Business Ethernet Marketplace


Business Ethernet Marketplace











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Business Ethernet Marketplace

by Faulkner Staff

Copyright 2017, Faulkner Information Services. All Rights Reserved.

Docid: 00021322

Publication Date: 1710

Report Type: MARKET

Preview

Business Ethernet offers enterprises higher
online speeds and lower prices without the need for additional
infrastructure as it can use existing copper. Importantly, it is a
private connection, not shared with other customers. While carriers and
vendors that promote fiber and cloud services may seemingly be dominating
the current business landscape, Ethernet is still pivotal in helping large
organizations to create private clouds and connect data centers
and carriers. However, now that Ethernet prices are dropping, it is also
increasingly being used by small- and mid-sized organizations. This report
analyzes the current Business Ethernet marketplace, it’s players, and its
trends.

Report Contents:

Executive Summary

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Business Ethernet solutions offer private, fast,
highly reliable connectivity.

Optical Networking Market Trends

The defining body for Carrier/Business Ethernet is the Metro
Ethernet Forum (MEF), a global alliance with more than 220
organizations. The MEF
says that its mission is to accelerate the worldwide
adoption of carrier-class Ethernet networks and services by
developing technical specifications and implementation
agreements to promote interoperability and deployment of
Carrier Ethernet (more commonly known as Business Ethernet services) worldwide. In addition, a new and
independent MEF organization, OpenCloud Connect, has been
formed to address the demands of delivering cloud
services. Thus, the ecosystem is in place and the
market is growing, especially for US market leaders
AT&T, Level 3, and Verizon. Furthermore,
Business Ethernet services are getting faster and more
standardized, paving the way for increased use.

Market Dynamics

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Business Ethernet services
are high-speed connections that enable enterprises to
link more quickly and more securely over larger bandwidths
than consumer Internet services. They provide high
performance, predictable Quality of Service (QoS), low
latency, and lower prices, often without the need for
additional infrastructure, thanks to their ability to utilize existing copper. Importantly, this
type of network offers private connections, not shared with other customers.
This provides a much-needed boost to business customers’ security by
creating a network gap between their data and the public Internet, an
important distinction for businesses handling sensitive data, such as
medical records.

Ethernet service providers cite cost savings as their
main selling point. The downside is that Ethernet,
unlike the cloud, is not available everywhere.
Availability is likely to continue to widen, however, as
the demand for high-speed data transport will only grow. Thankfully for proponents of the
technology, it also benefits from the existence of a
highly established and curated ecosystem, largely
because of the influence of the aforementioned Metro Ethernet Forum
(MEF) and its duty to author and certify the standards to which Business
Ethernet providers are expected to adhere.

Diving deeper into the governing body of Business Ethernet, the MEF, one
finds a global alliance that spans 43
countries, with more than 220 organizations, including
telecommunications service providers, cable MSOs,
network equipment/software manufacturers,
semiconductor vendors, and testing organizations. It
defines Carrier Ethernet specifically as a
ubiquitous, standardized, carrier-class service and
network defined by five attributes that distinguish it
from familiar Local Area Network (LAN) based Ethernet:
standardized services, scalability, reliability, quality
of service, and service management.1As previously stated, MEF
aims to accelerate the worldwide adoption of carrier-class Ethernet networks
and services by developing technical specifications and implementation
agreements to promote interoperability and deployment of Carrier Ethernet
worldwide. It currently
maintains the CE 2.0 standard, which defines Carrier
Ethernet services of four types: E-Line, E-LAN,
E-Tree, and E-Access.2  CE
2.0 defines various service classes, describes how
networks interconnection, and establishes management
standards.

Top sectors for Carrier
Ethernet include finance, healthcare, education
(distance learning, in particular), government, IT,
media, and real estate. Applications include Internet
access, disaster recovery, enterprise cloud-based
applications, and virtualization. Benefits range from
scalability to cost reduction to revenue acceleration
to ease of migration from traditional networks.3
Thanks in large part to the efforts of the MEF, the ecosystem
is in place for the market to grow.
With market dynamics currently very
much determined by ease of
interoperability and the ability to
work with the cloud, market leaders
will continue to need to innovate
and differentiate on these issues if
they want to gain marketshare.

Market Leaders

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In May 2016, Charter completed its acquisition of Time
Warner and Bright House, this created what is now the fourth largest Ethernet
provider in the US.4 Following the closure of the acquisition,
Charter reorganized its Business Ethernet segment and other services under the
Spectrum Enterprises brand name.

