Inevitable Ethernet

What rural telco cooperatives have, perhaps more than anything, is copper. So you'd expect them to be enthusiastic about the current wave of equipment that allows next-generation services over that existing copper. But their enthusiasm is tempered with the fear that metro Ethernet services, delivered over copper using bonded DSL and other technologies, will cannibalize their existing T-1 business.

“When they need more bandwidth, customers will start ordering 10 Mb/s Ethernet circuits in place of T-1s,” said Richard Haddock, chief engineer for Farmers Telephone Cooperative, a 55-year-old telco in South Carolina with more than 60,000 customers. “I'm not looking forward to it, because we'll be cutting our own throat. A 10 Mb/s Ethernet circuit is cheaper than two or three T-1s.”

Nevertheless, Farmers saw the future coming. Last year it began offering mid-band Ethernet service (high-speed Internet at 10 Mb/s and above) using G.SHDSL-bonding Ethernet First Mile gear from Hatteras Networks.

For carriers such as Farmers, schools are often among the first customers to drive the need for a bonded copper service. Like banks and other businesses, schools tend to crave more and more bandwidth these days. But they're often located a good distance away from office parks and other corporate clusters where it pays to build out fiber. A school in Oregon, for example, led Qwest Communications to use equipment from Hatteras rival Actelis Networks.

Actelis made a name for itself last year by introducing a repeater for Ethernet First Mile systems that allows the technology to span distances of up to 25 miles. Other vendors, including Anda Networks and Turin Networks, have introduced T-1 bonding gear to overcome the distance limitations of bonded G.SHDSL. (For his part, Farmers' Haddock has no complaints with the reach of Hatteras gear. “On a single pair, we can do 3 Mb/s up to 5,000 feet,” he said. “Or 5 Mb/s up to 3,000 feet — it's one or the other.”)

With a specialization in covering long distances, it's little wonder that Actelis has reported traction among rural telcos. The vendor now claims to have about 112 IOC customers, including CenturyTel. More recently, Actelis won South Carolina's Horry Telephone Cooperative, one of the country's largest telephone coop. Horry and Farmers-and many of Actelis' other customers-may have had a keen view of the future of mid-band Ethernet services and technology as a result of their location in what was once called BellSouth territory. BellSouth began offering widespread mid-band Ethernet services-in 2 Mb/s, 4 Mb/s and 8 Mb/s tiers-last summer using Hatteras gear. As it was the first Bell carrier to make a major mid-band Ethernet push, the BellSouth deployment was a high-profile validation of the technology and the business case that independent telcos in the region no doubt noticed.

Another driver for mid-band Ethernet technology among IOCs is wireless backhaul. Fiber only reaches about 20% of today's cell sites; in rural areas, the number is presumably lower still. Farmers, for one, has T-1s reaching nearly 100 cell towers. Many of those T-1s are used by competing wireless carriers such as Alltel and Sprint that co-locate their gear on those towers. Sooner or later, Haddock said, those co-locating competitors will start to want more than just one T-1 after another. “Thus far we haven't had any requirements to convert from T-1 to Ethernet,” he said, adding jokingly, “I'm holding my breath. We'll hold off as long as possible.”