Imagine the home of the future. Each house and business in Australia will have fast, immediate and interactive access to the Internet, video conferencing, television, games, music and a host of other services. Everyone will be connected.
What will make this happen? Some say Public Ethernet.
Rapid growth is being forecast for so-called 'Public Ethernet services' with revenue reaching more than $1 billion this year and increasing to more than US$4 billion by 2005, according to Dataquest. "Public Ethernet is gaining popularity from its low cost, simplicity and the widespread comfort commercial customers already have with Ethernet in the LAN, where it has long been the dominant technology," says Steve Koppman, senior analyst for Gartner Dataquest's Worldwide Public Network Services program.
Ethernet is becoming the common denominator across many types of networking services and solutions, according to Danny Ng, Director of Intelligent Internet, Nortel Networks. He says, "While data services are typically delivered through ethernet today, there exists a high level of interest in exploiting the high bandwidth and capabilities of the ethernet and VPN technology to support voice and multimedia services."
Public Ethernet refers to any public network service that extends ethernet beyond the local area network (LAN). It is rapidly being viewed as the most cost-effective and adaptable technology for the deployment of broadband services to the community. But there are considerable drawbacks in terms of cost and scalability. According to independent telecommunications analyst, Paul Budde, "It will bring network costs down by 60 per cent, but deployment is capital intensive and problems with scalability and quality of service need to be sorted out."
"Looking forward, there are many factors to consider in building an ethernet-based carrier access network, including fibre availability, application and user traffic differentiation, scalability and availability," says Ng.
Public Ethernet is a lower cost per higher bandwidth solution than existing layer 2 offerings such as Leased Lines, ATM and Frame Relay. It is ubiquitous, and it is a more natural interface to the end customer. Simon Newstead, Systems Engineering Manager, Australia and New Zealand for Juniper Networks, comments, "Delivering a native ethernet interface directly to the end customer helps reduce costs, as the enterprise no longer has a requirement to purchase and maintain expensive WAN routers with ATM and FR interfaces. They can connect via ethernet, either through a CPE router or directly from a switch or hub. It also helps cut down operational expenses, removing an additional layer of technology from the service."
There are two key components in the carrier infrastructure to support Public Ethernet services. The first is the ethernet access layer itself, which typically uses ethernet over dark fibre out to customer buildings, either using ring or point-point technology. This layer of the network has to be very simple, with high bandwidth and a low cost per port, and can be built using ethernet switches operating at layer 2.
The other critical component is the edge services layer, which aggregates and manages all user traffic back at the carrier's central office exchange from the ethernet access layer and interfaces into the network core.
This edge services layer provides all the intelligence to define and manage the individual services and is also the point at which value-added services such as QoS, layer 2 and 3 VPNs, security, content control and customised portal control are delivered. Without the edge services layer, Public Ethernet services can be relegated into basic IP connectivity services only, with little opportunity for product differentiation or value add.
He continues, "New carrier ethernet networks can also make use of new layer 2 over MPLS technology including draft-martini and draft-kompella, enabling new layer 2 VLAN services, as well as the continued delivery of existing layer 2 services like Frame Relay and ATM - however, over an MPLS/ethernet carrier network."
"This helps carriers consolidate their core spending on new IP/MPLS router platforms rather than existing ATM and FR switches. For example, TelstraClear in New Zealand is rolling out both layer 3 and layer 2 VPN services over MPLS on their Speedway Metro ethernet network using draft-martini technology."
But the technology is not the main issue. The biggest challenge for the market is the development of successful business models and value propositions that will drive the evolution and deployment of Public Ethernet.
