High-Speed Ethernet Services: Channel Opportunities and Challenges

Transcription

1 IT TELECOM January 2013 US$39.00 S P E C I A L R E P O R T High-Speed Ethernet Services: Channel Opportunities and Challenges By Kelly Teal, Senior Editor, Channel Partners COMMUNICATIONS

2 Table of Contents Introduction... 3 Market Demand... 4 Ethernet Services Types for Enterprises... 5 Applications for High-Speed Ethernet... 7 Wide Area Networking Cloud Data Storage Replication and Networking Business Continuity/Disaster Recovery Suppliers... 9 Partner Sales Opportunities Gaming Houses of Worship Real Estate Public Transit Oil, Gas and Energy Health Care Finance Other Ethernet s Ongoing Challenges Conclusion About The Research The Author Channel Partners Copyright 2013 VIRGO Publishing, LLC, and CompTIA, Inc. All rights reserved. The publisher reserves the right to accept or reject any advertising or editorial material. Advertisers, and/or their agents, assume the responsibility for all content of published advertisements and assume responsibility for any claims against the publisher based on the advertisement. Editorial contributors assume responsibility for their published works and assume responsibility for any claims against the publisher based on the published work. Editorial content may not necessarily reflect the views of the publisher. Materials contained on this site may not be reproduced, modified, distributed, republished or hosted (either directly or by linking) without our prior written permission. You may not alter or remove any trademark, copyright or other notice from copies of content. You may, however, download material from the site (one machine readable copy and one print copy per page) for your personal, noncommercial use only. We reserve all rights in and title to all material downloaded. Channel Partners High-Speed Ethernet Services: Channel Opportunities and Challenges 2 channelpartnersonline.com

3 Introduction Ethernet, born as a LAN technology and since extended into the WAN, instantly connects users on the same network and transports VoIP, video and applications in real time while providing traffic prioritization. Thanks to economies of scale, Ethernet also is cheaper than its TDM counterparts. As such, high-speed Ethernet services, considered here as 100MBps-100GBps, are growing in popularity among SMBs and enterprises, as their capabilities and pricing position them as viable alternatives to T1s and DS3s. And thanks to growing demand, service providers are building more fiber or adding capabilities to their copper plants to support Ethernet. (Not all telecom and cable providers have reached the 100MBps threshold yet. When it comes to EoC specifically, some operators top out at 45MBps and 88MBps while others have hit 100MBps.) The result of this ongoing expansion over the past several years is that more providers have interconnected or added on to their networks, eliminating geography as one of Ethernet s earlier limitations. Ethernet is less expensive than traditional transport; suppliers can deliver more bandwidth, for less money, via Ethernet over fiber or copper than they can over T1s or DS3s. Some of Ethernet s other benefits include scalability (organizations may add or subtract bandwidth without buying new premises-based equipment), reliability and ease of use. Those factors all have become more attractive to channel partners customers as video and voice applications, along with cloud computing and services, fuel the need for connectivity among customer locations and data centers that handle functions including storage and replication. Ethernet also offers fast bandwidth for business continuity/disaster recovery, a critical component in the age of superstorms, terrorism, and other natural and man-made disasters. More providers have interconnected or added on to their networks, eliminating geography as one of Ethernet s earlier limitations. Channel Partners High-Speed Ethernet Services: Channel Opportunities and Challenges 3 channelpartnersonline.com

4 Market Demand Insight Research in July 2012 forecast total public Ethernet revenue to surpass $11 billion in 2017, representing a compound annual growth rate of 17 percent. A November 2012 report from IDC put the number at $9.2 billion in 2016, up from $5.2 billion in Much of the demand will be for 100 megabit, gigabit and 10 gigabit Ethernet speeds as enterprises use VoIP, storage networking and cloud services, IDC said. Vertical Systems Group recently reached similar conclusions. The firm s research clearly indicates rising demand for Ethernet access focused on connectivity to private clouds for data center hosting, said Rick Malone, principal at Vertical Systems Group, in August Similarly, worldwide, legacy bandwidth growth has flattened while Ethernet mounts at a healthy double-digit pace, said Vertical Systems Rosemary Cochran in October Enterprises throughout the world are stepping up the migration of their legacy network applications to Ethernet, driven by increasing availability of Ethernet services, lower bandwidth costs and more flexible bandwidth scalability. Figure 1-1 Total US Public Ethernet Revenues, ($Millions) $12,000 - $10,000 - $Millions $8,000 - $6,000 - $4,000 - $2,000 - $ Source: Insight Research Corp., July 2012 Channel Partners High-Speed Ethernet Services: Channel Opportunities and Challenges 4 channelpartnersonline.com

