Abstract
Ethernet, the protocol that is ubiquitous in enterprise local area networks,
is now being offered by service providers as a metro or wide area service.
These publicly available Ethernet services have been among the communications
market' s fastest growing segments, with carriers enjoying revenue growth in
the range of 30 percent annually as enterprises large and small opt for these
new services that are being offered in an array of speeds and reach.
Public Ethernet offers the chance to tie customer locations together in what
appear to be virtual LANs that can stretch across a metropolitan area, a
region, the nation, or the world. Public Ethernet offers significant
advantages in cost and simplicity and in facilitating convergence- and is
often touted as a replacement for legacy data solutions like private line and
frame relay. This Insight study projects market size, growth, and revenue,
including segmented breakdowns of point-to-point and any-to-any services as
well as by interface levels ranging from 10Mbit/s to the emerging 10Gigabit
standard. This report provides insight into this emerging arena that will
fundamentally shape the communications market of the future.
1.1 Public Ethernet
Ethernet is the world' s dominant machine-to-machine (computer-to-computer)
interface protocol, with interfaces on more than 300 million computers
worldwide- and it is fast becoming a potent force in metro and wide-area
communications.
Public Ethernet is still in an early growth stage. Second only to IP in terms
of growth potential and influence on the communications market, Ethernet has
become an increasingly prominent feature of the national data networking
landscape in the US. As of late 2006, Ethernet services are available from
virtually all major data service providers, including incumbents, second-tier
carriers, and smaller specialized players differentiating themselves by price,
technology, and flexibility.
Until recently, public Ethernet services have generally earned the label
"metro Ethernet." The large majority of Ethernet service has been, and still
is, between points within a metropolitan area. It is only relatively recently
that public Ethernet has become a more widely accepted service available into
the long-haul, though this has not been marketed in any significant way. This
may change in 2007 as major incumbents- particularly AT&T and Verizon- plan to
introduce long-haul Layer 2 virtual private networks (VPNs) in 2007.
INSIGHT' s use of the term "public Ethernet" refers to any Layer 2 public
network carrier service that extends Ethernet beyond the local area network
(LAN) and connects to customers through Ethernet interfaces. Public Ethernet
may be marketed as transparent or native LAN, Ethernet, Gigabit Ethernet,
GigE, metro Ethernet, Ethernet private line (EPL), Ethernet virtual private
line (EVPL), Layer 2 virtual private network (VPN), Ethernet access, virtual
private LAN service (VPLS), or a variety of other names. INSIGHT' s definition
does not, however, include routed Layer 3 IP-VPN services, which also carry IP
over Ethernet. Public Ethernet services include relatively longstanding legacy
transparent or native LAN services, whether asynchronous transfer mode
(ATM)-based within the network core or using an Ethernet over fiber (or SONET)
architecture. Our definition also includes newer services from small and large
carriers that variously deliver end-to-end Ethernet directly over optic fiber,
encapsulate Ethernet packets in SONET, or transmit it over dense wavelength
division multiplexing (DWDM) wavelengths or as Ethernet over multi protocol
label switching (MPLS).
Ethernet can be segmented by its speed (<=10Mbit/s; >10Mbit/s-100Mbit/s;
100Mbit/s-1Gbit/s; >1Gbit/s), by the nature of its sale (retail vs.
wholesale), by the region the service covers, and by topology, which refers to
whether the service delivery can be characterized as E-line or E-LAN.
E-line is an Ethernet service structurally similar to a private line. E-line
point-to-point service provides a Layer 2 private line or virtual private line
(VPL) on Ethernet between two locations.
E-LAN service, by contrast, structurally resembles a LAN. It provides the
potential for multipoint-to-multipoint Layer 2 service. Each user network
interface (UNI) in an E-LAN service connects to a multipoint Ethernet virtual
connection (EVC)...
