Metro Ethernet Technology to Replace Frame Relay and ATM Networks to Enable Increased Enterprise Bandwidth

Frost: While business Ethernet local area networks (LANs) have primarily been used in the past for internal data traffic, with scant dependence on metro area network (MAN) or the wide area network (WAN), demand for Ethernet and high bandwidth in the MAN/WAN is witnessing a surge. This is widely due to the emergence of web-based applications models as well as the widespread use of the application service provider (ASP) model. As legacy technologies do not allow for flexibility in provisioning bandwidth to address periodic bursts in enterprise activity, Ethernet is rapidly replacing frame relay and asynchronous transfer mode (ATM) networks in Europe.

At present, enterprises are experiencing difficulties due to technology capacity limits of legacy technologies such as frame relay, ATM and private lines. While enterprises are internally connected at gigabit Ethernet (GigE) speeds, these connections ride over time division multiplexing (TDM) circuits, thereby creating bottlenecks in the transport layer. In this context, extending Ethernet to the MAN offers a considerable increase in capacity and transmission speeds while simplifying network deployment and management.

Ethernet almost completely displaced other networking technologies in the business LAN environment such as token ring and attached resource computer network (ARCNET) during the 1990s. The progressive increase in data speed rates has allowed the expansion of Ethernet into the metropolitan space, while at the same time keeping the simplicity typical of this technology. Consequently, metro Ethernet services in the MAN are growing in demand as they assist in addressing enterprise needs for greater bandwidth and enable carriers to reduce their operational expenses.

New business applications, such as networked storage, distance learning, medical imaging and computer aided design (CAD)/content addressable memory (CAM) applications demand greater bandwidth. In addition, the outsourcing of non-core activities, distribution of sites, increase of remote workers and globalisation of enterprises are fuelling the demand for greater bandwidth, thereby supporting market growth.

National and pan-European government initiatives for electronic data transfer are also considerably boosting demand for greater storage capacity and extended LAN and will have a positive impact on market growth.

One of the drawbacks of Ethernet, however, is that, due to its origin in the LAN environment, it has limited protection mechanisms in the event of network disruptions. Hence, it will become crucial for metro Ethernet services to offer reliability and provide quality of service (QoS) throughout the network, similar to that of Frame Relay or ATM.

The metro Ethernet forum (MEF) certification conducted in 2005 and to be continued over 2006, as well as the expected standardisation of operation, administration and management functions will further boost the uptake of metro Ethernet services. Earlier deployments of metro Ethernet services have been hindered by the lack of standardised carrier-class Ethernet equipment and services. The MEF's efforts to bring the definition of carrier-class Ethernet to a common ground will assist in the rapid deployment of metro Ethernet networks.

Increasing competition and the migration of customers to more cost-effective, advanced Internet protocol services have affected the revenues of legacy connectivity services. Thus, it will become imperative for service providers to be aware of the risk of commoditisation of metro Ethernet in the current telecommunications environment. Carriers too, will need to create differentiation in their offerings based on performance, coverage area, pricing, ease of use and value-added services.

EMEA: Metro Ethernet Services Market Insight Publ 20060322