Ethernet Expo: Shop 'Till You Drop

(OCTOBER 13, 2005) NEW YORK - Ethernet Expo - Demand for Ethernet services may be on the rise, but it can still be tough to get those services - even in New York City.

At a carrier and enterprise roundtable session, here, some Big Apple users spun their tales of woe trying to get connected up. Part of the problem is that carriers just aren’t pounding the pavement, they said.

“We really tried to go out and find providers of Ethernet connectivity” without success, said Eliot Robinson, executive vice president with Sterling National Bank. “We haven’t found suppliers beating down our door.”

Sterling did manage to get its Ethernet services through sheer luck, discovering its 37th Street office shared a wall with a Cogent Communications Inc. (Amex: COI - message board) facility on 36th. That led to a Homer Simpson-like scheme of breaking through the wall to hook up to Cogent.

Then, of course, Sterling moved (d’oh!!!) to a downtown home with Cogent nowhere nearby. Con Edison Communications Inc. (NYSE: ED - message board) happened to have connected fiber to Sterling’s new building and thus became Sterling’s new Ethernet provider - but Robinson said his company is always shopping for a better deal.

“Our demand for bandwidth is based on price. If we can find better bandwidth we buy it,” Robinson said.

J. Stuart Heath, director of IT for Muze Inc., managed to hook up with WilTel Communications LLC’s Ethernet service through his own legwork. “So far, the salesmen haven’t called me to say they provide Ethernet services,” he said. “I was lucky enough to come across WilTel when I was looking for a new phone system.”

Even Light Reading CEO Steven Saunders, who moderated the session, related his “absolutely hopeless” attempt to buy service from the former Yipes Communications. “A hundred and eight buildings, multiple rings, none of them near the Light Reading office,” Saunders said.

(Yipes’ assets were bought out of bankruptcy by Yipes Enterprise Services Inc. in 2002, and some of Yipes’ markets were sold to Expedient. See Yipes Reborn - Amid Accusations and Yipes Finds Expedient Partnership.)

Robinson said it was just as tough finding a VOIP service to his liking. Carriers weren’t willing to terminate SIP for an enterprise. Moreover, he wanted VOIP that traversed the public Internet, as opposed to private Ethernet links, because he reckoned it would be cheaper.

“It was hard to find anybody who wanted to do it, because - look at Verizon. Why would they want to lose that business?” Robinson told Light Reading.

Many VOIP services are transmitted over private Ethernet links, but Robinson sought out service that traverses the public Internet - it’s cheaper, and he reports that the performance has been fantastic. “It’s going to be the way to go, because otherwise you’re going to have to pay for another local loop or pay to be in a carrier hotel.”

The happy ending is that Sterling’s monthly phone bill has fallen to $500-600, down from $2,000, Robinson estimated.

In part, Muze and Sterling’s problems could have been solved if carriers did more marketing. But how about just connecting up all these New York buildings? It’s not so easy, the carriers said.

Wireless connectivity to a building is one option, but the costs - securing roof rights and wiring the building’s interior, for example - turn wireless into a losing proposition, said Mark McGinness, vice president of business development for Expedient. For that reason, Expedient would prefer to connect to buildings via dark fiber where it’s available, he said.

An even better scenario is to collocate with an RBOC, he noted. That way, Expedient preserves its investment should the customer in question defect to another carrier. “Do I want to spend $10,000 or $20,000 to get at 50 customers that might want to buy from me? Or do I want to spend that $10,000 to $20,000 in an RBOC center to get to maybe 10,000 customers?” McGinness asked.

Panelists were in harmony on the future of Ethernet services, though, as carrier and enterprise representatives agreed the industry is on the cusp of seeing bandwidth demand and Ethernet demand blossom.

Muze supplies “meta data,” information relating to CD or video titles; retailers can then draw from Muze to flesh out their Web sites rather than enter all that data themselves. Heath envisions Muze expanding that service to include streaming media and, further out, content aimed at wireless devices.

For Robinson at Sterling, bandwidth simply brings immediacy. “Customers as well as employees want instantaneous responses,” he said. “From that standpoint, we will buy faster and faster data networks, assuming they’re not terribly expensive.”

“People ask about the killer app for Ethernet. There isn’t one. It’s going to be the collection of all of them,” said Craig Drinkhall, vice president of product development for TelCove.

That belief in Ethernet - and in bandwidth growth - is behind Telenor’s (Nasdaq: TELN - message board) recently announced plan to go all-in with an all-IP infrastructure by 2010. Vice president Sten Nordell outlined two factors that make the idea fly: There’s no aggregation layer in the network, and no legacy services will get migrated to the new network. To the second point, Telenor plans to swap out legacy services with Ethernet/IP equivalents. (See Telenor to Unveil All IP Plan and Aggregation Aggravation.)

Media Contact:

Craig Matsumoto Senior Editor 2005, Light Reading