Ethernet certainly holds wide appeal for a variety of business verticals and applications. That said, there are a few groups and uses that are leading the way.

“In terms of the industries with particular apps that map to Ethernet, the most activity is in health care, education and local governments,” says Rick Malone, a principal at Vertical Systems Group Inc., adding that simply is because these verticals tend to be where the fiber is located. “The financial industry is the next biggest vertical after those three and is probably the faster-growing in terms of ports being installed on a yearly basis because they’re rolling it out on lower-speed too.”

Regardless of business type, Internet access is the first application for which most users tend to adopt Ethernet, Malone notes. If you look at all the gigE applications, he says, storage area networking (SAN) applications are among the most prevalent. But, again, he says, that’s because of the concentration of fiber at the locations demanding SAN applications.

“… [Y]ou have to look at the fiber footprint first, what organizations are around the fiber footprint, and then what high bandwidth applications run over [Ethernet] between the buildings,” he says.

“The scalability of Ethernet can’t be beat, being able to go from one optical facility and being able to go up from 10meg to 100meg to a gig, 10gig and 100gig, you just don’t see that scalability with any other technology,” says Fred Ellefson, vice president of business development at ADVA Optical Networking. “Then, on top of that, Ethernet capital equipment tends to be a fraction of the cost of SONET.”

Until recently, it was primarily the pure-play Ethernet folks like Yipes Enterprise Services Inc. and, a little later, the big telcos, that were offering Ethernet services. But business Ethernet port shares for the largest providers were slightly lower at yearend 2006 as compared to mid-year results, according to Vertical Systems‘ latest market analysis. That’s because leading providers encountered more competitive pressure in the Ethernet services realm as newcomers began to compete for enterprise customers, the firm reports.

“The biggest change from the mid-year report was the penetration of some of the MSOs, even though they didn’t show up as market leaders, there were a lot of gains on that end of the market,” Malone says. “AT&T [Inc.] and other traditional [telcos] grew at or below market rate. MSOs/CLECs grew above that. Part of that is it’s a small market right now and a few big installations in short time could swing some market share, but also there’s an availability issue.”

For now, however, AT&T is the leader based on ports, with a 13.6 percent share. That’s a drop from 16.2 percent at mid-year 2006, but doesn’t figure in BellSouth Corp., which had an 8.5 percent share of ports at the end of December when the company’s acquisition by AT&T was completed, Vertical Systems reports. Verizon Business is No. 2, with 12.2 percent of total U.S. business Ethernet services ports in the United States. Time Warner Telecom, an early Ethernet entrant, has 10.7 percent port share, a slight decline. And following those three are Qwest Communications International Inc., Cogent Communications Inc., Yipes, Level 3 Communications Inc. and a host of others.