Reaching Network Nirvana Through Fiber & Ethernet

A new telecom infrastructure is emerging out of the disruption of old-style, twisted copper, public switched, telephone network-based business. It’s based on Ethernet and is cheaper, more flexible and performs better than its legacy copper counterpart, and it all began with cable. As cable companies destroyed the market for multiple phone lines into a residence by providing Internet access and voice services over a Hybrid Fiber Coax (HFC) network, a new market opportunity arose.

The multi-strand fiber deployed to enable this new capability for the HFC plant was also used to create a new class of physical network provider: the fiber-based Metro Ethernet (MetroE) company. These providers are different from the long-haul fiber firms that went under in the early 90s. They are generally located in an area of a few thousand square miles where their focus is grabbing business from enterprises that would be buying large quantities of telecom initially offered by old-school telcos like T-1s, Frame Relay and in some cases SONET-based fiber products. Many are separate business entities from the cable providers they were spawned from, but share the same bundles of fiber their cable company parents use to provide residential and small business triple-play service. You can call it “Fiber to the Enterprise.” These MetroE providers generally charge less than telcos for the same services.

With the standardization of carrier Ethernet equipment, MetroE providers can now offer E-Line and E-LAN services, wide area extensions of well-understood enterprise and consumer Ethernet networks. This allows geographically separate sites to be connected as if they were plugged into a simple LAN switch, removing complexity and latency.

Ethernet exchanges are Layer 2 switching fabrics that extend the reach and flexibility of MetroE providers. The status quo is changed in the carrier hotel/Internet exchange space because the exchanges are a new entity, not offered before. Ethernet exchanges aren’t Internet exchanges or physical “meet me” rooms per se, but something in between: a way for MetroE subscribers to connect with IP transit providers, CDNs and data centers quickly and efficiently without having to turn up expensive new point-to-point circuits and add router ports. Ethernet exchanges allow geographically dispersed MetroE providers to connect with one another and compete effectively by offering solutions outside their own physical footprints.

Ethernet exchanges offer this flexibility because of their underlying switch technology, which can handle both IP traffic and other protocols where those protocols might be more efficient. These Layer 2 switched virtual connections between ports, or VLANs, replace multiple hardwired Layer 3 routed circuits from an Incumbent Local Exchange Carrier, which are expensive, require a long time to provision, and need dedicated equipment for the user on both ends of the connection. MetroE and the exchange take this complexity out of creating new connections. Additionally, each party that connects to a VLAN boosts the network effects, which makes the community larger, offering access to all players throughout the exchange.

From a MetroE subscriber’s view, if an E-line or E-LAN provider belongs to an Ethernet exchange, the subscriber can buy general-purpose IP transit competitively from the backbone transit providers that are exchange members, lowering cost. The MetroE connection makes it as if the subscriber had a really long patch cable directly into an Internet exchange, fixing the last mile or local loop problem.

If the subscriber is interested in receiving financial data or other content, say movies on Netflix (s nflx) from a CDN provider that’s a member of the exchange, then the subscriber can have the exchange simply provision another VLAN from another provider to the subscriber’s port. This avoids routing over the public Internet or worse, provisioning an expensive, multi-telco, hardwired connection between the two endpoints.

For the financial content consumer, this reduces complexity and increases performance by lowering latency. For the bulk video consumer, it avoids an intermediate peering tollbooth dustup like the current Comcast and Level 3 scrum. For the video provider or content aggregator, it opens new markets as Metro Ethernet and high-capacity, fixed wireless become increasingly popular last-mile choices. For the last-mile builder, having a MetroE connection to your local Ethernet exchange allows you to compete with larger providers by having access to fatter backhaul and cheaper transit.

For the data center operator, being a member of an Ethernet exchange increases the addressable market for their space, as users of that space don’t need to have a direct physical pipe into the facility; the exchange simply provisions a cross-connect VLAN. An owner of CPU and data storage footprint (cloud computing provider) that’s a tenant of a data center exchange member can offer spare capacity easily accessible by other members.

Ethernet exchanges open options for subscribers and publishers that didn’t exist in the time of point-to-point provisioning. Combine the growth of MetroE footprint, the increases in carrier Ethernet capacity to 40 and 100 Gigabit and new long- and short-haul dark fiber providers coming online with connections to Ethernet exchanges, and the world sees the rise of a new international communications platform being built on an Ethernet backbone that’s cheaper and more flexible than legacy copper. This is a repeat of the revolution that took place over a hundred years ago with the rise of the Bell system. In this case, it’s being built on a packet switched fiber infrastructure, and with central offices that are carrier-neutral from their inception. This new platform will give rise to revolutionary capabilities and efficiencies in the way we communicate, produce and consume content, store data and use compute cycles.

Craig Plunkett is Managing Director of CEDX Corporation, a New York consulting firm specializing in wireless and IT product strategy and technical deployment. Most recently, he served as VP of Wireless Market Development for Cablevision’s OptimumWiFi. He developed the first fleet-wide motorcoach Wi-Fi service in the transportation sector and is also the founder of several successful WISPs

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