Verizon Business Flips the Switch on Anticipated Global VPLS Ethernet Services

| Nov 3, 2009 | Business Network Services - U.S. | Competitive Intelligence Report

| Analyst: Brian Washburn

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

Event Summary

November 3, 2009 – Verizon Business has expanded its Ethernet virtual private LAN service (VPLS) globally in Europe, Asia and North America. The service taps Verizon's existing Ethernet infrastructure and global MPLS fabric, and uses the carrier's global provisioning platform to extend service from the U.S. to 31 countries and territories. The carrier's direct footprint is extended by interconnection agreements with numerous in-region Ethernet providers. Verizon VPLS supports four classes of service, offers port speeds from 1 Mbps to 1 Gbps and higher, and is backed by standard SLA guarantees.

Analytical Summary

• Current Perspective: Positive on Verizon Business’ launch of global Ethernet virtual private LAN service (VPLS), because the carrier has infrastructure in place to debut service in 31 international locations, plus relationships with more than 100 Ethernet access partners worldwide to help connect customers to the nearest Verizon VPLS point of presence (POP). Verizon debuted VPLS in the U.S. in March 2007; it has been deploying Ethernet infrastructure, but in the two-and-a-half years since, the VPLS competitive landscape has grown greatly.

• Vendor Importance: High to Verizon Business, because the carrier still sees similar demand drivers as the ones that spurred VPLS in the first place, including a direct Layer 2 upgrade path from frame relay and ATM, mesh networking support and customer traffic privacy, including exclusive customer control over routing tables. Verizon Business VPLS touts both high capacity, up to 1 Gbps and higher port speeds ICB, and high scalability, supporting up to thousands of sites.

• Market Impact: High on competing providers of international Ethernet services, because Verizon Business has been deploying Converged Packet Architecture (CPA) Ethernet nodes for years – the infrastructure that serves as Verizon's VPLS provider edge – reaching 128 switches deployed in 111 locations in the U.S. and abroad in October 2009. The deployed global infrastructure already provides an array of Ethernet access services, and Verizon can relatively easily convert those pre-existing Ethernet access customers to end-to-end Ethernet VPLS.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - Full report in Business Network Services - U.S. | More information

Recommended Competitor Actions

• AT&T should press the point with customers that it beat Verizon Business to launching global VPLS by more than a year. It can question whether Verizon's delays were due to issues with its choice and implementation of platform for CPA. AT&T can state that it has as many global VPLS country endpoints as its rival, but that it has built up experience in the particulars of operating a global VPLS fabric effectively that Verizon Business will still need to learn.

• Regional VPLS competitors in EMEA or Asia/Pacific can position Verizon Business as a competitor that is interested mainly in customers that have a major presence in the U.S. These competitors can claim that they are better suited to serving customers' in-region needs if they are not U.S.-based, and would not want to have the U.S. as their communications hub.

• Global Crossing should show off that for a so-called “Tier 2” carrier, its VPLS fabric is nearly as far-reaching as that of even the largest Tier 1 providers. It can also point customers to its six classes of service, and the depth of monitoring, management and support that its uCommand customer portal provides for the carrier's VPLS Ethernet. Global Crossing can position itself as offering service with more comprehensive features, at lower prices.

• Carriers that have not yet deployed VPLS should look to add the technology, even as they can state Verizon's long wait and AT&T's relative quiet since the OPT-E-WAN launch demonstrate that the technology has not yet found a large, enthusiastic customer base. These competitors can show off their range of Layer 2 alternatives including international EPL, EVPL, even legacy frame relay/ATM packet networks, noting that they will add VPLS when the technology is sufficiently mature and customers become sufficiently interested.

Recommended End User / Customer Actions

• Verizon Business is an obvious choice for VPLS among any customers that are already using the carrier's CPA infrastructure for Ethernet access services. These customers might want to move just one point-to-point link, or parts of the core enterprise network, most or even all of their network over to VPLS, and they may wish to maintain their existing long-haul services. Via CPA, Verizon Business should be able to accommodate these sophisticated requests.

• For customers searching among VPLS alternatives, Verizon Business and AT&T present different platform philosophies, but probably will show similar footprints and price points. If the customer has a significant U.S. presence and wants to deploy VPLS globally, both carriers should be finalists in evaluating whether VPLS technology in its present stage makes the cut.

• Verizon Business has accrued high numbers of Ethernet access and Ethernet NNI partners, and these should help the carrier offer a broad end-to-end Ethernet footprint for customers. The majority of these access arrangements and NNIs are relatively simple but effective. Complex Ethernet VPLS interconnection is still done on a custom basis, and work on standardizing VPLS NNIs is in progress.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - Full report in Business Network Services - U.S. | More information

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