Market Segmentation
Total US Public Ethernet Access Revenues:
- by Topology:
- by Regional Domain
- by Type of Sale
- by Bandwidth Level
- greater than 1Gbit/s (1000Mbit/s)
- greater than 100Mbit/s up to and including 1Gbit/s
- greater than 10Mbit/s up to and including 100Mbit/s
- up to 10Mbit/s
US Public Ethernet Total Port Estimates by Throughput
- greater than 1Gbit/s (1000Mbit/s)
- greater than 100Mbit/s up to and including 1Gbit/s
- greater than 10Mbit/s up to and including 100Mbit/s
- up to 10Mbit/s
Sample Monthly Pricing for:
- In-Metro E-Line and E-LAN Services
- Dedicated Internet Access
Average Price Range for E-Line and E-LAN Services
Table of Contents
Chapter I
EXECUTIVE SUMMARY
- 1.1 Public Ethernet
- 1.2 If Ethernet Gains, Legacy Losses
- 1.3 Forecast of Public Ethernet Services
Chapter II
BACKGROUND & INTRODUCTION
- 2.1 The Emergence of the Public Ethernet
- 2.1.1 Ethernet Spreads Out of the LAN
- 2.1.1.1 Data over Voice
- 2.1.1.2 Native LAN: Forgotten but Not Gone
- 2.1.1.3 GigE without the Gig
- 2.1.2 Public Ethernet Grows While General Market Declines
- 2.1.3 Definitions
- 2.1.3.1 Ethernet' s Components Defined
- 2.1.3.2 Wholesale Forecast Definitions
- 2.1.4 Five Key Attributes
- 2.1.4.1 Service Standardization
- 2.1.4.2 Scalability
- 2.1.4.3 Service Management
- 2.1.4.4 Reliability
- 2.1.4.5 Quality of Service (QoS)
- 2.1.5 Metro Ethernet Forum: Aid to Collaboration
- 2.1.6 Ethernet Services: Conceptual/Technical Building Blocks
- 2.1.6.1 User Network Interface (UNI)
- 2.1.6.2 Ethernet Virtual Connection (EVC)
- 2.1.6.3 Service Parameters
- 2.1.6.4 Performance Quality Parameters
- 2.1.7 Pricing
- 2.1.8 Types of Service: E-line and E-LAN
- 2.1.8.1 E-line
- 2.1.8.2 E-LAN
- 2.1.8.3 Other Typologies: Dedicated vs. Switched
- 2.1.9 Examples of Major Public Ethernet Applications
- 2.1.9.1 LAN Extensions
- 2.1.9.2 Layer 2 Virtual Private Network
- 2.1.9.3 Dedicated Internet Access
- 2.2 The Data Networking Context
- 2.2.1 Packet Data Networking
- 2.2.1.1 Internet Protocol (IP)
- 2.2.1.2 Packet and Virtual Networks
- 2.2.2 Ethernet and SONET
- 2.2.3 Resilient Packet Ring (RPR)
- 2.3 Ethernet' s Pros and Cons: The Case For and Against Public
Ethernet
- 2.3.1 Business Ethernet Drivers
- 2.3.1.1 Video: The Next Killer Application
- 2.3.2 Advantages of Public Ethernet
- 2.3.2.1 Reduced Cost
- 2.3.2.2 Ease of Use and Adoption
- 2.3.2.3 Scalability
- 2.3.3 Service Adoption Inhibitors
- 2.3.3.1 Inertia and Investment Requirements
- 2.3.3.2 Fiber Connectivity and Service Availability
Constraints
- 2.3.3.3 Interoperability as a Barrier
- 2.3.3.4 Doubts Regarding Ethernet
- 2.4 Changing Industry Structure
- 2.4.1 Industry Consolidation: The Market Context
- 2.4.1.1 Consolidation: The Enterprise Perspective
- 2.4.1.2 Provider Strategies: Incumbent vs. Challenger
- 2.4.1.3 The Regulatory Context: The FCC UNE-P Ruling and
Small Players
Chapter III
TRENDS, APPLICATIONS & MARKETS
- 3.1 Working Together: Interoperability, Merger, and Collaboration
- 3.1.1 Interoperability: The Current Problematic State
- 3.1.2 Interoperability: The Road Ahead
- 3.1.3 The Road Ahead: Consolidation
- 3.1.4 The Road Ahead: Collaboration
- 3.1.4.1 Partnership Issues: Pros & Cons
- 3.1.5 Service Interworking
- 3.1.6 Challenger Diversification & Consolidation
- 3.2 Widened Service Availability on Fiber and Copper
- 3.2.1 The Emergence of Copper
- 3.2.2 Ethernet as Future Network Foundation
- 3.3 Service Pricing Stabilizes
- 3.3.1 Ethernet`s Reason: Cost or Transformation?
