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| In the last few years Ethernet has been moving from the Local Area Network (LAN) to the Wide Area Network (WAN), with an ever wider range of service providers targeting a growing base of MNC (Multi-National Corporation) business customers and large public sector organisations, to mid-sized corporates and, increasingly, SMEs (Small and Medium-sized Enterprises).
There are a number of key drivers behind this trend, including customer familiarity with Ethernet technology and ever-increasing bandwidths on the supply side. In terms of benefits to customers, Ethernet offers the potential to reduce costs, deliver easier day-to-day management, retain control of IP routing (important for many customers on security, regulatory and cultural grounds) and address their growing bandwidth demands. Establishing an accurate growth figure is impossible, but the consensus is that the Ethernet services market is growing in double digits year on year, and this has been backed up by the financial reports of many profiled service providers, often citing annual revenue growth figures of around 15%. The availability of Ethernet services has moved from local point-to-point services to national and global VPN products which are often offered as a complement to established IP VPN services. What has been a bit of a surprise is that a few major service providers have dragged their feet on the introduction of Ethernet services, giving early movers the opportunity to take advantage and win the business of customers as they migrate from legacy data services. There are a number of technical issues that mean that it is broadly accepted that Ethernet VPN services cannot scale beyond 50 interconnected sites, which means that the future is likely to be dominated by hybrids of IP VPNs and Ethernet services. It also means that it is clearer which customers service providers should target - those with a limited number of sites and with high bandwidth demands, with obvious target vertical sectors being finance, the public sector, health, education, professional services and the media. In the same way that IP VPN services benefit from extended reach using technologies such as xDSL and mobile, Ethernet services are increasingly being extended through evolving standards such as EFM (Ethernet over the First Mile) and a growing range of agreements establishing NNIs (Network-to-Network Interfaces) between service providers. As with any fast-growing market, an ever wider base of service providers is looking to Ethernet services to win new business and retain existing customers. This is already resulting in pricing pressures and there is usually no stopping such price trends once they start. That having been said, Ethernet is a market that service providers have to address if they aspire to meeting the needs of a growing number of business customers. |
