Ethernet Making Metro Inroads

There's a new disruptive technology threatening to dramatically rearrange the way telephone service carriers architect their networks to bring cheaper, more robust broadband technologies to enterprise users. According to a new study, the technology of change is a familiar one-Ethernet--but it's being used in an entirely new way.

In a new report, International Data Corp. says that the timeworn Ethernet technology is migrating from the LAN to the Metro WAN.

Sterling Perrin of IDC predicts that, fueled by the decline in prices for LAN switches and routers, combined with the galloping growth of data in medium and large enterprises, the Ethernet Metro market will grow at a 42 percent compound rate annually. The market--bigger in Asia than anywhere else right now--hit $1.1 billion in 2003, and should shoot to $6.3 billion by 2008.

"The U. S. is favoring an evolutionary approach," said Perrin in an interview. "It's replacing a whole mix of products--T1, T3, ATM, and Frame Relay." Perrin, who is senior analyst at IDC's Optical Research unit, said the U.S. is off to a late start in moving Ethernet technology from the LAN to the Metro market. "All the RBOCs are starting to roll out these services."

Perrin said the move was pioneered a few years ago by a group of start-up telecom firms, most of which went out of business in the widespread collapse of the telecom industry two to three years ago. The business began moving in Asia, though, and continues to do so.According to the report, the worldwide market is dominated by Cisco Systems, with 39 percent of the market, and Nortel, with 21 percent. Perrin noted that Cisco didn't pay too much attention to the market initially, but it does now, after it realized there was great growth potential there. Nortel understood the market early on and worked hard to develop its share.

Recently, major telephone companies--including AT&T, BellSouth, and SBC Communications--have all rolled out Ethernet Metro services aimed primarily at medium and large businesses. In his report, Perrin divides the market into four segments, representing four different equipment approaches to the Ethernet metro market: