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Carrier Ethernet: the shape of things to come?

The potential for Carrier Ethernet looks good in India. Telcos have made inroads in IT/ITES, Oil & Gas and Media & Entertainment. By Venkatesh Ganesh

In early 2011, Kevin Vachon, COO of the Metro Ethernet Forum, was in Mumbai. He spoke of the growing role of Ethernet in the enterprise. He was underscoring the point that industry players are slowly waking up to which is that demand for high bandwidth, low latency and low cost networks is driving the growth of Ethernet services. Globally, according to a forecast by the Dell’Oro Group, the number of 10 GbE ports will reach 15.1 million in 2012 and revenue will grow to $5.1 billion that year. Moreover, 10 GbE is expected to contribute to about 25% of telco revenues by 2012. This bullishness on the Ethernet market is echoed by other research firms. Frost and Sullivan estimated that the Indian data services market, which was currently worth Rs. 6,660 crores would grow at a CAGR of 12% for the next five years. Since the rollout of 3G last Diwali, Indian telcos have largely hit the pause button with the 2G user base yet to make the switch to 3G for the greater part. Triple play services have not witnessed any significant uptake in India. At the same time with government push for initiatives such as building a National Knowledge Network to connect 1,500 institutions of higher learning and research by March 2012 and rural broadband connectivity to 2,50,000 panchayats in three years could fuel growth.

Different flavors

"Demand for more extensive Ethernet services is being fueled by bandwidth hungry applications." John Hoffman Head Ethernet Product Management, Tata Communications

India could account for 30% of the revenues accrued from Ethernet services globally, as per Dell'Oro. The mobile backhaul equipment market grew 10.3% in 2010 over the previous year, to $6.84 billion worldwide, according to Infonetics Research. As operators refresh their 2G networks and transition to 3G, they will start to adopt IP/Ethernet as the mobile backhaul solution in order to lower the costs of growing mobile data traffic, using IP as the base technology for 3G, LTE, and WiMAX networks. According to research by Frost and Sullivan's South Asia and Middle East, applications that enable enterprises to monitor and optimize their networks in real time using a single window to monitor network uptime, bandwidth usage, billing details etc. from a remote location are the kind of services that are being offered by carriers. Some telcos are also offering usage models and bandwidth on demand, which gives enterprises the flexibility to change their bandwidth pipes based on usage patterns. To draw a comparison, China has a modest level of enterprise Ethernet penetration and global corporations that have operations in China desire high-speed Ethernet connections. To accommodate them, global carriers are adding more mainland China gateway cities to their networks. In India, the last few months have seen some action from telcos who are rolling out Ethernet services to corporates operating in India—both Indian companies as well as MNCs.

In August, Tata Communications, rolled out its Next generation Ethernet (NGE) architecture across 11 Indian cities. These nodes will connect the carrier's domestic NGE network with its international backbone in Mumbai and Chennai. Carriers like Tata Communications expect robust demand despite a lukewarm uptake at present. “The market is seeking better and more extensive Ethernet services, demand for which is being fueled by bandwidth hungry applications,” pointed out John Hoffman, Head of Ethernet Product Management, Tata Communications.

Take the case of Aircel. Aircel has undertaken a WiMAX rollout for L&T’s DIAL project. Apart from that, it is working with mid-sized companies like Jindal Stainless Limited, East West Designs, MMTC and others. Recently, it entered into a partnership with Virtela to launch an application acceleration service to fuel the global expansion of Indian enterprises. To make the offering more compelling, this Cloud-based application acceleration service enables enterprises to make business applications run up to 25 times faster and leverages a per-hour pricing, which the company claims starts at Rs. 25 per hour.

Apart from this, Aircel has a Layer 3 MPLS VPN solution capable of transporting voice, video and data. One of India's leading integrated infrastructure finance players has gone ahead with this for a back-up MPLS network to run in parallel with its existing MPLS network for real time applications.

Bharti Airtel, the largest integrated private operator in India, offers mobile, fixed, broadband, media and leased line services. As a full-service operator, there is a requirement to realize the implementation of multiple servers in a Metropolitan Access Network. Different operators have unique approaches as far as the pace and extent of IP evolution goes. This is strongly dependent on service characteristics, level of L2/L3 features at base stations, radio spectrum availability and on the strategies around fixed-mobile convergence. Based on what is available to them, carriers take it to market.

Similarly, Aircel has done an implementation at an IT/ITES company, which had a need for a clear channel leased circuit between Pune and Colombo.