- 3.3.2 Data Price Stabilization: Case Study
- 3.3.3 Costs beyond Service Pricing: The Real Deal
- 3.4 Broadening of Applications and End Users
- 3.5 Product Substitution: Ethernet Gains, Legacy Losses, Gradually
- 3.6 The Competitive Outlook
- 3.6.1 The Growth of Cross-Industry Players
- 3.7 Ethernet`s Growing Readiness
- 3.7.1 Quality of Service (QoS) Issues
- 3.8 Retail Customer Perspective: Beyond Hype
- 3.9 Switched, Any-to-Any Services Will Lead Ethernet Market
- 3.9.1 VPLS: New Face of E-LAN Emerging
- 3.9.2 Layer 3 vs. Layer 2 VPNs: New Clash of Civilizations?
- 3.10 Public Ethernet Expanding Rapidly Into the Long Haul
- 3.11 E-line Will Continue Strong, Steady Growth
- 3.12 Wholesale Ethernet to Start Slower, Grow Faster
- 3.13 Bandwidth Trends
- 3.13.1 Bandwidth Rates Rising Inexorably
- 3.13.2 More Low-End Customers Build Low-End Ethernet
- 3.14 The International Outlook
Chapter IV
SERVICE PROVIDER PROFILES
- 4.1 AT&T Corporation
- 4.1.1 Network Architecture
- 4.1.2 Services Offered
- 4.2 BellSouth Corporation
- 4.2.1 Network Architecture
- 4.2.2 Services Offered
- 4.3 Broadwing, Inc.
- 4.3.1 Network Architecture
- 4.3.2 Services Offered
- 4.4 Cogent Communications
- 4.4.1 Network Architecture
- 4.4.2 Services Offered
- 4.5 Global Crossing
- 4.5.1 Network Architecture
- 4.5.2 Services Offered
- 4.6 Level 3 Communications, Inc.
- 4.6.1 Network Architecture
- 4.6.2 Services Offered
- 4.7 Optimum Lightpath
- 4.7.1 Network Architecture
- 4.7.2 Services Offered
- 4.8 Time Warner Telecom Inc.
- 4.8.1 Network Architecture
- 4.8.2 Services Offered
- 4.9 Verizon Communications
- 4.9.1 Network Architecture
- 4.9.2 Services Offered
- 4.10 Yipes Enterprise Services
Chapter V
MARKET FORECASTS
- 5.1 Methodology
- 5.2 Definitions and Forecast Segmentation
- 5.2.1 Definitions
- 5.2.2 Segmentation
- 5.2.2.1 Breakdown by Topology
- 5.2.2.2 Breakdown by Regional Domain
- 5.2.2.3 Wholesale vs. Retail
- 5.2.2.4 Breakdown by Bandwidth Level
- 5.3 Market Forecasts
- 5.3.1 Total Market
- 5.3.2 Market by Topology
- 5.3.3 Market by Regional Domain
- 5.3.4 Retail vs. Wholesale
- 5.3.5 Bandwidth Levels
Appendix
GLOSSARY
Table of Figures
Chapter I
- I-1 Total US Public Ethernet Revenues
Chapter II
- II-1 User Network Interface (UNI)
- II-2 Frame Loss
- II-3 E-Line Point-to-Point Service Type
- II-4 E-LAN Multipoint-to-Multipoint Service Type
- II-5 LAN Extension Using E-LAN Services
- II-6 Illustration of VLAN Tag Support
- II-7 Dedicated Internet Access
- II-8 Typical IP Network
- II-9 Managed Packet Network, Virtual Private Line
- II-10 Resilient Packet Ring (RPR) Technology
- II-11 Data vs. Video Traffic, 2005-2010 (Tbit/s)
- II-12 Three-Year Total Cost Savings for Ethernet Private Line
Chapter III
- III-1 AT&T Data Transport Revenue Growth
Chapter IV
- IV-1 Broadwing All-Optical Switched Network
