FEATURE


all sorts of choice from best efforts to real time,” he says. “Ethernet affords this sort of flexibility too. If you’re buying a straight SDH service, you’ll find all your choices come at a similar level of performance, and that perhaps you’re locked into a higher performance level than you want for your traffic. Ethernet, as anyone will tell you, is a lot more granular and easily scalable than that.”


STRIKING A BALANCE


The boot is plainly on the other foot for the carrier assembling a product portfolio to meet the needs of buyers, deciding on a balance between variety and profitability. Greater standardisation in the way Ethernet is sold would, argues Kreifeldt, ease this process while also bearing risk. “With all standards there’s a balance to be struck between enough to make interoperability possible, and to make what you’re offering readily understandable, but not so much that it’s a straightforward commodity,” he says. “Commoditisation is clearly not so bad for the buyer, but as a service offering you want to be able to differentiate yourself against the competition, or even within the confines of your own product range to be able to offer different things at different prices.” There is clearly, says Kreifeldt, an appetite across the market for


more standardisation than it currently enjoys, and he believes efforts to bring this about are for the most part welcome. “I do believe that Ethernet is moving to greater uniformity and


standardisation, even if there are still a lot of service providers out there whose offer is not MEF-certified,” says Rena Bhattacharyya, research manager for enterprise telecoms services at analyst firm IDC. “There are people out there who don’t think a more unified Ethernet world is necessary or important, but in the US market that I am familiar with,


HOW ETHERNET IS PRICED


The way in which carrier Ethernet is priced, and how it is delivered, is the subject of a report by analyst firm Telegeography titled International Long-Haul Ethernet Service Pricing. The report surveyed the Ethernet pricing of a number of major carrier names around the world. It found that of the seven carriers surveyed


that offer both Ethernet over MPLS and Ethernet over SDH, six offered the MPLS service at a discount to traditional Ethernet over SDH for the same capacity. The premium for EoSDH over EoMPLS varies widely by carrier, ranging from 15% to 80%. Most carriers also offer a differential in pricing between EoMPLS and Ethernet over DWDM. Five offered both EoMPLS and EoDWDM for the


same routes and capacities, three of which price EoDWDM at a discount to EoMPLS, with the other two pricing the services uniformly. Different architectures of EoMPLS have different prices. A pseudowire, or virtual circuit that tunnels through the MPLS cloud, is generally sold at a significant discount to a port-based VPLS service, the comparison analogous to price differences between SDH/Sonet and Layer 3 IP VPN. North America and Europe are the least costly regions for Ethernet. Intra-Asia routes are much more expensive. India has the highest EoSDH prices in the data set. “As our data demonstrates, all Ethernet services are not the same, and prices vary significantly based on the product required,” concludes


Erik Kreifeldt, senior analyst at Telegeography and author of the report. “Rather than simply checking for the best price on a commoditised service like SDH/Sonet, customers must also evaluate service characteristics.” Ethernet’s advantages, both in terms of carrier cost and customer price, are likely to lead to more market share in the long-haul communications market at the expense of rival standards, he believes: “Legacy corporate network technologies such as ATM and Frame Relay, SDH/Sonet and perhaps in some instances even MPLS-based IP VPN will be replaced,” he says. “As this occurs, and as carriers enter the Ethernet market in greater numbers, prices will likely fall as we have seen with other products.” ■


GLOBAL MEDIAN EOMPLS PSEUDOWIRE MONTHLY LEASE PRICES, FASTE


$7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0


Amsterdam- Frankfurt


Chicago- New York


Frankfurt- London


Los Angeles- Tokyo


London- New York


Hong Kong- Singapore


Notes: Prices represent the median of individual carriers point-to-point solutions tunnelled over the MPLS cloud. Prices presented in USD and exclude local access and install. FastE = 100Mbps


Source: Telegeography Research


people are looking for a tried and tested solution. They would not have been interested in carrier Ethernet in its early days when it was best efforts, but it’s got credibility now. Like IP VPN, initial scepticism is something people have moved on from. They are happy to use Ethernet and IP VPNs in their network.”


DIFFERENT NEEDS Despite moves towards greater market uniformity, service providers still need a well-rounded offer in all areas to make them well placed to work with enterprise and wholesale customers. And this will naturally entail price variance.


Capacity’s Carrier Ethernet Business Briefing


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