"Ethernet's flexibility in scaling up and its ability to support new technologies are its biggest draw." Nareshchandra Singh Principal Research Analyst, Gartner

Today’s applications require both flexible bandwidth and high availability to operate at peak performance levels. “Ethernet can scale easily to support new technologies as it can sit on top of existing investments and this allows a company to increase or decrease its bandwidth pipe as per its requirements. This flexibility is its biggest draw,” opined Nareshchandra Singh, Principal Research Analyst, Gartner.

"Existing protocols and equipment often take months of planning and deployment not to mention complexity, something that CIOs don’t have time for." Rajarshi Sengupta Executive Director, Deloitte & Touche Consulting India

“Existing protocols and equipment often take months of planning and deployment not to mention complexity, which is not something that a CIO has time for,” said Rajarshi Sengupta - Executive Director, Deloitte & Touche Consulting India.

Hybrid networks

Integrated extensively within LAN architectures, Ethernet can be a choice for metro area data transport as well as wide area interconnection, which would be a requirement for Indian companies as they expand their global footprint.

“Today, Indian enterprises are looking for hybrid solutions that include both dedicated and virtual connections and a key to provide global service is the ability to meet all customer needs with hybrid networks and solutions,” said Chung Sen, Product Marketing Manager APAC, Verizon Business.

While Indian telcos are rolling out their service offerings, international telcos like Verizon, France Telecom's Orange Business Services, Cable & Wireless, AT&T and others are entrenching themselves in the Indian market. They see continued demand from MNCs who either have a presence in India or want to outsource their networking needs to India. Also, with mobility within the workforce being a big thing at multinational companies with a plethora of devices (such as smartphones and tablets) entering their networks, Verizon Business is seeing increasing business. “Employees can work from virtually anywhere as long as they have the right tools and reliable, secure access to their corporate assets,” said Sen.

The convergence of voice, video and data is driving market demand for MPLS VPNs and customers can retain routing control of the network. This has led to adoption of Layer 2 Ethernet services for running secure applications like the ones that telcos are offering.

"MPLS supports a variety of Carrier Ethernet solutions. Service providers can offer a single Carrier Ethernet service at all network endpoints." Mahesh Gupta VP - Borderless Networks, Cisco India & SAARC

Another trend that is impacting the global workforce is the adoption of social networking within enterprises. “As organizations are starting to allow their employees to use social networking, enterprises need to take a hard look at the way that their existing networks are laid out,” opined Mahesh Gupta, Vice President, Borderless Networks, Cisco India & SAARC. Gupta drove home his point with the fact that when Cisco decided to allow its employees to bring in any device, it had to take a fresh look at its network.

"The first step, consists of converging fixed and mobile data services on to a converged metro platform." Sethumadhavan Srinivasan Director – Strategy & Marketing, Huawei Telecommunications India

As today's college kids enter the workforce, they have a different set of expectations and this could well end up driving the way that telecom networks are built or modernized. “So far, the network had some attributes and operators went to end users to sell or deliver services based on that. The service experience was limited to what the networks could deliver. Today, the change is about the service-driven network and the need to design networks that will deliver the service and end-user experience requirements,” said Sethumadhavan Srinivasan, Director - Strategy & Marketing, Huawei Telecommunications India.

These hybrid solutions are being considered by customers who have existing investments in technologies like MPLS. “We offer multi-service Ethernet access through the Integrated Access option to our international Ethernet link customers. This integrated access allows companies to optimize network access costs and complete their architecture with hybrid solutions," said Peter Martin, Global Head for Cloud Strategy at Orange Business Services.

The key challenge of service providers today is two-fold. Firstly to deliver multiple services on a carrier-grade IP infrastructure and secondly to achieve the convergence of fixed and mobile on a single network. “Integrated operators are looking at the first step, which consists of converging fixed and mobile data services on to a converged metro platform. Going forward, the same network needs to evolve towards full fixed-mobile convergence where real-time services such as voice will be emulated across this Carrier-grade Ethernet network using PWE-3 technology,” said Srinivasan. This approach provided the way for carriers to reduce the cost per transported bit by offering seamless multiple services on a single platform, he added.

Carriers haven't embraced Ethernet

According to Hoffman of Tata Communications, Ethernet is not being used for the backhaul by telcos at present. This, he asserted “With Ethernet, service providers can add new services without additional upgrade spends, which means faster introduction of new service offerings and quicker turnaround times,” said Sajan Paul, SE Director for Juniper Networks India.

