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<p><br />
Ethernet Services: Global Market Drivers and Winning Portfolios</p>
<p>June 24 & 25, 2009</p>
<p>1. Introductions</p>
<p>Siow Meng Soh, Senior Analyst, Telecom Services, Asia <br />
David Hold, Senior Analyst, Business Network Services, North America<br />
Joel Stradling, Senior AnalystBusiness Telecom Services, Europe</p>
<p>2. Agenda</p>
<p>1. Broad Trends in Ethernet Services and Market Penetration<br />
2. Current Controversies: <br />
.Ethernet vs. IP<br />
.VPLS, MPLS & Scalability</p>
<p>3. Reaching Customers: Topics in Ethernet access: <br />
.Ethernet over Fiber, Bonded Copper & TDM circuits<br />
.Off-net Access via E-NNIs</p>
<p>4. Market Verticals & Applications<br />
.Who is buying Ethernet and why</p>
<p>5. Buying Criteria –What makes a Winning Portfolio?<br />
.Regional Market Landscape and Leaders<br />
.U.S, Europe & Asia Pacific</p>
<p>6. Future Directions –Taking Ethernet to the Next Level</p>
<p>3.
Broad Trends</p>
<p>Ethernet is replacing legacy data networks</p>
<p>Different country-by-country and cross-border landscapes around the world: </p>
<p>.Regulatory environment, network legacy/next-generation, competition, and so on<br />
</p>
<p>Business applications are driving take-up:</p>
<p>.Software as a Service (SaaS), hosted UC & VoIP<br />
</p>
<p>Additional ICT trends driving Ethernet take-up: </p>
<p>.Data centre consolidation, virtualization, ICT outsourcing <br />
</p>
<p>4. Broad Trends by Ethernet Services Types</p>
<p>Positive</p>
<p>Immature</p>
<p>Mature</p>
<p>EPL-Metro <br />
Metro Ethernet<br />
(All types)</p>
<p>Cross-border VPLS</p>
<p>Ethernet Access</p>
<p>National VPLS</p>
<p>Negative</p>
<p>Momentum<br />
Maturity</p>
<p>Neutral</p>
<p>EVPL </p>
<p>ETREE</p>
<p>Transparent LAN<br />
Services (TLS)</p>
<p>EPL-LH </p>
<p>5.
Market Penetration </p>
<p>Carriers experiencing high double-digit growth mainly due to migration from legacy services</p>
<p>Ethernet circuits still low (<10-15%) compared with other circuits; mostly metro Ethernet circuits (long haul Ethernet circuits <25%)</p>
<p>Point-to-point still more common than multi-point </p>
<p>Metro Ethernet still more common than long haul (inter-metro)</p>
<p>6. Market Penetration </p>
<p>U.S. market approaching an estimated 200K ports in 2008</p>
<p>Port & Revenue Growth*</p>
<p>.The largest carriers seeing growth rates of 50-70% per year</p>
<p>.Cable operators report growth ranging from 30% to 45%<br />
</p>
<p>Ethernet growth rates may be “recession-proof” </p>
<p>.Multiyear enterprise contracts </p>
<p>.Companies are looking for cost savings, which Ethernet delivers</p>
<p>.Demand still rising for bandwidth, which Ethernet delivers</p>
<p>.Migration from legacy services may even increase<br />
</p>
<p>7.
