Service providers migrate to Metro

Service providers are rapidly adopting Metro Ethernet according to a study of 37 top tier service providers n North America, Europe, and Asia Pacific carried out by Infonetics research.

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By  Simon Duddy Published  April 24, 2005

Despite pressure to keep capital expenditures in check, service providers are responding to strong demand for more metro Ethernet services for fear of losing customers to competitors, which is driving metro Ethernet equipment sales, according to Infonetics Research’s latest study, Service Provider Plans for Metro Optical and Ethernet. The study reveals the uptake of Ethernet among service providers has been faster than previously expected. Reasons for the uptake include increasing demand from customers who want Ethernet services, lower prices, and the convenience of incremental bandwidth. “Ethernet is on pace toward metro service dominance over the next five to ten years,” says Michael Howard, principal analyst of Infonetics Research and lead author of the study. “We interviewed carriers for a similar study last year, and at that time they were conservative in some of their estimates of when and where they would adopt Ethernet technologies or offer new types of services. In many areas, they are definitely moving at a faster clip than predicted, like in delivery of services and adoption of Ethernet technologies, and they’re on track in most other measures of Ethernet use. If manufacturers can deliver carrier-class Ethernet products with end-to-end QoS, it will speed up the adoption curve even more,” he adds. Among many issues, service providers are considering how to offer Ethernet services: over SONET/SDH rings to leverage the installed infrastructure, over existing IP/MPLS networks, or by building separate overlay Ethernet networks. To reach small and medium businesses, service providers are considering Ethernet over IP/MPLS and Ethernet overlay networks that have lower costs. The study confirms a clear move in DSL networks from ATM to Ethernet is underway. Of the 70% of study respondents that have DSLAMs, 92% use ATM DSLAMs with ATM uplinks now, dropping to 78% in 2006, when almost three-quarters use Ethernet uplinks and IP/Ethernet-based DSLAMs. Currently ATM DSLAMs are popular in North America and Europe, and IP/Ethernet DSLAMs are popular in Asia Pacific. 86% of the service providers interviewed say their customers’ demand level is high for metro Ethernet services, with about 60% reporting high demand for moving from legacy services to IP VPNs and Ethernet services. Incumbent providers rate competition, revenue growth, cannibalization, profitability, and reducing opex higher on their list of business challenges than do competitive service providers.

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