Orange Business Services Improves Global Ethernet Offering by Expanding Reach and Adding VPLS

| Nov 18, 2009 | Business Telecom Services - Europe | Competitive Intelligence Report

| Analyst: Joel Stradling

Current Perspective: Slightly Positive
Vendor Importance: Moderate
Market Impact: High

Event Summary

November 17, 2009 – Orange Business Services expanded International Ethernet Link (IEL), adding Ethernet VPLS, 1 Gbps speeds and four CoS tiers, available in ten European countries. The carrier also has made its point-to-point offering available in 32 countries including four CoS, up from 14 countries. Its Ethernet VPLS leverages upgraded Ethernet-over-MPLS infrastructure. Online monitoring is extended to IEL clients on the WebVision platform: Orange Business Services' My Service Space customer portal will be integrated in the future.

Analytical Summary

• Current Perspective: Slightly positive on the new reach and upgraded features and performance that Orange Business Services has added to IEL, because the service provider is pragmatically advancing its Layer 2 data WAN proposal both to close gaps against rivals and at the same time to make it more compelling., The expanded IEL offer now includes VPLS-enabled any-to-any speeds up to 1 Gbps, and four CoS tiers now available in ten European countries. Moreover IEL's traditional point-to-point product has been extended to 32 countries (up from 14) to expand Orange Business Services' target market and give existing clients and new prospects more options.

• Vendor Importance: Moderate to Orange Business Services, because the carrier needed to respond to growing demands from its customers for cost-effective and high-performance Ethernet services. The company also had to respond to numerous competitor initiatives in recent months concerning VPLS launches, including announcements by Verizon Business, Telstra, Global Crossing and Tata Communications. Finally Orange Business Services must capitalize on its very strong established global IP/MPLS VPN business and MPLS PoP assets worldwide and at the same time evolve its integrated L2/L3 proposition to prevent any potential loss of traction from being too focused on Layer 3 IP VPNs.

• Market Impact: High on the international data WAN services market, because Orange Business Services has a solid pedigree in global data networks and has unequivocally improved its Ethernet range. IEL applies new WAN competitive pressure from a carrier that already has a large installed customer base and IP/MPLS-backed ‘Business VPN’ service available in 150 countries. IEL is not the strongest Ethernet portfolio in the market in an apples-to-apples comparison, but Orange Business Services’ overall market momentum raises the level of challenge it poses to its rivals.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - Full report in Business Telecom Services - Europe |

Recommended Competitor Actions

• Numerous competitors have already launched VPLS-backed Ethernet services available in more countries, and some players offer any-to-any Ethernet interconnecting major continents. Such competitors can therefore tell customers that Orange Business Services is being reactive with this move, and that despite its efforts IEL is still a weaker offering compared to many alternatives.

• Tata Communications, Reliance Globalcom, AT&T and Telstra can point out that their Ethernet VPLS offerings are truly global in nature, interconnecting continents, and as of today Orange Business Services cannot compete against such capabilities, as it is limited to point-to-point connections only.

• Verizon Business and AT&T need to point out to multinational clients that IEL offers a modest in-region any-to-any footprint at ten countries in Europe, with no VPLS presence and a minimal IEL presence in the Americas. AT&T in particular needs to update the market on the progress of its OPT-E-WAN offering. Both competitors should go on the offence with their Ethernet offers, for example by providing evidence and reference cases of existing Ethernet service client traction in Europe.

• KPN International needs to underscore that it offers Ethernet VPLS in more than twice as many countries, and launched in 2008 compared with Orange Business Services.

• KPN International, Verizon Business and COLT can point out that their numerous E-NNI agreements offer extended reach to off-net locations, and that Orange Business Services’ decision to not enter such agreements at the core level limits its ability to connect to more destinations.

Recommended End User / Customer Actions

• Customers should evaluate IEL, because Orange Business Services has improved the range, adding new capabilities with any-to-any connectivity available in 10 European countries, support for up to four CoS tiers, and speeds up to 1 Gbps. Meanwhile its normal point-to-point IEL service is now available to 32 countries worldwide, with more countries to be added in the short term. IEL is a largely on-net proposal with partners only used in the last-mile access part, giving Orange Business Services considerable control for solid SLAs.

• Several service providers offer more extensive Ethernet VPLS footprints compared with Orange Business Services. For clients that decide that they want any-to-any Ethernet mesh networking between continents, such as from Europe to Asia, the carrier falls short. Competitors that can offer any-to-any on a more global scale include Tata Communications, Telstra, AT&T, Verizon Business and Global Crossing.

• For customers that want to connect just one, or a few sites in the Americas and Asia with their facilities in Europe, IEL has a suitable combination of mesh and point-to-point Ethernet. When it comes to connecting many sites in the U.S. with Ethernet, AT&T and Verizon Business have a greater number of domestic POPs to extend and connect these services. However, Orange Business Services is a strong contender for customers willing to mix carrier Ethernet with IP-VPNs to connect extensive facilities worldwide.

• Orange Business Services offers a pragmatic Layer 2 Ethernet and Layer 3 IP VPN approach, combining the two in a hybrid inter-working solution wherever this is deemed the most sensible selection. The company can also offer practical advice based on vast experience for network migration from legacy platforms, such as ATM and frame relay, to more modern IP/Ethernet solutions. However clients should push the carrier for a single online monitoring tool, because currently IEL is not yet integrated with the carrier’s new ‘My Service Space’ toolkit, but is supported by with the older WebVision customer portal.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - Full report in Business Telecom Services - Europe |

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