A trend that won’t end

Optical. Ethernet. IP. These may be the last three words left in the last mile access dictionary at the end of the decade, at least for businesses. 

Several technologies have emerged for providers that want to sell new metro access services to businesses. New metro access services use Ethernet, dense wave division multiplexing (DWDM), passive optical network (PON) and data-aware Sonet/SDH technologies to connect businesses to optical transport for wide area network (WAN) and Internet access. Residential customers will ultimately have access to fiber and intelligent optical networking gear, but in the near term will have to use DSL, cable and fixed wireless access technologies to meet their demand for increased bandwidth. 

In 2Q01, worldwide revenues for optical last mile CPE reached $75M, and they are expected to grow to $138M by 2Q02, with Ethernet CPE accounting for 18% and 37% of these revenues, respectively.

PON technologies will allow providers to more efficiently extend fiber to homes and businesses without having to commit to fiber homeruns, which are very costly. Although a mix of the aforementioned technologies will be used for providing new metro access services, Ethernet-focused solutions have the strongest chance of succeeding. The ubiquity of Ethernet has proven itself in the local area network over the years, and is now poised to dominate the last mile for new metro access.

Some of the business drivers for adopting new metro access services are:

• increased scalability and performance

• reduced cost of ownership, and 

• obtaining a simple network to manage. 

Assuming service will be available to most business customers, barriers to purchasing new metro access services will include security, network reliability and financial stability of start-up service providers. Usage of new metro access services will revolve around Internet, data center, storage and WAN connectivity. Virtual private networks (VPNs) will secure new metro WAN connections, allowing businesses to connect customers, partners and suppliers, in addition to their own sites.

MPLS Multiprotocol Label Switching MPLS FAQ MPLS Resource Center  MPLS Forum EVENT MPLS2001 International Conference October 7-9, 2001 Omni Shoreham Hotel, Washington, DC

Currently, start-up providers of new metro access services want to offer tiered services with scalable bandwidth-on-demand for speeds ranging from 1Mb/s to 1Gb/s. These providers will need a rapid provisioning platform and visibility tools for their customers who want to verify usage, quality of service (QoS), and service level agreements (SLAs). In many cases, providers will select and install CPE as part of a bundled service offering, and these new metro access products will feature high availability, protocol conversion, copper and optical interfaces, and support for IPSec, MPLS and packetized voice.

Who are these new start-up service providers? The young guns, providers like Yipes, GiantLoop Network, Telseon and Cogent Communications, will lease metro dark fiber from merchants like Level 3 and Global Crossing and connect to long haul backbones from carriers like WorldCom, AT&T, Genuity and Qwest. 

Gigabit Ethernet The newest version of Ethernet, which supports data transfer rates of 1 Gigabit (1,000 megabits) per second. --from Webopedia WHITE PAPER September, 2001 10 Gigabit Ethernet Technology Overview a .pdf file EVENT GEC2002 Gigabit Ethernet Conference April 16 - 18, 2002 Santa Clara Convention Center, Santa Clara, CA

The Ethernet-centric start-up providers will simply aggregate Ethernet traffic from customers with IP routers and Layer 3 switches, and then direct the traffic to a core router in the long-haul carrier’s POP. The new start-up providers are at the mercy of the carriers’ private backbones in offering end-to-end reliability and QoS, but can gain more control by placing Gigabit Ethernet switches that encapsulate Ethernet packets in DWDM wavelengths in the backbone carriers’ POPs. This Ethernet over DWDM implementation addresses reliability and QoS issues, but comes with a higher price that customers may not be willing to pay.

Leased lines, using time division multiplexing (TDM), frame relay and asynchronous transfer mode (ATM) technologies have long been the breadwinners for incumbent providers. Now, in the face of new start-up providers offering cost-effective, abundant bandwidth services, the incumbents must complement their private line offerings with Ethernet over SONET services. They have the edge over their new rivals in that they own metro SONET rings and long-haul backbones, and have deep pockets. However, the new start-up providers have simpler networks to manage and a chance to prove that they can quickly provision, maintain and service optical/Ethernet connections while turning a profit.

Despite a weak telecommunications market and a slowing economy, the new metro access market remains a hot spot for incumbents, start-up providers, and equipment manufacturers looking to create value for their customers and profit for themselves. In 2Q01, worldwide revenues for optical last mile CPE reached $75M, and they are expected to grow to $138M by 2Q02, with Ethernet CPE accounting for 18% and 37% of these revenues, respectively. 

The struggle between old and new providers will be transparent to the end users as long as new metro access services prove to be available, reliable and cost-effective. Compared to the DSL access market, where competitive local exchange carriers depended on Incumbent local exchange carriers, the competitive landscape for new metro access looks fairly autonomous. 

The fact that long haul and metro fiber is readily abundant makes for a fair competitive environment where new providers don’t have to depend on an incumbent carrier’s ability to unbundle their network elements to launch and sustain services. This unregulated market is a healthy one and should allow Ethernet to expand its presence in new metro access networks. 
Jon Cordova is Directing Analyst: WAN, Internet and New Metro Access for Infonetics Research, Inc., Woburn, MA. He can be reached at jon@infonetics.com.

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