5 Ethernet Service Types for Enterprises Ethernet connects either one site to another, or any site to any. The architecture determines which service type, E-LAN or E-Line, is best for an enterprise. Also, deploying Ethernet equipment with optical, rather than electrical, ports sets up the customer for easy scalability as bandwidth needs increase. SERVICE TYPE CONNECTIVITY TYPE BEST FOR E-LAN Multipoint-to-Multipoint Multipoint, Layer 2 VPNs Transparent LAN Service Multisite connectivity with many locations in a metro area requiring a high degree of intersite connectivity E-Line Point-to-Point Ethernet Private Line (replaces TDM private line) Virtual Private Line (replaces Frame Relay or ATM services) Ethernet Internet access Data center, interconnect and site-to-site VPNs, or site-to-cloud Applications such as cloud computing, SaaS, or connectivity to an MPLS backbone network Source: Metro Ethernet Forum Channel Partners High-Speed Ethernet Services: Channel Opportunities and Challenges 5 channelpartnersonline.com

6 Source: Metro Ethernet Forum Another popular use for Ethernet is Virtual Private LAN Service. VPLS is a class of VPN that supports the connection of multiple sites over a managed IP/MPLS network, but with an Ethernet interface to customers. This blended Layer 2/3 VPN simplifies the boundary between the LAN and the WAN (i.e., the customer and service provider domains), so that all services in a VPLS appear to be on the same LAN regardless of location. This gives customers more control over their networks without having to involve the service provider. (Note: PE is provider-edge device and CE is customer-edge device) Source: Cisco Systems Inc. Channel Partners High-Speed Ethernet Services: Channel Opportunities and Challenges 6 channelpartnersonline.com

7 Ethernet Applications Ethernet was built to connect multilocation organizations. When it comes to tying together sites across any geography, Ethernet, with its low latency, high bandwidth and reliability, proves the best access method, especially considering its price compared to legacy technologies ATM, frame relay and T1s, for example. The low latency stems from the use of switches, not routers, which is a key reason why Ethernet can be preferable to router-based protocols such as MPLS and VPN. In settings where milliseconds are crucial, Ethernet wins. Ethernet also stands out for its ability to handle businesses skyrocketing speed and bandwidth requirements for less money than other access methods. Because it provides more bandwidth at less cost, carriers can sell Ethernet cheaper than T1s. For example, a T1 delivering 1.5MBps costs around $300 per month, while 2MBps Ethernet hovers around $200. Such pricing appeals to small, medium and large businesses using bandwidth-intensive apps such as video, IP-based voice and softwareas-a-service (SaaS), and needing virtual extensions of the LAN in the form of infrastructure-as-a-service (IaaS). Ethernet provides not only the scalable pipes to accommodate those technologies but also the quality of service. To that point, here are some of the applications for which Ethernet is ideal: Wide area networking. Channel partners are constructing larger, more complex deals for multisite companies that want to get rid of old networking technologies and outfit their firms with MPLS. And now that most Ethernet suppliers interconnect, this is more easily accomplished, and at lower costs than traditional WAN methods. Most of the demand is coming from organizations with sites. Cloud. Thanks to Ethernet, small organizations can take as much advantage of costeffective cloud services as their large peers. It used to be that very high-bandwidth apps were the domain of large firms with equally large IT budgets. But Ethernet s low cost has opened cloud-based computing to more users. For all cloud services, Ethernet assures quality and class of service. Data storage replication and networking. The more apps an organization keeps in the cloud, the more it needs storage replication and networking. Backup is performed off-site so that all files are not at risk of loss from a flood or fire, for example. Ethernet s speed means the replication and backups are done in seconds or minutes, rather than hours. And when an IT manager knows employees are going to be using more data such as video during a scheduled backup, he or she can request more bandwidth to ensure the backup runs smoothly alongside regular work activities. Business continuity/disaster recovery. Similar to data storage replication and networking, the speed and consistency of Ethernet mean it is well-suited for business continuity and disaster recovery. Many organizations use Ethernet as a secondary network for this purpose so that in the case of a disaster, failover takes milliseconds In settings where milliseconds are crucial, Ethernet wins. Channel Partners High-Speed Ethernet Services: Channel Opportunities and Challenges 7 channelpartnersonline.com

