A conversation with Verizon Communications' Tom Roche 

Since late last year, Verizon Communications has offered a mix of switched and point-to-point metro Ethernet service at speeds of 10 Mb/s, 100 Mb/s and 1 Gb/s in 35 top markets. Verizon director of advanced networking services Tom Roche, who oversees the company’s transparent LAN, frame relay and ATM products (but not Ethernet-over-Sonet, which is handled by another group), spoke with Telephony’s Ed Gubbins about the pressures of price reductions and the path to cross-country Ethernet links.

On pricing: I’d say over the past year and a half, we’ve had to drop our pricing in the neighborhood of 10% in major markets. Once or twice a year you have to look at pricing and make a determination on whether or not you’ll be required to drop prices lower. It’s a more continual market view as opposed to when frame relay was in—we could put frame relay into the tariff and [the price] would be sustained over years.

On cannibalization: We’re not seeing it so much with frame relay, but more so with ATM. Frame relay is competitively priced today. Customers who purchase it at lower T-1 and sub-rate T-1 speeds are satisfied with the level of service and bandwidth they get. It’s more the higher bandwidth services like ATM that make Ethernet so attractive. We have a price point where it would be attractive, when a customer completes an ATM contract, they would be interested in transparent LAN service. Today transparent LAN is only best-effort. As we add quality of service (QoS), the price will go up to be on par with ATM as opposed to cheaper.

On QoS: Today we’re running EMS, Ethernet multipoint service. It’s a best-effort service. We have SLAs today to repair and network availability—99.9%. We’ll have QoS SLAs in the second half of 2004, when we deploy Ethernet Relay Service (ERS), which allows me to do more virtual-circuit networking and assign QoS across that VLAN. That’s when we’ll be able to have voice.

On gear: We utilize the Cisco 6509 switching platform and the Canoga Perkins network interface device at the customer premises. We have 173 switches deployed today.

On what’s next: We’ll have the capability to connect switched metro Ethernet nationwide over an MPLS backbone. That’s going to be available in the first quarter of 2004. We’ll start in the northeast. You’ll see New York, New Jersey and Washington D.C. come up first. We’ve already got a corridor service between New York and New Jersey; we can offer Ethernet between those two states. There’s two versions we’ll provide. The first is layer-three RFC 2547 connectivity, where I’d convert layer two to layer three. The second is Martini tunneling, which keeps me at layer two. From a customer viewpoint, it looks like a direct Ethernet connection across the country.