Asia-Pacific leads Ethernet in the First Mile deployments, say analysts

November 6, 2002--The recent formation of industry groups and standards-setting organizations and a projected reduction in costs for end-users will significantly drive the number of residential Ethernet in the First Mile (EFM) subscribers over the next four years, contends a new report from market researcher In-Stat/MDR (Scottsdale, AZ). The number of EFM subscribers, over any media type, will increase from 1.3 million in 2001 to 36.8 million in 2006, with Asia-Pacific representing the largest market during that time.

"Ethernet's relatively low cost, simplicity, flexibility, ubiquity, and high bandwidth has resulted in a growing momentum for EFM over the past year and a half," contends Sam Lucero, analyst with In-Stat/MDR. EFM is currently being standardized by the IEEE 802.3ah Task Force and a parallel effort to develop market awareness for the new technology is being undertaken by the newly formed Ethernet in the First Mile Alliance (EFMA).

However, "a lack of standards has not prevented vendors from entering the market, and a number of equipment vendors, ranging from relatively small, specialized, privately heldcompanies, such as Alloptic, to the largest networking vendors, such as Cisco, are currently providing EFM gear," adds Lucero.

In-Stat/MDR also found that:

• EFM for residential access is currently mostly an Asia-Pac phenomenon, and will largely remain so through 2006, with more than 63% of the total number of residential subscribers. Reasons for this include: heavy reliance on Multi-Dwelling Units (MDUs), short local loop lengths, low labor costs, government support, and, particularly in the case of China, the need to deploy new infrastructure.

• Western Europe will be the second largest market for EFM, on a subscriber basis, with Scandinavia seeing particularly large deployments through 2006. EFM deployment in the US will remain fairly limited and be typically deployed by non-standard service providers, such as public utilities and property developers, though this will begin to change toward the end of 2006.

• From a technology standpoint, EFM to consumers through 2006 will largely be an Ethernet over copper phenomenon. While it is nearly as cheap to deploy fiber in greenfield developments as it is to deploy copper, the cost to overbuild with fiber is still largely prohibitive, and there is simply too much copper already in the access network for the ILECs of the world to ignore. It will be at least 20 more years before direct FTTH becomes a mainstream means of residential connection to the local exchange. However, when that day finally comes, it will be Ethernet, not ATM, which will be the communication protocol binding the residential fiber subscriber access network together.

The report, "Ethernet In The First Mile: Like A Bridge Over Troubled Water," explores the technology and market for EFM, including market drivers and barriers. Subscriber forecasts are given for the following regions: Asia-Pacific, Western Europe, North America, and Rest of the World (ROW). Forecasts are segmented between EFM over Copper subscribers and EFM over Fiber subscribers. For more information about the report, visit the company's Web site at www.instat.com.