Carrier Ethernet: Looking Back at 2011 and Ahead to 2012

CEN Feature (Jan 3 2012)

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   2011 was a big year for Carrier Ethernet, with the technology making numerous gains on both the technical and business fronts. And 2012 is shaping up to be just as big. We thought we’d take the opportunity this week to review some of the biggest developments of 2011 and to provide a look at what’s likely to be hot in 2012.

   2011 in Review

   Here are some of the key Carrier Ethernet developments that took place 2011, in no particular order:

   Cable companies made big inroads in the carrier Ethernet market. When we talked to Heavy Reading’s Alan Breznick in August, he told us Comcast was on track to grow its business services revenue to as much as $1.5 billion in 2011, up from $1.2 billion in 2010—a 25% increase. He also pointed out that Time Warner Cable and Cox were only a bit behind Comcast in business service revenues. Not all cable company business revenues are from Carrier Ethernet, but Breznick said Carrier Ethernet may be the biggest service type within the data category and is driving much of the cable companies’ business services growth.

   Carrier Ethernet tends to receive more attention from cable company salespeople than it does from traditional telco salespeople because “they don’t have to worry about cannibalizing their base the way the incumbents do,” Breznick observed.

   10 Mb/s Ethernet as the new T-1. Business customers tend to subscribe to what Vertical Systems Group calls “intermediate” data speeds ranging from fractional T-1 to T-3 speeds—and according to the research firm, Carrier Ethernet is the most popular technology choice within the intermediate-speed category. This reality is beginning to cause some service providers to rethink their network architecture—in some cases replacing edge routers with multi-service carrier Ethernet platforms. By 2014, Ethernet connections will exceed all other intermediate-speed options by a factor of about 2.5, Vertical Systems Group predicts.

   Ethernet helped HSPA+ become 4G. It’s been just about a year since T-Mobile and AT&T started calling their HSPA+ networks “4G.” While some people initially scoffed, the nomenclature seems to have stuck, in no small part because both companies upgraded the capacity of their backhaul networks to support higher HSPA+ data rates, making them equivalent to what Verizon offers on its 4G LTE network. AT&T made a point of crediting Ethernet for enabling HSPA+ to support the higher data rates—and although T-Mobile was not forthcoming with that information, Carrier Ethernet almost certainly was a key enabler of its HSPA+ bandwidth boost as well.

   Carrier Ethernet over copper broke the 100 Mb/s speed barrier. Some service providers, including Windstream, are offering speeds as high as 200 Mb/s using Carrier Ethernet over copper. With its acquisition of PAETEC, which closed in late 2011, Windstream gained PAETEC’s Intelliber unit, which was an Ethernet over copper pioneer.

   Back in July we spoke with Sean Baillie, general manager for the Intellifiber business, who told us customers love the high-speed Ethernet over copper service. “The 100 Mb/s service can be delivered over a distance of up to 4,000 feet, and on occasion, we’ve pushed that marker to 5,000 feet,” Baillie told us. “That translates into hundreds of thousands of buildings in the strike zone.”

   Automating Carrier Ethernet over copper. Carrier Ethernet over copper could see an even greater boost now that a new option is available to simplify the process of ordering and provisioning Carrier Ethernet connections. Global Capacity has put together a system that knows the incumbent carrier central office from which a building is served, which competitive providers have co-located Ethernet over copper equipment in that central office and the distance between the building and the CO. Using that information, the system automatically calculates what each network operator would charge for Ethernet over copper service at a certain bandwidth and with a certain set of service parameters. Customers have the option of using Global Capacity’s system just to get price quotes or, if they prefer, they can buy through Global Capacity.

   2012 and Beyond

   Looking ahead to 2012, here are some areas where we expect to see heightened interest and activity:

   Carrier Ethernet needs enhancements to maximize its use for cloud services. Cloud services will continue to be a major growth area—and although Carrier Ethernet is often chosen to support cloud connectivity, some key modifications could make it even stronger. As Informa analyst Camille Mendler explained in a recent interview, users of cloud services are likely to begin asking for connectivity to “match the nature of the cloud, which is on demand.” Smart network operators will be taking increased interest this year in enhancing their operations support systems to respond more promptly to changes in service requirements.

   Carrier Ethernet exchanges co-locate with cloud providers. Cloud service providers have some important things in common with content providers. They need a lot of bandwidth—and they can provide better service if they can minimize the number of network hand-offs between themselves and their end users. Content providers addressed this by co-locating in carrier hotels where they could directly connect to multiple network operators—and some cloud service providers are making a similar move by co-locating in Carrier Ethernet exchanges. Look for more cloud service providers to follow CoreSite’s move over the months to come.

   LTE will bring unique backhaul challenges. 4G LTE will continue to be an important investment area—and 2012 could be the year network operators begin to really tackle the unique challenges of backhaul connectivity for LTE networks. As Infonetics Principal Analyst Michael Howard explained in an excellent white paper that came out a few months ago, LTE backhaul requires lower latency than earlier generation technologies—and network operators will want to minimize core network traffic by offloading Internet traffic as close to the cellsite as possible. Carrier Ethernet, Howard explained, is well suited to addressing both of those challenges and several others that are unique to LTE.

   Timing and synchronization ready to hit the mainstream. Perhaps the most critical of LTE’s unique backhaul requirements is timing and synchronization—a capability that Carrier Ethernet backhaul networks must support before network operators can move voice traffic from the costlier TDM circuits that are used for that purpose today. It’s taken a while, but a wide range of Carrier Ethernet equipment is now up to that task—and 2012 is likely to be the year when network operators get serious about implementing that capability.

   Simplifying Ethernet backhaul deployments. As service providers continue to invest heavily in Carrier Ethernet for mobile backhaul, they will seek ways to expedite that process, including looking seriously at a new deployment option. At least one of the Carrier Ethernet exchange operators—CENX—now gives network operators the ability to easily obtain quotes for cellsite connectivity from multiple backhaul connectivity providers and to automate the process of provisioning service to those cellsites. CENX claims network operators can save as much as 30% by purchasing Ethernet services through the CENX Carrier Ethernet exchange.

   All in all, Carrier Ethernet continues to offer new opportunities to meet the demands of a very dynamic and continually evolving industry. We look forward to bringing you the latest updates and relative Carrier Ethernet news throughout the coming year.

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