- IV-2 Level 3' s National Backbone (3)Link Intercity Wavelength Net
Chapter V
- V-1 Total US Public Ethernet Revenues
- V-2 US Public Ethernet Access Revenues
- V-3 US Public Ethernet E-Line Revenues
- V-4 US Public Ethernet E-LAN Revenues
- V-5 US Public Ethernet Revenues by App/Topology
- V-6 Percentage Ethernet Revenues by Topology
- V-7 US Public Metro Ethernet Revenues
- V-8 US Public Wide-Area/Long-Haul Ethernet Revenues
- V-9 US Public Ethernet Revenues by Geography/Region
- V-10 Percentage Ethernet Revenues by Region
- V-11 US Public Ethernet Topology by Regional Market
- V-12 US Retail Public Ethernet Revenues
- V-13 US Wholesale Public Ethernet Revenues
- V-14 US Public Ethernet Revenues by Retail/Wholesale
- V-15 Percentage Ethernet Revenues by Retail/Wholesale
- V-16 US Public Ethernet Revenues >1Gbit/s
- V-17 US Public Ethernet Revenues >100Mbit/s - 1Gbit/s
- V-18 US Public Ethernet Revenues >10Mbit/s - 100Mbit/s
- V-19 US Public Ethernet Revenues <=10Mbit/s
- V-20 US Public Ethernet Revenues by Bandwidth Level
- V-21 Percentage Revenues by Throughput Level
- V-22 US Public Ethernet Total Port Estimates by Throughput
Table of Tables
Chapter I
- I-1 Characteristics of Ethernet Service Varieties
Chapter II
- II-1 Characteristics of Ethernet Service Varieties
- II-2 Sample Monthly Pricing for In-Metro E-Line and E-LAN Svcs
- II-3 Sample Monthly Pricing for Dedicated Internet Access
- II-4 SONET and Ethernet Defined Transmission Rates
- II-5 Average Price Range for E-Line and E-LAN Services
- II-6 Major Ethernet Providers Deploying/Planning Eth over Copper
- II-7 Sample QoS-Based Metro Ethernet SLA, EVPL
- II-8 Continuing Industry Consolidation
Chapter III
- III-1 Comparative Strengths of Layer 2 and Layer 3 VPNs
Chapter V
- V-1 Total US Public Ethernet Revenues
- V-2 US Public Ethernet Access Revenues
- V-3 US Public Ethernet E-Line Revenues
- V-4 US Public Ethernet E-LAN Revenues
- V-5 US Public Ethernet Revenues by Appl/Topology
- V-6 Percentage Ethernet Revenues by Topology
- V-7 US Public Metro Ethernet Revenues
- V-8 US Public Wide-Area/Long-Haul Ethernet Revenues
- V-9 US Public Ethernet Revenues by Geography/Region
- V-10 Percentage Ethernet Revenues by Region
- V-11 US Public Ethernet Topology by Regional Market
- V-12 US Retail Public Ethernet Revenues
- V-13 US Wholesale Public Ethernet Revenues
- V-14 US Public Ethernet Revenues by Retail/Wholesale
- V-15 Percentage Ethernet Revenues by Retail/Wholesale
- V-16 US Public Ethernet Revenues >1Gbit/s
- V-17 US Public Ethernet Revenues >100Mbit/s - 1Gbit/s
- V-18 US Public Ethernet Revenues >10Mbit/s - 100Mbit/s
- V-19 US Public Ethernet Revenues <=10Mbit/s
- V-20 US Public Ethernet Revenues by Bandwidth Level
- V-21 Percentage Revenues by Throughput Level
- V-22 US Public Ethernet Total Port Estimates by Throughput