Overseas, in countries like Sweden and the Netherlands, the development of broadband infrastructure and Public Ethernet has been heavily sponsored by national and regional governments. Budde states, "Government support is essential as a nationwide network cannot be built without its assistance. In Australia, heavy lobbying is taking place in the face of the privatisation of Telstra, where the Federal Government is being asked to invest $5 billion to cover the economically unviable areas."Globally, carriers have already successfully deployed ethernet-based networks. "These services have enabled customers to build reliable LAN infrastructures across Canada with no compromise in LAN bandwidth of 10 Mbps to 1 Gbps. The customer continues to benefit from the simplicity of ethernet even when the connectivity is delivery over distances well beyond individual LANs," Ng says.
In Asia Pacific, carriers such as China Telecom (PRC), China Unicom (PRC), KDDI (Japan) and United Networks (New Zealand) offer a wide range of services delivered via ethernet. These services include VPN, high speed Internet access and data centre connectivity. Korea Telecom has benefited greatly in past years from government subsidies in rolling out the world's largest broadband network with millions of users in a short time period.
Gordon Vick, Regional Sales Director, Australia, New Zealand and South Asia for Foundry Networks, believes that one of the biggest issues influencing the roll-out of the Public Ethernet is the metropolitan area network (MAN) - the traffic intersection of the LAN and WAN and the natural home for much of the world's bandwidth and next-generation network services.
Vick comments, "Data traffic is increasing at unprecedented rates throughout the world, nowhere more so than in the MAN. The advent of high-speed LANs, broadband consumer access, inexpensive video conferencing, Voice over IP (VoIP) and other high-bandwidth applications and services has put tremendous pressure on metro network infrastructures. The bandwidth and technology sophistication in the MAN will have to increase in order to meet the demand."
Public Ethernet offers a very high bandwidth access technology, enabling a range of new broadband applications and services. According to Newstead, "The increased speed and bandwidth from carrier delivered Public Ethernet services will also help drive the growth of the application server provider market for new hosted applications, including outsourced storage, virtual file servers and security services."
"In addition to the new revenue opportunities Public Ethernet offers in terms of new broadband applications and content, it also has the potential to migrate much of the existing business on Frame Relay/ATM and leased lines at a reduced cost. For this competitive reason, telcos can't really afford not to roll out this technology," says Newstead.
Rolling out Public Ethernet while using Layer 2 over MPLS technology such as draft-martini and draft-kompella means telcos can still offer legacy services like Frame Relay while consolidating spending on a new IP/MPLS packet infrastructure.
The focus needs to be on adding value to the basic offering to bring in additional revenue to help drive these services into increased profitability, rather than viewing broadband services as just increased bandwidth. Newstead comments, "This will be the model that will allow broadband providers, be they using DSL, cable, fibre or wireless access, to win in the long term and make broadband roll-outs a real success."
"Much of the industry and market hype during the past year or so regarding ethernet-based network costs is false," comments Budde. "Ethernet-based networks are not 1/10 to 1/15 the cost of traditional networks. The capital cost for ethernet-based networks is approximately 50 to 60 per cent less than traditional networks. These are, however, significant savings."
Ethernet-based technologies are making their debut in the access and metro networks today. "As this technology alternative matures and its standards evolve, ethernet-based technologies should begin to take centre stage," observes Budde.
An IDC study indicates that the number of metro ethernet subscribers in Asia Pacific (excluding Japan) is expected to grow from 280,000 in 2001 to 9.3 million in 2006.
In 2001, subscribers across the region contributed $395 million to the metro ethernet market and this is expected to reach $19 billion in four years. China, Hong Kong, South Korea and Taiwan are leading the push, with South Korea, not surprisingly, emerging as the clear leader of the pack. In size, however, China will dominate the subscriber market.
In China, services to residential areas start from $13 per month for a 2 Megabits per second connection, as opposed to $18 for ADSL, while companies pay $140 a month, $15 cheaper than the ADSL equivalent, Gamble added. Uptake of metro ethernet services will also be boosted by the high population density in Chinese cities and the vast deployment of this technology to home users. Critical mass will be found in the residential market where competitive pricing against ADSL services will position the market for tremendous growth.
