With multiprotocol label switching (MPLS) in the core and all services moving to Internet protocol (IP), Ethernet in the metro network is a Swiss knife for business connectivity, broadband service aggregation and cell site backhaul. Service providers can only ignore the capital expenditure (CAPEX) and operational expenditure (OPEX) advantages of carrier Ethernet at their own risk, as a converged Ethernet network will allow service providers to economically address many of the needs of their business residential, and wholesale customers.

New analysis from Frost & Sullivan, North American Carrier Ethernet Equipment Markets, reveals that revenues in this market totaled $1.45 billion in 2006, and can reach $2.88 billion in 2013.

“Ethernet for the carrier infrastructure is a mature and proven technology, and the twin advantages of cost and scalability offered by carrier Ethernet particularly make a powerful case for deploying this technology in service provider network infrastructure,” notes Frost & Sullivan Principal Analyst Sam Masud. “Deployment of carrier Ethernet equipment will be aggressive because it not only lowers service provider capex and opex, but also enables them to meet the requirements of some of the most talked about applications- Ethernet services for enterprise local area network (LAN) extension, broadband triple-play and cell site backhaul.”

Other notable benefits of carrier Ethernet include enabling service delivery with strict service level agreements (SLAs), as well as allowing service providers to offer granular bandwidth, instead of being constrained by the rigid bandwidth hierarchy of legacy services. Unlike legacy services, Ethernet services can be offered with a broad range of speeds, typically from 1 Mbps to 1 Gbps, while allowing for incremental increases within that range. No change to subscriber equipment is necessary if a subscriber opts to upgrade Ethernet service from 10 Mbps to 100 Mbps and, in some cases, to 1 Gbps.

Nevertheless, a significant challenge for the market’s growth lies in that an overwhelming majority of office buildings are not connected by fiber, and therefore cannot get high-speed Ethernet services. At the same time, hyper-competition in the Ethernet services market threatens to erode some of the capex/opex advantages that stem from deploying Ethernet in carrier networks. For instance, scores of carriers currently offer Ethernet services without any one carrier being able to claim a significant share of the market.

“There are also some vendors offering solutions for delivering Ethernet services over existing twisted pair,” says Masud. “How much success their solutions have with service providers is unclear at this time, although these solutions do allow service providers to address the large small- and medium-sized business segment.”

In order to further the acceptance of carrier Ethernet, service providers must overcome customer perception of Ethernet as a best-effort technology, and develop a successful strategy for transitioning customers from profitable legacy services to more economical Ethernet services.