While Ethernet remains a dominant technology for business and wholesale carrier customers, there’s a growing thirst for optical wavelength and dark fiber solutions.
One of the latest growing market trends is 100 Gigabit Ethernet connectivity. This comes as customers upgrade from lower-speed Ethernet services and consider wavelength or dark fiber service alternatives.
Wavelength circuits provide Layer 1 dedicated bidirectional gigabit-speed optical fiber connections between sites like a multi-site enterprise or a data center.
Vertical Systems Group (VSG) noted in its year-end 2022 U.S. Wavelength Services LEADERBOARD the critical driver for wavelength services is expanding the U.S. base of wavelength circuits driven by double-digit growth for 100+ Gbps connections through 2027. Billable installations of 400+ Gbps services are also emerging as wavelength providers expand availability and roll out new solutions.
Customer demand for retail wavelength circuits continued to outpace wholesale deployments in 2022. This growth is due to what VSG said is the surge in gigabit bandwidth requirements from carriers, webscale network operators, and enterprises.
“Despite the resiliency of the Ethernet market, several providers are preparing for port reductions in the future as customers opt for alternative service technologies” like wavelength and dark fiber services, said Rick Malone, principal of Vertical Systems Group, in the research firm’s half-year Wavelength LEADERBOARD.
Carriers step up
Service providers are responding to the demand for wavelength services. Lumen, Windstream and Cogent have been enhancing their networks organically or through acquisitions to support more optical wavelength services.
Lumen Technologies is enhancing its position in the optical wavelength space by expanding its U.S. intercity dark fiber network, which will reach nearly 12 million fiber miles, creating diverse routes to more than 50 major cities nationwide. To differentiate its network, Lumen continues upgrading its infrastructure using a multi-conduit system, allowing for the quick deployment of the latest fiber technology.
It also built out its 400G wavelength network. The service provider has deployed its U.S. intercity wavelength network across 70 markets, giving customers diverse routing options. Over 240 data centers are enabled for 400G Lumen Wavelength Services, and over 800 Tbps of capacity currently runs across the network. Lumen is fulfilling customer orders of more than 50TB of 400G wavelengths. The intercity expansion will continue throughout 2023 and beyond, extending this network and pushing it deeper into the metro edge.
"We see a significant demand from enterprises, government agencies, hyperscalers and wholesale customers for high-bandwidth interconnections between their data centers and public cloud,” said Miriana Martinova, SVP, Lumen Enterprise Core Network Solutions.
Windstream Wholesale is being no less aggressive. The service provider began offering regional connectivity via 400G wavelengths. The new Regional Rapid Fiber services will build on the company’s work in 400G ZR+ pluggable optical transceivers to enable flexible point-to-point connections within multiple regional sites across Windstream’s Intelligent Converged Optical Network (ICON).
The Regional Rapid Fiber wavelength services are designed to enable flexibility and redundancy in regional applications. Focusing on multi-point connections within a restricted radius, Regional Rapid Fiber connectivity services will be accessible within approximately 50 regional PoPs across Windstream’s ICON network.
Following acquiring Sprint’s wireline assets, Cogent expanded its optical wavelength and optical transport services over its fiber network. Cogent is selling these wavelength services to its existing customers, Sprint customers and new customers who require dedicated optical transport connectivity without the capital and ongoing expenses associated with owning and operating network infrastructure.
Dave Schaeffer, CEO of Cogent Communications, said the optical wavelength efforts are paying off and that it plans to extend wavelength services to more areas. “We have sold these services in 35 discrete locations with shorter provisioning cycles and have connectivity to approximately 200 locations that still have longer provisioning cycles,” he said. “Over two years, we expect to be able to offer wavelengths in over 800 carrier-neutral locations in North America.”
DIA, SD-WAN ramp
Besides the demand for wavelength and fiber services, Ethernet growth continues to serve as a foundation for next-gen DIA (Dedicated Internet/Cloud Access) and SD-WAN services.
Ethernet port share growth, according to VSG, continues to be driven by two main factors: demand for DIA and SD-WAN. Driven by ongoing enterprise migration to Cloud services, Managed SD-WAN and SASE, and hybrid WANs, VSG said that DIA (Dedicated Internet/Cloud Access) accounted for the newest Ethernet service installations in the first half of 2023.
The research group noted that Ethernet Access to VPN installations is declining as MPLS customers transition to SD-WANs.
However, challenges remain. SD-WAN service providers revealed that managing security integration with evolving SASE and SSE solutions, helping enterprises best fit SD-WAN technology to requirements, and supply chain delays are still prevalent as they pursue SD-WAN opportunities.
Malone said the demand for dedicated internet access (DIA) and SD-WAN were the growth engines of Ethernet in the first half of 2023. “DIA connectivity for cloud computing and SD-WAN/SASE networks lifted U.S. Ethernet port growth in the first half of 2023,” he said.
AT&T continues to lead the SD-WAN market. It ranks first on VSG’s SD-WAN 2022 U.S. Carrier Managed SD-WAN and the Global Provider Carrier Managed SD-WAN LEADERBOARDs. The telco rose from second place on the global SD-WAN LEADERBOARD, displacing Orange Business.
AT&T will face continued competition from aggressive cable operators like Comcast, also making headway in the SD-WAN race. The cable operator introduced SD-WAN solutions to enable small and medium businesses, with either a single location or multiple standalone locations, to help securely connect and manage their network, applications, and users. These enhancements enable secure networking and application optimization for single or multi-site businesses that need to connect to the Cloud or SaaS applications but may not require site-to-site networking.
Large carriers aren’t the only ones ramping up their DIA and SD-WAN capabilities.
Regional service providers like Consolidated Communications, which continues to expand its commercial fiber network reach, are making progress. In its second-quarter earnings call, the service provider noted that DIA grew 16% while SD-WAN was up 36%. The telco said it is well positioned to drive its dedicated internet access (DIA) and Ethernet services as a foundation to sell cloud-based voice security and SD-WAN.
“Within commercial data services, we're focused on driving growth for our core fiber product offerings of dedicated internet access and Ethernet connectivity,” said Bob Udell, CEO of Consolidated Communications, during the second-quarter earnings call. “With success in the fiber connectivity business, we expect to expand and grow our cloud voice security and SD-WAN offerings in our enterprise markets.”
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