8 and data remain intact. Users also do not notice the change. Ethernet s speed further means that companies can perform active sync backups of their data to maintain business operations throughout the day. Historically, companies backed up data once per day, usually at night. But with active sync, if a disaster occurs at, say, 2 p.m., the day s work is not lost because it has been continuously backed up. Channel Partners High-Speed Ethernet Services: Channel Opportunities and Challenges 8 channelpartnersonline.com

9 Suppliers From ILECs and CLECs to cable operators and resellers, partners have a range of choices for obtaining 100MBps-100GBps Ethernet. A number of master agencies also sell Ethernet options from these suppliers so their agents and VARs can mix and match the best services for their customers. In mid-2012, Vertical Systems Group pegged AT&T and Verizon as the top two providers of business Ethernet in the United States, based on port share. The two ILECs were followed by tw telecom, CenturyLink, Cox, XO, Time Warner Cable Business Class and Level 3 Communications. Here are some examples of who provisions high-speed Ethernet for businesses in the United States: ILECs, such as CenturyLink, Verizon and AT&T LECs, such as Windstream, MegaPath, XO, tw telecom and Integra Telecom Cable operators, such as Comcast, Optimum Business, Time Warner Cable Business Class and Charter Business Resellers, such as AireSpring, Bandwidth.com and NetWolves Specialty providers such as Wolfe, Cogent Communications, Zayo Group and US Signal Channel Partners High-Speed Ethernet Services: Channel Opportunities and Challenges 9 channelpartnersonline.com

10 Partner Opportunities for High-Speed Ethernet Services Given the demand for high-speed Ethernet services, channel partners will want to know more about the best customer profiles to target. The opportunities abound, particularly for agents and VARs who see beyond an organization s employee roster size. Remember this: Bandwidth use, not the number of people, determines the best prospects. Here are specific markets that rely on Ethernet: Gaming. When you consider what it takes to run a casino, it makes sense to use Ethernet as the underlying network. Some casinos even use three or four carriers so they have diverse routes. Why? The high-bandwidth connectivity powers and secures networked applications galore, from slot machines and table games to hotel reservation platforms and surveillance systems. Houses of worship. The religious community has emerged as one of the heaviest users of data and video. Many churches broadcast sermons and events over the Internet and have state-of-the-art audio/visual systems in their sanctuaries. They also use projectors that, connected via Ethernet, display the same information across locations. Real estate. The real estate market remains a tough one so agents and brokers are making the most of modern technology to sell houses and commercial space. Scan a QR code with your smartphone, for example, and you can take a video tour of a home. The ability to run fast Internet apps comes down to Ethernet. Public transit. Bus operators, rail lines and trucking companies all are looking at Ethernet. Buses, for instance, need video recorded over a fast connection for surveillance. Rail lines require cargo tracking and up-to-the-minute weather conditions. And trucks need fleet management to monitor drivers locations, speeds and idle times. Ethernet enables all of those capabilities. Oil, gas and energy. Remote monitoring of pipelines and meters has grown in popularity with the spread of broadband networks. That s because with Ethernet connectivity oil and gas companies and utilities can manage machines from a computer or mobile device. This saves resources; for the most part, employees no longer have to oversee meters in person, which cuts down on truck rolls and man hours. Health care. Here s a no-brainer for Ethernet. Hospitals, doctors offices and other medical facilities need to connect multiple locations, quickly and securely, in the era of electronic medical records (EMRs), telemedicine and stringent government privacy Bandwidth use, not the number of people, determines the best Ethernet prospects. Channel Partners High-Speed Ethernet Services: Channel Opportunities and Challenges 10 channelpartnersonline.com

11 regulations. They also tend to have tight IT budgets. Ethernet comes to the rescue with its ability to move large files such as X-rays in real time at less cost than its legacy peers. Finance. Banks and trading desks stand out as two groups in the financial sector that need Ethernet. As with health care, Ethernet fits these users needs thanks to its affordable multilocation connectivity. Banks and traders also require security and speed, both of which Ethernet offers. Ethernet serves the same needs within other important markets, including hospitality, government, education, and legal, engineering and architectural firms. Channel Partners High-Speed Ethernet Services: Channel Opportunities and Challenges 11 channelpartnersonline.com