The top providers in the US are the following:5

  1. AT&T
  2. Level 3
  3. Verizon
  4. Spectrum Enterprieses
  5. CenturyLink
  6. Comcast
  7. Windstream
  8. Cox

Carrier Ethernet
services are also offered throughout the world. The
global leaders are the following:6

  1. Orange Business (France)
  2. Colt (UK)
  3. AT&T (US)
  4. Level 3 (US)
  5. BT Global Service (UK)
  6. Verizon (US)
  7. NTT (Japan)

Just three of the top-tier global Ethernet providers – AT&T, Verizon, and Level 3 –
are based in the US. Although that is a generally strong showing, accounting for
almost half of the top provider list, Western Europe also shows its strength
here with the presence of France’s Orange
Business, and the UK’s Colt and BT Global Services. Despite Asia’s growing
reputation as a powerhouse in the IT industry, and its booming need for new
network connectivity and infrastructure, only a single entrant from the eastern
continent made it into the top seven, Japan’s NTT.7

Increasingly, providers are offering
Ethernet services in countries other than where
their headquarters are located, suggesting that many
of these leading service company are increasingly
viewing themselves as global providers. Global
carriers as well as carriers in the US are also
focusing on increasing the speeds of their services.

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The use of Carrier Ethernet in the US was growing by 17 percent per
year in 2016, but has since slowed somewhat due to market saturation and the
consolidation of several providers.8 Although not at the level it
once was, this continued growth would still be the envy of many similar areas of
telecom infrastructure, particularly the flagging wireline telecom services that
once dominated the market. This continued, albeit reduced, growth is in large part
due to the fact that businesses have come to absolutely rely upon the
availability of
secure, high-speed, reliable private Internet
connections. Sharing lines with other companies can lead
to lower speeds and undependable access, not to mention additional risk of
network intrusions. Private lines,
on the other hand, provide flexibility and value –
companies can purchase bandwidth as needed, with some
vendors even offering different pay scales for short-term and temporary
capacity changes. Vendors and carriers that are at the
top of the market, like those listed above, offer all of these features, and are
striving to introduce new services and even higher
speeds. Network quality is also improving, as is network management, with many
providers recently beginning to offer improved service level agreements (SLAs).

These improvements will come as welcome news to the small
to medium-sized businesses that are
beginning to consume almost as
much of the Ethernet market as
large enterprises. Thanks to
this new class of user,
customers are demanding more
and more bandwidth. Over the
next few years, Ethernet speed requirements will almost certainly
see the same type of boom that
cellular data rates have undergone, thanks to the rampant growth of
data-hungry services like
streaming video and online
games. Furthermore, an
analysis published by the Ethernet Alliance noted
that in addition to getting faster, Ethernet is
becoming more standardized: “Ethernet is developing
four new Ethernet speeds – 2.5, 5, 25 and
400 Gigabit Ethernet (GbE)—to add to the
existing six speeds—Megabit Ethernet (MbE),
100MbE, GbE, 10GbE, 40GbE and 100GbE). Over
the next decade, several more speeds are
being considered, including 50GbE, 200GbE
and multiple speeds beyond 400GbE.”9

Outlook

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For Business Ethernet to grow substantially, the bottom
line is that it must become integral to the growing need for cloud-based
services.
Thankfully, it is an ideal fit. Business/Carrier Ethernet could prove to be the best option for
connecting enterprise users to the cloud, better even than public broadband or
consumer-grade fiber services. Knowing this, organizations like OpenCloud
Connect have begun working towards making Business Ethernet a vital part of the
growth of cloud computing by helping cloud service providers, carriers, and
enterprises to support cloud services more
easily, quickly, and economically. Members
of this organization include systems integrators, network
equipment manufacturers, and service
providers, including, most importantly, cloud service providers. OpenCloud
Connect has launched the OpenCloud Project to create an open test
and iterative standards development program.

Expanding beyond this, it remains imperative for Business Ethernet providers
to project a continued reputation for speed, reliability, and security to the
public. These are the tentpole advantages that Business Ethernet has over
consumer and even enterprise-class networking services. With speeds of public
fiber and even copper networks constantly growing, Ethernet services are under
constant threat of being rendered less appealing. However, the separation of
networks, the guaranteed services level agreements, and the injection of various
forms of additional security make Ethernet services far superior to this public
counterparts in many ways. This fact seems to be behind the current trend
towards Ethernet adoption by smaller and smaller businesses. While it will
likely never be within the reach of the individual consumer, the scalability of
Ethernet installations mean that some day, even mom and pop businesses could
well be relying on Business Ethernet services for their networking and Internet
needs.

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References

1 Metro Ethernet Forum (MEF).

2 MEF. “CE 2.0.”

3 MEF.

4 Vertical Systems Group. "Mid-Year 2017 U.S. Carrier Ethernet
LEADERBOARD." Vertical Systems Group. August 17, 2017.

5 Ibid.

6 Vertical Systems Group. "Mid-Year 2017 Global Provider Ethernet
LEADERBOARD.” Vertical
Systems Group. September 12, 2017.

7 Ibid.

8 Vertical Systems
Group. “Mid-Year 2016 U.S. Carrier Ethernet
LEADERBOARD.” Vertical Systems Group. August
18, 2016.

9
John D’Ambrosia
and Scott G. Kipp. “The 2015 Ethernet
Roadmap.” Ethernet Alliance. March
2015.

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