Value-added services over Ethernet — a Golden Opportunity

As enterprises converge their datacentres, business moves into the cloud, mobile and fixed line services merge and Internet services become ubiquitous, legacy WAN services no longer cut the mustard. SOHO offerings based on xDSL are straining the limits of copper connectivity and neither is sufficiently reliable or powerful enough for today’s critical business applications. Higher up the scale there are Leased Lines, IP-VPNs or ATM offerings giving reliable connections, but not always delivering the flexibility and scaling required by today’s businesses.

The good news is that systems integrators and resellers are increasingly opting for the far more flexible WAN services available via Carrier Ethernet, and the exciting business opportunities they offer. This powerful Carrier Ethernet is mainly thanks to the work of the MEF (Metro Ethernet Forum) the industry body responsible for extending the use of Ethernet from a local to a wide area service technology – and now comprised of over 175 of the world’s leading service providers and equipment vendors.

The Changing Face of Ethernet
As the universal standard for office LAN connectivity, Ethernet offered simplicity, familiarity and the cost benefits of a mass market technology. The MEF’s challenge was to specify a new "Carrier” Ethernet standard, lifting it from a "best effort” LAN connection to one that could compete with and even exceed conventional WAN technologies.

The MEF decided on five key attributes: Standardised Services, Scalability, Reliability, Quality of Service (QoS) and Service Management. With these enhancements Carrier Ethernet (along with mobility) became the fastest growing segment of the industry with revenues of £12.5bn in 2010 expected to rise to in excess of £25bn by 2014 as forecast by Infonetics Research.

Among the advantages of Ethernet, in addition to its relative simplicity and familiarity, is the fact it can be delivered over copper, cable, fibre or wireless – and over existing TDM (typically SDH) architectures. This means that an Ethernet network can extend across the last mile with full flexibility and transparency to applications. Another very major advantage is that – whereas scaling a leased line means laying another physical connection with all the costs that entails – raising or lowering bandwidth on an Ethernet link can be done almost immediately, megabyte by megabyte, allowing very tight costing of the service for small businesses, with plenty of room to expand as business grows thus making the concept of ‘on demand’ bandwidth attainable.

Carrier Ethernet Services in Action
Integrators and resellers are increasingly significant drivers behind the growth of Ethernet services. They purchase carrier-class Ethernet from direct or wholesale service provider partners, to deliver value-added services to their clients. Retail customers in particular benefit from Ethernet connectivity between head office and remote branch office LANs.

The so-called “white label” wholesaler – taking an existing Ethernet service and re-packaging  it – is a small but growing segment of the market, often addressing a specific vertical market, such as public sector organisations for marketing their services into.

A greater number of value added resellers specialise in a particular area of expertise – connecting a customer’s premises to their in-house managed IP router environment and offering hosted managed services tailored to customer needs. The advantage to the customer is the flexibility offered by a small company and “out of the box” solutions which meets their business requirements. Other services offered include hosted desktop services, financial applications (e.g. pay roll), managed storage and backup plus integrated voice solutions.

Out of such innovative business models, a whole new ecosystem of opportunities is emerging, with telcos selling to medium sized resellers who supply small companies serving local or niche sectors of the business market. Here is a superb opportunity for a dynamic start-up, beginning with an IP router at their headquarters and getting more favourable contracts from other small resellers than could be gained by going direct to the big companies. From there the enterprising company can move up the ladder, the Ethernet-Eco chain adding services, for example creating a data centre and extending the network services offered. Ethernet is a natural fit with hosted data centre services owing to its transparency to a range of applications and capability to scale flexibly plus of course its coverage, simplicity and cost effectiveness.

It is true that systems integrators are not primarily engaged to deliver network services alone but also for process re-engineering and outsourcing of IT skills to name but two specialities. However, having defined the applications and systems needed by the client, there is still the question of how it is best delivered and managed across the clients sites, and the problem can often best be solved by selling on an Ethernet service as one package with a managed service.

Seize this opportunity…
Ethernet is out there and increasingly available from simple site to site connectivity at the low entry level to global enterprise networks with thousands of sites. For the entrepreneur with flair, or for the larger company seeking new ways to capitalise on its network and data centre assets, Ethernet services look like a golden opportunity for competitive business innovation.

See how the MEF is supporting this growing market with its equipment and service certification programmes, as well as online details of available service coverage.