Neutral Tandem jumps on carrier Ethernet exchange bandwagon

Neutral Tandem this week said it would join the burgeoning carrier Ethernet exchange market. The company already has infrastructure in place to support its original business of interconnecting voice traffic between non-incumbent carriers, and that infrastructure is well suited to supporting the new offering, Neutral Tandem Chief Operating Officer Surendra Saboo told Connected Planet.

“We already have multiple fiber providers that already connect to us and these are the same providers that provide the tail circuits for Ethernet,” Saboo said. About 20 fiber providers—including companies such as XO Communications, U.S. Signal and Zayo—connect to Neutral Tandem’s facilities, which serve 137 markets. “We expect most of them to participate in this exchange,” Saboo said of the fiber providers. “In our core business we handle close to 8 billion minutes of traffic a month. We have over 110 carrier customers. A lot of them would be buyers and sellers on this Ethernet exchange.”

The new offering aims to enable carrier customers to interconnect their carrier Ethernet offerings so that they can more easily serve end user customers wanting to interconnect multiple locations, including locations that are only served by other carriers. Mobile backhaul also will be an important application, Saboo said.

“A company can come to our exchange and easily access any of these fiber providers,” said Saboo. “They can put together a solution very quickly as opposed to making one-off deals with providers in different cities.” This approach can substantially reduce rollout times to a customer, which currently can take as long as several months, Neutral Tandem said.

To support the new offering, Neutral Tandem will add Ethernet switches and develop a network management system (NMS) that will be overlaid onto the NMS for the switches. “It will simplify the ordering and provisioning process and keep track of service level agreements and billing,” Saboo explained.

Neutral Tandem is the third company to enter the carrier Ethernet exchange market in the last six months. In October, collocation provider Equinix announced its service launch, followed by a similar announcement from startup company Carrier Ethernet Neutral Exchange (CENX) in November.

Saboo said his company has an advantage over competitors because unlike them, Neutral Tandem operates its own MPLS network, which interconnects the company’s voice switching facilities. “The other two have just collocation space,” Saboo said. “They are geographically limited to where they are physically located. We have a network so people can connect to us in Chicago and we can make buildings in Milwaukee and Indianapolis available to them. They can have an Ethernet extension from Chicago to Indianapolis and connect to a tail provider in Indianapolis.”

Although Neutral Tandem’s carrier Ethernet exchange service is still in the development phase, Saboo said it would be available in “the near future.” The initial 2010 market deployment schedule will include Atlanta, Boston, Chicago, Dallas, Denver, Detroit, Houston, Los Angeles, Miami, New York, Philadelphis, San Francisco, Seattle and Washington D.C., the company said.

Carrier Ethernet exchanges could help the growing carrier Ethernet market grow even faster, according to Infonetics Research, which said the global carrier Ethernet services market would have been $200 million greater in 2009 if uniform global interconnectivity had been available.