Infonetics: Carrier Ethernet equipment sees strong growth

Service providers are adopting carrier Ethernet in a big way, according to research released late last week from Infonetics.

“The biggest early driver [of carrier Ethernet] was carriers moving to an IP network,” said Michael Howard, Infonetics co-founder, in an interview. “But in the last year, if not the last three, what has pushed [carrier Ethernet] more dramatically is video and mobile broadband. In the future we see the cloud as a big driver.”

Carrier Ethernet microwave backhaul equipment is expected to see a compound annual growth rate (CAGR) of 41% through 2015, according to Infonetics. Microwave backhaul was the fastest growing of 10 carrier Ethernet equipment categories that Infonetics tracks—including carrier Ethernet switches, IP core and edge routers, Sonet/SDH equipment, WDM equipment, VDSL, fiber and copper EADS, and EPON, as well as Ethernet and dual Ethernet/TDM microwave equipment.

The next fastest-growing category was core routers, which had a five-year CAGR of 19%. Howard sees much of that growth being driven by carriers purchasing core routers with 100 Gig Ethernet ports—even though Howard estimated that service providers worldwide have deployed only about 1000 core router ports at 100 Gig E speeds.

“Even though it’s a small number of ports, those interfaces are growing the fastest,” Howard said.

Equipment manufacturers are poised to begin shipping equipment with 40 Gig E ports and when they do, Howard expects to see those shipments outpace 100 Gig E port shipments because there is strong pent-up demand among data center operators for 40 Gig E connectivity.

Looking forward
It’s important to differentiate between 40/100 Gig E and 40/100G WDM shipments, Howard said. “In WDM there is a lot more 40 Gig installed and being sold than 100 Gig,” he said.

The reason, he said, is that 100 Gig equipment costs “a lot more” than 40 Gig equipment. As service providers look to address their bandwidth needs, he said, “40G is more cost effective.”

Beginning in 2013, however, Infonetics believes 100G equipment will be “effectively priced at two times 40G,” Howard said. When that point is reached, he said, that will be the “comfort zone where carriers start buying 100G instead of 40.”

Howard believes it will be three to four years before equipment is available supporting speeds above 100 Gb/s. “We will see 400 Gig first,” said Howard. “Carriers will need it before we see terabit.”

Howard predicts the same “cost conundrum” that currently exists between 40G and 100G WDM equipment will exist between 400G and 1-terabit equipment.

Developers, he said, can see their way to 400 G but “there are some basic problems to solve for a terabit”—a viewpoint that echoes what John D’Ambrosia, chief Ethernet evangelist for Force 10 Networks and chair of the IEEE’s newly announced 802.3 Ethernet Bandwidth Assessment Ad Hoc group, told Connected Planet in a recent interview.