12 Ethernet s Ongoing Challenges Once upon a time, the greatest inhibitor to Ethernet adoption was availability. Not every provider reached all areas; in other words, one supplier may have had Ethernet in Los Angeles but not in Chicago, making multilocation connectivity difficult. These days, many, if not most, Ethernet carriers have wholesale agreements with one another, making coverage close to ubiquitous. This shift is good for the industry. Increased interconnection facilitates expanded service availability and therefore more competition, thus more choices, better features and lower prices over time, according to a July 2012 Insight Research Corp. report. Despite that progress, expect to encounter some other challenges with Ethernet. Availability. While Ethernet is prevalent throughout metro areas, there are some places think business parks that lack fiber because digging trenches and installing feeds is expensive and time-consuming. And when providers do not have assurance that someone will use the fiber, they may remain unwilling to invest in it. There are options to fiber-based Ethernet, of course. Companies leasing in business parks can use Ethernet over copper that is, if the last mile to the business park still is copper. In recent years, the ILECs have done away with a number of copper loops and replaced them with fiber. Speed. Not all pipes can handle GigE speeds yet. But more providers are deploying equipment that bulks up their networks with more bandwidth. Quoting and Delays. There are few automated platforms that give up-to-date information to partners seeking availability and pricing. For the most part, agents and VARs must request manual quotes from carriers. This eats up time and causes frustration among end users hoping for fast deployments. As it is, days is standard for a new Ethernet sale. Pricing. Expect little pricing uniformity among providers. Pricing levels will continue to be all over the map, varying wildly by competitive intensity even by individual downtown building, and by a broad range of factors that often seem to make it hard to form realistic pricing expectations, Insight Research analysts wrote. While Ethernet is prevalent throughout metro areas, there are some places... that still lack fiber. Channel Partners High-Speed Ethernet Services: Channel Opportunities and Challenges 12 channelpartnersonline.com

13 Conclusion While the higher Ethernet speeds (40GBps-100GBps) have yet to become ubiquitous due to hardware costs, that will change by 2017, according to Insight Research. More organizations will take advantage of Ethernet s bandwidth and pricing as they continue to put their infrastructure and applications into the cloud. Ethernet is used by virtually all businesses... for virtually everything touching the information economy and personal communications, Insight Research analysts wrote in July For channel partners, the continuing shift means keeping abreast of client needs, oversight that translates into revenue and profit. After all, so many organizations are looking to third-party exp REVIEW LINK You are invited to review the document 01_13CHAP_Report_HighSpeedEthernet_4_ review.pdf located at: <\\vp-art-01\dosfiles\editorial PDF Proofs\CHAP\01_13CHAP_ Report_HighSpeedEthernet_4_review.pdf> erts to serve as their IT and telecom staff. And given that public Ethernet revenue in the United States alone is projected to top $11 billion in 2017, according to Insight, it only makes sense to master the service s capabilities. Channel Partners High-Speed Ethernet Services: Channel Opportunities and Challenges 13 channelpartnersonline.com

14 About The Research The High-Speed Ethernet Services report is based on interviews with master agents and channel-centric competitive service providers and cable operators, as well as secondary research. The Author Kelly Teal is senior editor of Channel Partners magazine, which is part of VIRGO s Communications Network. Teal has worked for VIRGO since October She has held her current role since December Previously, she was business and regulatory editor. Teal has worked as a journalist including as a reporter for The Associated Press and a local NPR affiliate for more than a decade. She holds a bachelor s degree in liberal studies from Northern Arizona University. Channel Partners For more than two decades, Channel Partners has been the leader in providing news and analysis to indirect sales channels serving the communications industry. It is the unrivaled resource for resellers, aggregators, agents, brokers, VARs, systems integrators, interconnects and dealers that provide network-based communications and computing services, associated CPE and applications as well as managed and professional services. Channel Partners is the official media of the Channel Partners Conference & Expo ( Channel Partners High-Speed Ethernet Services: Channel Opportunities and Challenges 14 channelpartnersonline.com