CEN: Vertical Systems Group just released its mid-2011 Ethernet services market share results for the U.S. and Global Providers.  What are the key trends?

 Erin: In the U.S., we saw very strong enterprise demand (30+% port growth) in the first six months of 2011 across all Ethernet provider segments. Nine companies achieved a position on our Mid-2011 U.S. Business Ethernet LEADERBOARD: three Incumbents (AT&T, Verizon, CenturyLink/Qwest), four competitive providers (tw telecom, XO, Cogent, Level 3) and two MSOs (Cox, Time Warner Cable).  The threshold for a Leaderboard position is 4% or more of billable retail ports.

For Global Providers, the Mid-2011 LEADERBOARD has six companies: Orange Business, Verizon, Colt, NTT, AT&T and Global Crossing.  Share trends for the first half of the year indicate that global Ethernet providers are capitalizing on two essential assets.  First, they all operate fiber infrastructures that enable delivery of Ethernet services in multiple countries. And second, these companies offer their customers network solutions that integrate higher speed Ethernet access connectivity to IP/MPLS VPNs.

CEN: In the past, Vertical Systems Group has emphasized that a significant number of Ethernet service connections were sub-10Mbps.  Where is the current sweet spot in terms of Ethernet service connection speeds? 

Erin: Vertical's Ethernet speed outlook is that "100 Mbps is the new 10 Mbps". Today the majority of U.S. Ethernet connections to enterprise sites are 10 Mbps or lower, including sub-10 Mbps speeds. Based on our latest research, we're projecting that speeds above 10 Mbps will be most prevalent for Ethernet connectivity by the end of 2012. 

CEN: What are the initial applications for 10Gig Ethernet services? Who is buying them and what’s driving bandwidth demand?

Erin: This is a great question because the need for speed is really accelerating. Our research shows that Ethernet bandwidth has just surpassed the aggregate bandwidth associated with all legacy circuits in the U.S.  For 10 Gig services, the top buyers and applications include:

ISPs - backbone circuits, social networking, video, gaming, SaaS, IaaS

Cellular providers - cell site backhaul aggregation, Ethernet private lines between cellular provider switching centers

Large enterprises - interconnection of data centers, Ethernet private lines, VPN/Internet access for online applications and cloud content

CEN: How would you summarize the availability of Carrier Ethernet access technologies today and where do you see them evolving in the future?

Erin: Today, just over half of U.S. business Ethernet installations are delivered over Direct Fiber. SONET/DWDM is the second most prevalent Ethernet access technology.  Other technology alternatives include TDM, bonded copper, Coax/HFC, FWL and others.  While fiber is the access technology of choice for Ethernet service delivery, alternatives to fill gaps in fiber coverage will be required for many years.  This is good news for vendors of equipment that addresses the flexible access requirements service providers are demanding.

CEN: Vertical Systems Group was recently reported to say one-quarter of new Business Ethernet locations worldwide would require Carrier Ethernet access connections delivered via an access operator partner.  Can you expand on this? 

Erin: Yes, Ethernet service providers directly deliver nearly three-quarters of all new Ethernet ports using their own "on-net" service infrastructures.  To reach the remaining one-quarter of new port locations, the most prevalent solution is to use a type 2 service extension provided by an incumbent or other last mile provider.  In this scenario, Ethernet service providers establish bilateral business and technical interconnection agreements with each access carrier, typically as a wholesale transaction. Another alternative is the use of an Ethernet Exchange service, which enables the interconnection of Ethernet services among multiple service providers. 

CEN: Last year, Vertical Systems Group reported that Carrier Ethernet Exchanges had more Ethernet providers committed to selling than buying services.  Has this situation changed of late?

Erin: Not yet. The original Exchange model is most appealing to Ethernet carriers selling wholesale services because it provides a different sales channel. It is less compelling for buyers of Ethernet connections. Most potential buyers have not been able to quantify the business case for using an Exchange as compared to other Ethernet delivery alternatives. As a result, Exchange players have been repositioning their capabilities to focus on other Ethernet interconnection opportunities, like cloud computing and content delivery.

We've heard you're an avid surfer. Is there anything about surfing that you could relate to Carrier Ethernet in general?

Erin: (laughs) Well, the first thing I can tell you is that technology is the last thing I'm thinking about when I'm in the water. On the other hand, surfing does require that you remain patient and focused on the prize -- catching a great wave. So, in effect, we're talking about capitalizing on an opportunity. And, there is quite a bit of opportunity for Carrier Ethernet in the market today and in the foreseeable future. 

