Ethernet's power force

Level 3, Telseon, XO, Yipes carry Ethernet beyond the enterprise Gigabit Ethernet is old news on the enterprise circuit, but it is taking front-page space with carriers. Backbone and metro providers have carved the metro market, and they expect to win a major portion of the incumbents' private-line business because of lower pricing strategies.

Level 3 Communications, Telseon, XO Communications and Yipes Communications have all made Ethernet announcements during the last few months. "The equipment costs for moving packets over a metro area network are significantly lower for us - 20› vs. $1," said John Kane, CEO for Telseon. "We have introduced a disruptive pricing that changes the market's elasticity and the actual demand."

Although all the players agree on the present healthy, booming market, they are quick to point out that they intend to grow their profits by offering different services to dissimilar customer bases. Some are targeting only the enterprise, others are looking at carriers and a few view both groups as their customer base.

Telseon is a carrier's carrier and a connectivity provider in the metro area, Kane said. "We don't compete directly. We are like an arms merchant that provides connectivity." Telseon offers carriers switched private-line services at 10BaseT to 100BaseT Ethernet and is testing a gigabit Ethernet offering.

Yipes, another metro challenger, shakes itself from the pack with its ring topology and managed services. "Others compete on price, but we compete on our enhanced value proposition," said Jerry Parrick, CEO for Yipes. The service provider offers managed 1 Mb/s Ethernet to gigabit Ethernet connections on a fully meshed network architecture that supports routed and switched traffic over IP.

Both Yipes and Telseon categorize Level 3 as a partner and a distracted Ethernet competitor, which Level 3 concedes. "The metro players know our assets, and they are cautious," said David Samuels, senior director of North American IP services for Level 3. "But they should rest well at night knowing we can't do everything. While they would love for us not to be out in their territory, we are there, and we plan to partner with a lot of companies to provide a total solution."

Harping on its fiber backbone, Level 3 offers a 100BaseT and gigabit Ethernet service from its co-located gateways. The carrier uses virtual LANs to separate its customers' traffic as the Ethernet packets traverse the switched network. "Using Layer 2 allows us to extend the metro service to a long-haul Ethernet service," Samuels said.

XO has similar services, offering dedicated bandwidths of 10BaseT, 100BaseT and gigabit Ethernet at Layer 2. The 10BaseT and 100BaseT service is available via Sonet; DWDM technologies support the gigabit Ethernet offering.

"We can guarantee bandwidth to our customers because we're using Sonet and DWDM," said John Mullan, director of private data networking product management for XO. "It keeps us from oversubscribing our network the way Level 3, Yipes and Telseon do."

The carriers have conflicting opinions about Sonet's role in Ethernet services. XO is adding overhead by introducing Sonet, but the overall performance loss is negligible, Mullan said. "To a certain extent we are adding overhead, but at the same time we are able to optimize the customer's service due to Sonet."

While XO claims that Sonet has benefits, the metro players scoff. "Many companies that have a Sonet infrastructure are adding Ethernet on top or beside Sonet," Kane said. "They are just perpetuating old technologies that don't provide cost advantages, and they don't scale or provision easily."

Self-provisioning, Kane claimed, is one area where Telseon pushes the competitors to enhance their services. Telseon developed proprietary software that allows customers to reconfigure their bandwidth. "Customers want to introduce innovations into their community," he said.

"Our competitors have been buying network topography and third-party OSSs to enable self-provisioning, but we don't think that is the best way to approach the marketplace," he continued. "Instead, we are integrating our software in the network elements, fiber and switches."

Yipes also intends to offer its customers self-provisioning capabilities. "We will give our customers an unprecedented amount of control. They will be able to alter bandwidth, reserve bandwidth and add and change quality of service using a Web interface," Parrick said. "This kind of customer control will put pressure on carriers having wide area connections to extend the capability to their customers."

As these metro providers elbow the long-haul providers, no one is overtly concerned that the market is overpopulated with competitors. Each contender intends to stay its course as it enhances its service offering.

"During the last six months, customers have consumed bandwidth at a highly accelerated rate. With the price per megabit dropping, they can buy more, do more and reach more people," Samuels said. "It's silicon economics at work, which makes new business plans and relationships appear every day. And it leaves many market areas open for competition."