Metro Ethernet deployment on the rise in North America

Metro Ethernet’s low cost, its ubiquity and suitability for high-bandwidth data transport, and the overall shift toward network convergence are gradually weaning enterprises away from reliance upon legacy telecom services, contends a new report from Frost & Sullivan. The North American metro Ethernet services market earned revenues of $866.2 million in 2005 and should reach $3.4 billion by 2012, say analysts there.

Steady migration from legacy services such as ATM, Frame Relay, and traditional private line to metro ­Ethernet services results in the cannibalization of higher-priced legacy services revenues, which ­adversely affects ILECs and other service providers that still ­depend on legacy services for the majority of their revenues, contends Frost & Sullivan.

Nevertheless, service providers continue to recommend metro Ethernet not only because it is the technology of the converged network architecture, but also for fear of losing their legacy customers to competing providers. Cost savings up to 50% are catalyzing the shift to metro Ethernet among enterprise customers.

“Apart from educating customers, service providers must gain the trust of legacy users by initially providing them with Ethernet Internet access services,” ­explains Frost & Sullivan senior analyst Maria Zeppetella. “Once customers are comfortable with Ethernet access, they are more likely to upgrade to higher-priced metro Ethernet point-to-point or multipoint services.”

Ethernet’s increasing ubiquity has minimized end-user resistance to it as a metro service offering and has helped extend its reach beyond the LAN to the MAN. Increasing numbers of bandwidth-intensive applications are placing unprecedented demands on networks, and Ethernet is considered the most cost-effective and manageable solution to such data traffic.

“The adoption of Ethernet, combined with IP backbones and the widespread availability of optical fiber and WDM technology, is transforming the metro,” adds Zeppetella. “Ethernet’s ability to provide granularity, its ongoing progression with Carrier Ethernet standards developments, and the lower capital expenditure and operational expenditure are expected to help it gain further ground.”

For more information about the report, “The North American Metro Ethernet Services Market,” visit www.frost.com/communicationsservices.

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