CEN: Vertical Systems Group just released its mid-2011 Ethernet services market share results for the U.S. and Global Providers.  What are the key trends?

 Erin: In the U.S., we saw very strong enterprise demand (30+% port growth) in the first six months of 2011 across all Ethernet provider segments. Nine companies achieved a position on our Mid-2011 U.S. Business Ethernet LEADERBOARD: three Incumbents (AT&T, Verizon, CenturyLink/Qwest), four competitive providers (tw telecom, XO, Cogent, Level 3) and two MSOs (Cox, Time Warner Cable).  The threshold for a Leaderboard position is 4% or more of billable retail ports.

For Global Providers, the Mid-2011 LEADERBOARD has six companies: Orange Business, Verizon, Colt, NTT, AT&T and Global Crossing.  Share trends for the first half of the year indicate that global Ethernet providers are capitalizing on two essential assets.  First, they all operate fiber infrastructures that enable delivery of Ethernet services in multiple countries. And second, these companies offer their customers network solutions that integrate higher speed Ethernet access connectivity to IP/MPLS VPNs.

CEN: In the past, Vertical Systems Group has emphasized that a significant number of Ethernet service connections were sub-10Mbps.  Where is the current sweet spot in terms of Ethernet service connection speeds? 

Erin: Vertical's Ethernet speed outlook is that "100 Mbps is the new 10 Mbps". Today the majority of U.S. Ethernet connections to enterprise sites are 10 Mbps or lower, including sub-10 Mbps speeds. Based on our latest research, we're projecting that speeds above 10 Mbps will be most prevalent for Ethernet connectivity by the end of 2012. 

CEN: What are the initial applications for 10Gig Ethernet services? Who is buying them and what’s driving bandwidth demand?

Erin: This is a great question because the need for speed is really accelerating. Our research shows that Ethernet bandwidth has just surpassed the aggregate bandwidth associated with all legacy circuits in the U.S.  For 10 Gig services, the top buyers and applications include:

ISPs - backbone circuits, social networking, video, gaming, SaaS, IaaS

Cellular providers - cell site backhaul aggregation, Ethernet private lines between cellular provider switching centers

Large enterprises - interconnection of data centers, Ethernet private lines, VPN/Internet access for online applications and cloud content

CEN: How would you summarize the availability of Carrier Ethernet access technologies today and where do you see them evolving in the future?

Erin: Today, just over half of U.S. business Ethernet installations are delivered over Direct Fiber. SONET/DWDM is the second most prevalent Ethernet access technology.  Other technology alternatives include TDM, bonded copper, Coax/HFC, FWL and others.  While fiber is the access technology of choice for Ethernet service delivery, alternatives to fill gaps in fiber coverage will be required for many years.  This is good news for vendors of equipment that addresses the flexible access requirements service providers are demanding.

CEN: Vertical Systems Group was recently reported to say one-quarter of new Business Ethernet locations worldwide would require Carrier Ethernet access connections delivered via an access operator partner.  Can you expand on this? 

Erin: Yes, Ethernet service providers directly deliver nearly three-quarters of all new Ethernet ports using their own "on-net" service infrastructures.  To reach the remaining one-quarter of new port locations, the most prevalent solution is to use a type 2 service extension provided by an incumbent or other last mile provider.  In this scenario, Ethernet service providers establish bilateral business and technical interconnection agreements with each access carrier, typically as a wholesale transaction. Another alternative is the use of an Ethernet Exchange service, which enables the interconnection of Ethernet services among multiple service providers. 

CEN: Last year, Vertical Systems Group reported that Carrier Ethernet Exchanges had more Ethernet providers committed to selling than buying services.  Has this situation changed of late?

Erin: Not yet. The original Exchange model is most appealing to Ethernet carriers selling wholesale services because it provides a different sales channel. It is less compelling for buyers of Ethernet connections. Most potential buyers have not been able to quantify the business case for using an Exchange as compared to other Ethernet delivery alternatives. As a result, Exchange players have been repositioning their capabilities to focus on other Ethernet interconnection opportunities, like cloud computing and content delivery.

We've heard you're an avid surfer. Is there anything about surfing that you could relate to Carrier Ethernet in general?

Erin: (laughs) Well, the first thing I can tell you is that technology is the last thing I'm thinking about when I'm in the water. On the other hand, surfing does require that you remain patient and focused on the prize -- catching a great wave. So, in effect, we're talking about capitalizing on an opportunity. And, there is quite a bit of opportunity for Carrier Ethernet in the market today and in the foreseeable future.