Long accepted as the networking standard in the enterprise LAN, Ethernet continues to be embraced by service providers as a viable service for enterprises of all sizes.

Recent analysis from Vertical Systems Group confirms that by 2012, worldwide revenue for business Ethernet service will reach US$30.7 billion.

Unlike traditional legacy circuits that had been applied to specific types of applications, Ethernet is being used for multiple applications.

Enterprises are buying business Ethernet services to support their metro, regional, nationwide or global network applications (DIA, Ethernet access to other services (IP/MPLS VPNs), Ethernet Private Line and Ethernet LAN/VPLS services).

And while there will be differences in the delivery of Ethernet, explains Rosemary Cochran, principal of Vertical Systems Group, it’s clear service providers see Ethernet as a protocol that has staying power.

“The carriers are buying into [Ethernet] as being what we’re calling the future ubiquitous standard, and they are migrating from the classic SONET/SDH infrastructures to Ethernet,” she said. “That’s going to take some time and is happening at different rates in different parts of the world; however, it is happening and we’re seeing carriers buy into that as a worldwide standard.”

The fiber availability gap

Although enterprises and service providers are embracing Ethernet, it still has a long way to go before it’s a ubiquitously available service. Vertical Systems argues that there are essentially three issues or what they call the ‘big three big gaps’ for rolling out Ethernet service: fiber availability, pricing and speed.

Similar to what Willie Sutton once said about being a bank robber — "Go where the money is...and go there often" — the presence of Ethernet is a case of going where the fiber is.

“Where fiber is available, that’s where Ethernet services are going in,” Cochran said. “As you look across the world, there’s a high correlation where Ethernet services exist and where they don’t depending on what we call the fiber gap.”

The location and the amount of available fiber, as one would expect, often depends on the service provider’s geographic region. In Greenfield areas such as Asia Pacific, where the build-out of fiber has been widespread new construction, offering fiber-based Ethernet services is almost a no-brainer.

Alternatively, the majority of fiber-based Ethernet offerings in the U.S. tend to be relegated to larger cities where there is more competition between providers.

Part of the issue with fiber availability is a service provider’s ability to build a business case to offer an alternative service to the cash cow T1 service they offer today.

“If you look at the U.S., it’s NFL cities and the pockets where you’ve got, say, a specialized carrier, and look at where the top service providers such as Time Warner Telecom, Cogent, Optimum Lightpath or Cox and where there’s fiber those services exist,” Cochran said. “Looking across the world, Asia has been very heavy in Ethernet because of the fiber density and that’s where you’re going to see fiber services because that’s where fiber is available.”

The availability of fiber, or lack thereof, also ties into the pricing and speed gap issues.

When it comes to network service speeds in the U.S., there’s a large disparity between low-speed connections (T1 and lower) commonly used today and the 10 Mbps Ethernet entry point.

“If you can get [Ethernet] and if it’s priced appropriately, and it usually is, it’s a relatively easy decision for the customer,” Cochran said. “What that speed gap is showing is there’s a lot of legacy end points in the U.S. that are low-speed (below T1, fractional T1 and up to T1), and that’s where the bulk of the business is because of the way it’s priced. On the other hand, the majority of Ethernet ports are in the 10 Mbps-plus range.”

To address this disparity, incumbent (AT&T and Windstream) competitive carriers (Broadview and Time Warner Telecom) have been offering flavors of sub-10 Mbps services over existing copper and fiber.

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