets, while providing more cost-conscious products for emerging markets like India. Other vendors such as Telco Systems are also trying to strike a good balance of inexpensive and feature-rich solutions.
Competition and pressure on pricing moving to equipment providers
In the markets where carrier Ethernet adoption has been greatest, we are seeing increasing competition among service providers. This is driving down service pricing (particularly on popular routes) and increasing the need for flexibility and intelligence so providers can differentiate their services from those of the competition. In turn service providers are increasing the pressure on equipment vendors to provide lower-cost solutions both from a first-in (capex) perspective and ongoing maintenance (opex) perspective. Mobile operators are very sensitive to costs because service revenues they get from their customers are not rising as fast as the capacity required to support their network backhaul needs.
Carrier Ethernet (also known as metro Ethernet to some) is meanwhile rapidly moving into and across core backbone networks. This is true particularly with wholesale providers that are providing Ethernet access service to endpoints that are located in different metros. This means that the end-to-end Ethernet service is crossing more than one network, creating the need to provide uniformity of service attributes across those networks.
Right now, each service provider may define Ethernet attributes a little differently. Uniform service-attribute definitions are critical to maintaining end-to-end network visibility to ensure SLAs (service level agreements) are being met. Since such a large number of Ethernet services are provided via wholesale agreements, SLAs are extremely important to service providers, and end-to-end visibility and SLA monitoring are critical features that often differentiate vendor offerings.