Ethernet vs. IP</p>
<p>We see the technologies as complimenting each other</p>
<p>Different horses for different courses –vendors should really be avoiding shoe-horning end-users into a specific technology</p>
<p>Some incumbents are still moving slowly with aggressive Ethernet plays because there is a risk of cannibalization</p>
<p>IP/MPLS –investments have been made and for solid reasons: </p>
<p>.Neat QoS& traffic-shaping</p>
<p>.Suitable for few hundreds of sites<br />
</p>
<p>8. VPLS</p>
<p>VPLS –Is it Ethernet or MPLS? Layer 2 or Layer 3?</p>
<p>.Virtual Private LAN Service runs over MPLS Pseudowiremesh</p>
<p>.Defined by IETF, not IEEE</p>
<p>.We view VPLS as Layer 2 service, since no customer IP routing is involved</p>
<p>–Ethernet hand off; MAC address forwarding</p>
<p>Advantages of VPLS</p>
<p>.Scales Carrier Ethernet beyond metro --national and international</p>
<p>.Customers to build full mesh WANs at Layer 2 using lower cost interfaces</p>
<p>.Provides traffic management for better QoSand more reliable SLA</p>
<p>.Carriers leverage investment in national or global MPLS infrastructure<br />
</p>
<p>Growing worldwide VPLS deployments by major carriers</p>
<p>.U.S. –AT&T, Level 3, Qwest, Masergy, Reliance, twtelecom, Verizon Business; Global Crossing by Q4 2009</p>
<p>.EMEA –KPN, COLT, Tinet</p>
<p>.Asia Pac –SingTel, HGC, Reliance<br />
</p>
<p>9. VPLS & Scalability</p>
<p>But can VPLS scale to large enterprise networks?</p>
<p>.That is a major debate; demand for VPLS led by large enterprises</p>
<p>.Majority opinion is no –max 50 sites, preferably less</p>
<p>.Minority opinion --VPLS can scale to hundreds of sites or more</p>
<p>.Verizon proposed hierarchical VPLS architecture scalable to 1000 sites</p>
<p>.Most network operators will recommend Layer 3 solution above 50 sites</p>
<p>.Hybrid MPLS/VPLS solutions are being proposed<br />
</p>
<p>Scalability issues fall into two categories; carrier and customer</p>
<p>.Customer issues revolve around previous experiences with instability in large flat Ether-networks.</p>
<p>.Customer interior routing protocols, OSPF, require fewer than 50 routers</p>
<p>.Switches are cheaper than routers .but using switches instead of routers can cause MAC address explosion </p>
<p>.Carriers respond by limiting or charging for MAC IDs</p>
<p>.Other carrier issues relate to controlling broadcast and multicast traffic, and the number of pseudowiresneeded to build a fully meshed core<br />
</p>
<p>10. E-NNIs</p>
<p>Crucial for international carriers to expand their Ethernet coverage quickly and cost-effectively, particularly for deep in-country coverage</p>
<p>More efficient to have a standardized E-NNI framework </p>
<p>.MEF Specs near completion (Q4 2009)</p>
<p>.E-NNI certification is next <br />
</p>
<p>Some carriers have established E-NNIs based on the draft MEF standards </p>
<p>Some carriers have taken a more aggressive approach to use E-NNIs to expand their footprint</p>
<p>.COLT: 100 E-NNI partners</p>
<p>.Reliance: 21 E-NNI agreements with key partners</p>
<p>.HGC: E-NNI with partners such as Reliance, Telekom Malaysia, KT, StarHub<br />
</p>
<p>Most carriers adopt the „wait and see. approach and establish E-NNIs only when there is significant demand in a particular market </p>
<p>11. Ethernet Access –EoCu, Cable, and Optical Fiber</p>
<p>SPs deploying EoCuin Europe: </p>
<p>.COLT offers EFM in 12 European countries, based on Actelis</p>
<p>.BT uses Hatteras to reach approx. 54% of UK businesses </p>
<p>.BT 21CN fiber: 90% of UK business located within 15 km radius of its exchanges to make higher speed Etherflowfeasible<br />
</p>
<p>FTTxdesirable for bandwidth intensive applications</p>
<p>At a point above 8 Mbps at least one European SP prefers to deploy dedicated fiber tail</p>
<p>KPN aggressive fiber rollout to business parks: </p>
<p>.End-users encouraged to sponsor costs</p>
<p>.Driven by desire to leverage SaaSand remote back-up<br />
</p>
<p>12. Ethernet Access –EoCu, Cable, and Optical Fiber</p>
<p>Vast Majority of U.S. Ethernet is Fiber Based</p>
<p>.Most downtown buildings have fiber, plus carrier neutral facilities </p>
<p>.Outside downtown areas, fiber, and Ethernet access, inconsistent</p>
<p>.Consequently, Ethernet availability and prices can vary widely<br />
</p>
<p>Ethernet Over TDM Circuits and Copper Twisted Pairs</p>
<p>.Bonded T1 or DS3 --Masergy, Level 3, twtelecom, Verizon </p>
<p>–Equipment from Overture, Nortel (Tasman) </p>
<p>–Verizon CPA Building Ethernet Aggregation System –ANDA<br />
</p>
<p>.Low speed Ethernet over bonded copper pairs –Max. 10-20 Mbps</p>
<p>.ILECs AT&T, Equant& Qwest; CLECs Cavalier, XO and others</p>
<p>–Equipment from Actelis, Adtran, Aktino, Hatteras </p>
<p>Cable MSOs Deploy Ethernet over HFC</p>
<p>.Cox and TWC-Business Class use DOCSIS 2.0 Cable Modems</p>
<p>.Cox = 5 Mbps and TWC-BC = 2 Mbps Symmetric<br />
</p>
<p>13. Vertical Markets</p>
<p>Four industry verticals are most commonly cited -GEMS</p>
<p>.Many are well suited to ILEC & Cable MSOs local infrastructure<br />
</p>
<p>Governments, Education, Medical, Services (financial)</p>
<p>.State and municipal agencies<br />
</p>
<p>Education</p>
<p>.K-12 school districts and college campuses<br />
</p>
<p>Medical</p>
<p>.Regional medical centers in single metro area<br />
</p>
<p>Services </p>
<p>.Financial Markets, Banking and Legal<br />
</p>
<p>14.