“Some service providers have found that many earlier-generation Ethernet products failed to deliver the features their networks need. This has led to slower-than-expected adoption of Ethernet in service provider networks,” added Paul.

was a huge business opportunity for the company. According to industry watchers, telcos have not kept up with the advances in Ethernet and this can be seen by the fact that a year since the rollout of 3G, most operators are still busy upgrading their networks.

“With Ethernet, service providers can add new services without additional upgrade spends, which means faster introduction of new service offerings and quicker turnaround times,” said Sajan Paul, SE Director for Juniper Networks India.

“Some service providers have found that many earlier-generation Ethernet products failed to deliver the features their networks need. This has led to slower-than-expected adoption of Ethernet in service provider networks,” commented Paul.

“In India, transport technology has still not changed with 60-70% still being on DWDM, SDH and dark fiber. While the last mile is Ethernet, the rest is still shaping up,” he added.

Also, carriers insist that customers have concerns around guaranteed uptime, bandwidth utilization and fast response times around native Ethernet.

Telcos have built their traditional network infrastructure in such a way that each network was used for a different service. This framework cannot fulfill the requirement of additional services. The only feasible method is use a single network for all services. “With the Multi-Play era dawning, the Ethernet transport network will be riding on an all-IP enabled converged infrastructure, with the ability for Fixed and Mobile. This network will be based on an all-IP architecture, and will pave the way for fixed-mobile convergence,” averred Srinivasan of Huawei.

Looking ahead

While telcos are bullish about the next generation network rollouts, on the ground, things are going at a snail's pace. When asked about customers in India, Hoffman pointed out that from the time of its NGE network architecture launch, about five companies had evinced interest but they were yet to sign on the dotted line. Typically, this sort of rearchitecting takes a while before customers start adopting it.

Also, at a time when IT budgets are going down globally and in India, would companies consider undertaking complex rollouts? “This could be the best time for a company to take a look at its whole network keeping in mind the business climate and the inevitability of new ways of computing,” commented Gupta of Cisco.

“Since MPLS supports a variety of Carrier Ethernet solutions, service providers can design each solution to meet individual business requirements while providing a single Carrier Ethernet service at all network endpoints,” he added.

Tata Comms is going to market with its new Ethernet network core that carries only Ethernet traffic, unlike competitors who are building converged MPLS and VPLS-based networks to carry a mix of private, public IP traffic and Ethernet services. This, the company claims could be a pull for corporates since the costs involved with Ethernet have traditionally been lower.

This is why telcos and other network service providers are gung-ho about the Cloud. “With the Cloud starting to figure in the minds of CIOs, managed services will get a shot in the arm and, in the near future, we will see telcos roll out these services,” said Sengupta of Deloitte & Touche Consulting India.

Clean power, cooling, managed hosting and storage services can be moved up the value chain with the Cloud wherein SLAs that guarantees five nines uptime or a guaranteed response time of 100 milliseconds come into the picture. “In the Cloud world, speed is of essence and it is critical to fail quickly and re-invent rather than have long innovation cycles,” said Sengupta.

Moreover, in some instances, contact centers are co-located out of the premises or in some cases service providers manage it at the client's facility (due to regulatory issues). “Economies of scale and QoS will drive the adoption of data centers going ahead as enterprises figure out more ways to cut IT costs across the board,” felt Lt. Col. H.S. Bedi, Chairman and Managing Director, Tulip Telecom.

Content delivery as a service is yet another trend that could define the way that services are offered. “Services like Youtube or sudden spikes in network traffic on account of a sporting event cause a lot of headaches for telcos in terms of traffic management,” said Cisco's Gupta. This is where content delivery as a service would be handy. “We are betting on UC-as-a-service and see demand from MNCs who already have existing infrastructure investments,” said Martin of Orange Business Services.

In the final analysis, one thing needs to be kept in mind. While service providers claim that cost savings of 20-50% can be gained by choosing Carrier Ethernet over comparable WAN services, prices for long-haul connectivity haven't dropped as dramatically. Last-mile connectivity is still a significant cost, especially when facilities need to be brought in to support Carrier Ethernet at the point of presence in addition to laying fiber to the building. In such a backdrop, enterprises may not look to migrate from their existing networks to 10GbE due to the costs involved, said Singh of Gartner. This is where innovative pricing for services could play an important role and telcos are keeping their fingers crossed hoping that the Cloud will come to their rescue.

venkatesh.ganesh@expressindia.com