What Is an Ethernet Exchange, and Why Should I Care?

Cisco just produced an interesting whitepaper called “Why Should You Use an Ethernet Exchange?" At one time, this topic may have been reserved for telecom techies, but today, Ethernet exchanges may have an effect on how enterprises buy bandwidth in the future – and it can also affect the cloud because as networks extend, cloud services will be more readily available in a greater geographic region.

The concept of an Ethernet Exchange is simple: The technology of interconnection can help Ethernet service providers connect efficiently to other service providers and to their customers. Ethernet services are one of the key growth areas for service providers today, projected to grow more than 20 percent annually thru 2014, according to a report from the Vertical Systems Group.

One of the issues with buying Ethernet services is that Ethernet is often not available from a single service provider to the last-mile connecting the buildings that need it. A service provider could try to build fiber to all their customers’ buildings, but that would be expensive and take a long time. Or, they could do lots of individual proprietary interconnection agreements and different connections, but that is difficult, and takes even more time.

This is giving rise to the Ethernet Exchange as a solution that standardizes and simplifies Ethernet connections among service providers and their last-mile customers. This allows the sellers who have Ethernet assets to connect to the buyers who need access to specific buildings or regions.

Telx and others, including Neutral Tandem, offer Ethernet Exchange services in carrier neutral facilities. In these facilities, lots of different service providers are available to connect together to form end-to-end networks. The benefit of an Ethernet Exchange to Ethernet buyers is that one connection allows you to cost-effectively and quickly get to multiple service providers. For Ethernet sellers, you get immediate access to the buyers and a simplified technical and administrative process.

The availability of Ethernet Exchanges is forecasted to increase the size of the Ethernet Market overall.

“Carrier Ethernet Exchanges are an important new development that facilitate Ethernet connections and accelerate the move to Ethernet transport and services … this in turn jumpstarts more Ethernet services and more of the IP VPN services that ride on Ethernet transport. The net effect of these new Ethernet Exchanges, combined with fast-rising mobile backhaul connections, is a quickening of the Ethernet and IP VPN services markets, and as a result, we have raised our revenue forecasts," notes Michael Howard, co-founder and principal analyst for carrier and data center networks at Infonetics Research.

As vice president of Product Development and Product Management for Telx, Rose Klimovich leads efforts in creating the Telx strategy and developing and investing in new products and services in areas like colocation, cloud and Telepresence video. Rose’s team supports vertical markets including financial services, health care, cloud/SaaS, content/media and service providers.