A new study announced by Extreme Networks and completed by the OMNI Consulting Group (copy available by e-mailing This e-mail address is being protected from spam bots, you need JavaScript enabled to view it ) concludes that Ethernet is becoming the preferred network transport for innovative service providers and offers them the best return on investment (ROI). The study, ‘Service Velocity by Design, Engineering Carrier Networks with Ethernet at the Innovation Core’, details an economic model for carriers that can help to determine if they are meeting their financial goals when rolling out next-generation services. In this analysis, carrier Ethernet beat out all of the other technology options, such as Layer 3 MultiProtocol Label Switching (MPLS), for offering new revenue generating services.

Because it is difficult to measure the success or failure of next generation technologies and services by looking at the bottom line alone, the study modelled technologies such as Extreme Networks' Multidimensional Ethernet according to a broader framework termed Service Velocity. Service Velocity consists of three axes of measurement - management of quality of service (QoS), or the options a technology provides a carrier with in order to manage the end users’ QoS; marginal revenue productivity, which measures the amount of revenue generated by services with all of the costs of providing that service factored in; and lowering of OpEx, or the amount of labour, time and expenditure it takes to generate a new service or technology.

"Our model shows that service providers’ costs to acquire, provision and manage IPTV services using carrier Ethernet equipment from Extreme Networks are on average 20% improved over using alternative MPLS-type approaches,” says Frank Bernhard, managing principal of the Supply Chain and Telecommunications practice at OMNI Consulting Group and author of the report. “Because subscribers can be guaranteed a committed level of QoS, at a service-specific price, that price reflects a premium paid to the carrier for its ability to deliver incremental value. The technological innovation with Multidimensional Ethernet creates a performance opportunity for carriers to recognise efficiency and support incremental market penetration at a profit-sustaining price.”

Nor is the utility/profitability of Carrier Ethernet restricted to IPTV. According to the Metro Ethernet Forum (MEF) operators are supplying the service to enterprises and public sector organisations to enable them to cope with demand to connect multiple sites over point-to-point or point-to-multipoint connections and support growing numbers of mission-critical applications.

The MEF says these applications include LAN connectivity, PBX interconnection, voice over IP (VoIP), conferencing, disaster recovery, distributed computing and converged applications, e-commerce, help desk support, remote mirroring and fail-over and wireless backhaul and access, as well as enterprise applications (enterprise resource planning (ERP), customer relationship management (CRM), supply chain and so on), amongst numerous others.

“The ability to support the bandwidth requirements and quality of service attributes essential for the growing numbers of converged applications in business, residential and mobile applications, is a key factor in the rapid acceptance of Carrier Ethernet as the transport architecture of choice for mission-critical applications” states MEF chairman of the board Mike Tighe.

The Carrier Ethernet market rune-reading is accordingly upbeat. A recent report from Analysys, for example, estimated that Carrier Ethernet service revenue in Western Europe would reach €8bn by 2010, with the market for services in the MAN and WAN growing at an average rate of 33% over the next five years. ‘Developing a Successful Carrier Ethernet Service Portfolio’ reasons that the market will move away from uncontended point-to-point links in metropolitan areas to see Internet access over Ethernet and services with QoS predominate in 2010.

“The work of the Metro Ethernet Forum in developing service standards and standards-based SLAs for users will result in some very attractive and cost-effective services,” says the report’s author, Margaret Hopkins. “However, most end users are not yet aware of this initiative.”

Other key findings from the Analysys report include:

·        E-LAN best effort services, which interconnect sites as if they are on the same LAN, are expected to grow most quickly from a very low base to exceed €500mn by 2010;

·        Ethernet services with QoS, based on virtual private LAN service (VPLS) or virtual LANs (VLANs), are expected to grow at a rate of over 200% per annum to reach €2.5bn by 2010;

·        and small sites that are part of organisations with more than 500 employees will form the biggest market segment by value, with spend reaching almost €4bn by 2010.

We say: Ethernuts.
John Williamson