Applications: What are the End-users doing with all this Ethernet?</p>
<p>Large enterprise and MNC: </p>
<p>.1 Gig-E to 10 Gig-E data-centre interconnection</p>
<p>.Ethernet VPN –combining with IP/MPLS VPN</p>
<p>.IP video; Telepresence; SaaS; Disaster Recovery; intranets/extranets, data replication </p>
<p>.Example: BT Etherflowpoint-to-point customizable specialist IP VPNs, unique encryption and IP multicast <br />
</p>
<p>SME market: </p>
<p>.Simple and cheap –collapse voice, data & video onto one access</p>
<p>.Interconnecting small numbers of branch offices</p>
<p>.Disaster Recovery, remote back-up<br />
</p>
<p>Mobile backhaul –and cost-effective core transport</p>
<p>15.
Evaluating Ethernet Service Providers</p>
<p>Current Analysis „Buying Criteria. are used to evaluate the best Ethernet service portfolios</p>
<p>.Buying Criteria include network reach (metros, PoPs, nodes, etc), service types, bandwidth range and increments, multiple QoS, real time SLA metrics and customer network management. <br />
</p>
<p>„Winning Portfolios. include:</p>
<p>.Extensive on-net coverage and strong E-NNI partnerships for extending service reach to multiple metros, states, regions & countries</p>
<p>.Ample choice in the range: namely point to point, point to multipoint, or multipoint to multipoint –EPL, EVPL and ELAN or VPLS. Ethernet over DWDM wavelengths at the high end.</p>
<p>.Broad feature list: such as low, mid, and high bandwidths and flexible increments, fully-managed or non-managed, QoS, client-side and proactive monitoring, and competitive SLAs<br />
</p>
<p>16.
Current Analysis. Ethernet Product Assessments</p>
<p>17<br />
U.S.</p>
<p>Europe</p>
<p>Asia</p>
<p>Carrier Product Assessments: Results</p>
<p><br />
.U.S. Leaders: AT&T & Verizon –both players have broad choice and regional/national/int’l coverage</p>
<p>.twtelecom national CLEC with fiber to 10k buildings </p>
<p>.Cox, TWC-BC strong regional cable operators, + Optimum Lightpathin NY</p>
<p>.Contenders: Level 3, Global Crossing, Qwest, Masergy, Reliance (Yipes)</p>
<p>.EU Leaders: COLT –pioneer, broad range, EFM in 12 countries, 100+ E-NNIs</p>
<p>.KPN innovative VPLS in 22 countries</p>
<p>.Orange & BT Global Services –competitive </p>
<p>.Verizon good EPL product and CPA rollouts on-going </p>
<p>.AT&T, Interoute, Global Crossing, Cable & Wireless, Tata Comms, and Tinet</p>
<p>.A-PAC Leaders: SingTel & Tata Comms–good reach and broad options</p>
<p>.AT&T, Orange and Verizon competitive, but need local partners</p>
<p>.Strong contenders: Telstra, NTT Com, Reliance, PCCW Global and HGC<br />
</p>
<p>18.
What are SPs Working on to Move to the Next Level?</p>
<p>Coverage expansions: </p>
<p>.Adding Ethernet PoPsin key cities </p>
<p>.Establishing E-NNIs with access partners where demand is high</p>
<p>.Carrier NGN, including FTTx<br />
</p>
<p>Adding new services and features </p>
<p>.New services e.g., BT and Cable & Wireless</p>
<p>.VPLS for any-to-any connectivity –national and international</p>
<p>.10 Gig-E –pushing need for higher capacity transport</p>
<p>.Bandwidth on Demand e.g. Verizon Business<br />
</p>
<p>Better Performance</p>
<p>.New submarine cables –improves latency and availability</p>
<p>.Faster provisioning<br />
</p>
<p>Better online monitoring: </p>
<p>.Inbound and loop-testing</p>
<p>.adding NTU-to-NTU monitoring<br />
</p>
<p>19. Washington DC / Paris <br />
</p>
<p>Competitive Intelligence levels the playing field…</p>
<p>Current Analysisis the onlycompetitive research firm that provides solutions to improve your company’sCompetitive Response</p>
<p>Presented by: J. Stradling<br />
Email: jstradling@currentanalysis.com<br />
www.currentanalysis.com</p>
<p>Competitive Response enables you to Win.<br />
</p>
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