Off-Net Traffic Turns On to Ethernet

Sourcing off-net capacity is a normal part of doing business for carriers as they seek to create new markets and serve existing customers that have out-of-region locations. As they move to Ethernet architectures, they increasingly are looking to extend those networks out-of-region and out-of-country using other providers’ facilities.

“LGN uses one of its 60-plus partners to reach customers who are off-net,” says Steve Daigle, vice president of product and sales development for Looking Glass Networks Inc., a metro Ethernet carrier. “We’ve used EoS (Ethernet over SONET), dark fiber, Layer 2 and MPLS solutions from our partners.”

LGN is not alone. In 2005, worldwide wholesale Ethernet services revenue hit $1.5 billion, representing about 25 percent of all Ethernet service revenue, according to an April 2006 report from Infonetics Research Inc., which pegs North American usage at $320 million.

Today, most wholesale Ethernet is Layer 2 point-to-point or point-to-multipoint with FastE (100mbps) or gigE interfaces. Indeed, according to the Infonetics Research report, 75 percent of North American wholesale Ethernet traffic sold was in bandwidth speeds greater than 100mbps and primarily at 1gbps.

Ethernet circuits from the LEC are becoming more common, but they are not available everywhere. “LGN has multiple Type II Ethernet circuits installed,” says Daigle. “However, Ethernet is simply not as ubiquitous as DS3s or SONET and has been quite a challenge to implement.”

Consequently, carriers commonly encapsulate Ethernet over more ubiquitously available access methods like SONET, DS3, DS1, wireless and even wavelengths, says Fred Ellefson, vice president of Etherjack Alliances for ADVA Optical Networking.

One wholesaler is taking this approach to provide a packaged service for its carrier customers. Global Capacity Group Inc. (GCG) launched in January its Global LAN service to provide intrastate Ethernet services to carriers serving customers in remote off-net locations. Global LAN delivers transparent, secure Layer 2 extension of the carrier’s MPLS backbone directly to the customer premises.

“There definitely is a big issue with providing and extending Ethernet off main sites to rural or off-net locations,” says David Walsh, managing director of wholesale marketing for GCG. Global LAN uses the TDM infrastructure already in place to aggregate DS1s and DS3s to provide Ethernet to the customer premises and hand it off to the carrier customer. “We deploy the CPE and provide the Ethernet connection to the longhaul network,” says Walsh.

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Significantly, Global LAN is priced on a flat rate from 1mbps to 10mbps, in DS1 increments of 1.5mbps, 3mbps and so on. (Greater bandwidth — from 10mbps to 1gbps — is priced on an individual case basis.) Walsh says the flat-rate product is designed to serve carrier’s mid-market customers that need more than a DS1 to connect to the WAN. “It’s for customers on frame relay, ATM, point-to-point or IP VPNs that see a need to increase bandwidth,” he says. “They will have a hard time scaling without routers and backhaul expenses. We are adding that value back to the carriers.”

Global LAN currently is available in Texas, but will be expanded to other states. California and Colorado were expected to be turned up by summer, with a total of 39 states live by second quarter 2007, says Walsh.

While GCG is looking to help carriers expand to remote sites within the United States, VSNL International, a division of VSNL, is rolling out a new product to help companies expand globally. The new global Ethernet service, which was expected to be announced in May 2006, includes connections in 17 cities in North America, Europe and Asia as well as 100 cities within India, VSNL’s home country.

“A carrier can interconnect with us using a FastE or gigE interface in New York and utilize our backbone to reach other countries and cities,” says Ariane Moyes, VSNL International’s director of product management of global telecommunications services. In contrast to how carriers normally buy circuits between city pairs, which requires them to recreate the circuit for every E1 customers buy, the Ethernet pipe can be expanded as traffic needs increase.

“Every upgrade is nonservice affecting,” adds John Hoffman, VSNL International’s Ethernet product services manager. “They can grow as they need it. They don’t have to take more than they need right away. It’s a very lucrative and cost-efficient way for them to offer services globally without having to invest a lot of money globally.”

VSNL International’s global Ethernet service is sold similarly to private line service, says Hoffman. Rather than implement a port charge, as is common with best-effort offers, the service has a monthly recurring charge based on the bandwidth requested, which is available in increments of 50mbps between 100mbps and 1gbps.

Following VSNL’s recent acquisitions of Tyco Global Network and Teleglobe International Holdings Ltd., VSNL International upgraded its Ethernet-over-SONET platform in order to provide the SLAs required for carrier-grade Ethernet, says Hoffman.