In today's uncertain economic climate it takes courage to predict good news in any sector, but industry analysts such as Infonetics and Ovum are sticking to their predictions for strong growth in Carrier Ethernet services and equipment - a $20 billion market set to grow to between $40 billion to $50 billion by 2014. Impressive - but still just a ripple on the greater global economy.
The real significance of this growth lies in its effect on world business. If ever a tonic was needed, it is now, and Carrier Ethernet services are providing business with that tonic - in terms of lower cost, more flexible and yet more powerful communications, and expanding business opportunities across nations, continents and the world.
Ethernet - the background
Ethernet was among the success stories of the twentieth century - a simple, best effort, networking technology invented by Bob Metcalfe for the Xerox Palo Alto laboratories in 1972. It was challenged by other more sophisticated protocols such as Token Ring but, by the end of the century, Ethernet had become the de facto standard for the LAN. It had beaten off the opposition by being simple, cost effective and by continually evolving to run at higher speeds on lower cost media.
But, as a best effort solution, Ethernet remained in the LAN where the site's network administrators could manage any traffic contention issues. You could not let that happen on a WAN handling massive amounts of traffic from many different sources, so wide-area networks relied on more complex and costly technologies such as SONET/SDH, ATM or Frame Relay. If Ethernet was to break out of the office and become a WAN technology it would have to evolve significantly.
In 2002 an industry alliance called the Metro Ethernet Forum (MEF) was formed to promote Ethernet in the WAN. The forum recognized the need for five key attributes if Ethernet was to have a chance against the established legacy WAN technologies. These were:
• Standardized services.
• Scalability - in terms of bandwidth, reach (from access to global services), and number of users and services supported.
• Reliability - restoration capability to support traditional TDM traffic, and data flows tailored to a switched circuit network.
• Quality of Service options allowing SLAs up to multimedia standards.
• Services management to carrier-class OAM using standards-based vendor independent implementations.
Specifications were written defining this new "Carrier Ethernet" and the MEF started promoting it as a simpler, more cost-effective solution with the added benefit of being based on widely understood Ethernet, requiring less specialist training.
Carrier Ethernet benefits
From a business user's perspective, the MEF's most significant step was to launch a certification program, firstly for Carrier Ethernet equipment in 2005 and then for Carrier Ethernet services in 2006. Now users could be confident that the services would meet well-defined global standards, and sales began to soar. 2008 saw a severe economic downturn, but Carrier Ethernet remained resilient, offering just the sort of cost savings, business flexibility and new growth opportunities that were most needed in difficult times.
From a carrier's perspective, Infonetics Co-founder Michael Howard suggests that: "The biggest early driver [of Carrier Ethernet] was carriers moving to an IP network. But in the last year, if not the last three, what has pushed it more dramatically has been video and mobile broadband. In the future we see the cloud as a big driver."
This year service providers' capex spending on Carrier Ethernet is for the first time exceeding that of SONET and SDH. Only 14% of polled carriers expect to spend more on the traditional favorite technologies over the next 18 months, according to one poll. Nearly all agreed that Carrier Ethernet was best in the access network, while some 80% also favored it for the core.
A new ecosystem of business opportunities is growing around Carrier Ethernet services, with value-added resellers connecting a customer to their in-house router and offering hosted managed services. The advantage to the customer is the flexibility offered by a small company and an "out of the box" solution that meets their business requirement. Other services that resellers are beginning to provide to their clients include hosted desktop services, managed storage and backup, financial applications and integrated voice solutions. So we now see telcos selling Carrier Ethernet to medium-sized resellers who supply small companies serving local or niche sectors of the business market.
With Carrier Ethernet services now a major part of a provider's portfolio, industry uptake is accelerating. Among the biggest adopters are the mobile phone providers - an industry hit by intense price competition combined with a huge increase in data traffic driven by the rise in smartphones. Until recently backhaul from the cell tower to the core network used leased lines - an expensive solution and one where increased traffic could only be handled by installing another leased line. Once Carrier Ethernet backhaul is installed, however, not only do you have the simplicity of an all-IP network but also throughput can be rapidly altered as needed in small increments. Another advantage of Carrier Ethernet is that it can be accessed over a range of media - copper, fiber or wirelessly - so that the biggest success has been Carrier Ethernet microwave backhaul, expecting an over 40% annual growth rate for the next five years.
This flexible scalabilty is proving a key benefit for a host of business applications: instead of having to over-specify the network service in advance to meet maximum likely loads, the network administrator can save money by running a "just in time" WAN. The most significant benefit, however, is proving to be not just cost savings but rather support for next generation business applications - including cloud computing, interactive services, voice and high definition video conferencing.
Carrier Ethernet today
Initially it was large enterprises that saw the benefits of Carrier Ethernet for their global networks, but smaller businesses are increasingly adopting these solutions. Part of the reason for this has been due to the MEF's work in standardizing both the technical and business interfaces between different provider networks. Ethernet may be a simpler technology, but its very adaptability means that it takes longer to arrange a service that runs consistently across different carrier networks that may have diverse SLAs and classes of service. The MEF's Global Interoperability initiative has reduced the time taken from weeks to a few days. In addition we have seen a rise in "Ethernet Exchanges", playing the role of the old telephone exchange and meaning that small providers can now commission immediate links without needing specialist skills.
2012 marks the 10th anniversary of the MEF and the launch of Carrier Ethernet services. They have something to celebrate now, with nearly 200 worldwide members including telecommunications service providers, cable MSOs, network equipment/software manufacturers, semiconductors vendors and testing organizations. But it is global business that should be celebrating the rise of Carrier Ethernet - it is proving a real tonic.
Read more about lan and wan in Network World's LAN & WAN section.
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