The pace of overall growth in ports has slowed as markets have matured, and while carriers remain committed to deploying it as a key technology to support their services, a next stage of development is rolling into view.
“This huge market is undergoing an exciting transformation, moving from static connectivity to agile, dynamic, assured and orchestrated services that are delivered over more automated, virtualised and interconnected networks,” says Stan Hubbard, director of communications and research at industry consortium the MEF.
This, then, seems to be the picture for the foreseeable future, backed up by the recent actions of carriers to work towards new standards. In early 2017, the MEF and TM Forum announced a collaboration with an array of major service providers to standardise APIs for orchestrating Carrier Ethernet and other connectivity services across multiple networks worldwide – a big step towards the MEF’s so-called Third Network vision.
All this comes after the adoption of Carrier Ethernet 2.0 by many carriers in recent years, viewed as a foundation for future innovation. The MEF reports that about 95 service providers from 28 countries now offer CE 2.0-certified services, with adoption having spread worldwide, including in emerging markets.
Today, believes Hubbard, the most innovative players for the next stages are those focusing on the delivery of on-demand Carrier Ethernet services, NFV-based services and hybrid offerings that include SD-WAN managed service options.
“This is driving greater adoption and increasingly allowing carriers to buy wholesale services from each other to reach endpoints with end-to-end Ethernet services for their customers,” says Jim Daugherty, assistant vice president, product management for enterprise network services at AT&T.
Daugherty adds that he still sees strong demand for customers wanting to move from TDM-based services and growth driven by new applications. “Some of the migration is to broadband internet, but Ethernet has continued to capture a consistent portion.”
Technology outlook
Some say that growing technologies such as SD-WAN could dent the growth of Ethernet services in competition with them. But the picture is not straightforward because these technologies can conversely work in tandem too.
“Ethernet faces indirect competition from other techn – like SD-WAN, MPLS and dark fibre – in certain use cases,” says Rick Malone, a principal analyst at Vertical Systems Group. “However, because each of these interoperates with Ethernet, they are more likely to be complementary than competitive.”
“Even if business customers are migrating to SD-WAN with the option of internet-based access, Carrier Ethernet is still used for premium access with high bandwidth and high availability,” adds Erik Uchytil of the product management data department at Telekom Austria Group. “Carrier Ethernet is also used for other products like direct internet access, and in the wholesale sector as the underlying network technology for other carriers expanding their MPLS networks.”
So rather than just pure physical deployments of Carrier Ethernet, providers are set to focus on how things are built on top and how the services enabled by the technology are consumed going forward. Even so, carriers say there is still plenty of room for growth in roll-outs too.
Malone says the market in the US and other early-adopting countries is still seeing double-digit growth per year, even though, for example, the rise in retail ports in the US has slowed from the “market ramp” years of over 30% annual growth between 2006 and 2015. This has occurred as many large enterprises have completed the move from legacy services to Ethernet for corporate networking and cloud connectivity.
Malone also points out that some other markets are ramping up at much higher growth rates and that carriers continue to expand to unserved regions. “Globally, there are several untapped markets that do not currently have the infrastructure to support high-speed services,” he says. “As these areas are developed, Carrier Ethernet will be a technology of choice for high-speed networking.”
Global focus
One carrier seeing opportunity in expanding its Carrier Ethernet platform internationally is Level 3, which ranks among the top few carriers both globally and in the US in terms of port volumes, according to Vertical Systems Group data.
Carrier Ethernet is something on which Level 3 has placed “a very big bet”, says Chris McReynolds, VP of core network services at the company. This has been boosted by the company’s 2014 acquisition of tw telecom, which McReynolds says was already fairly advanced in Ethernet services.
Over the last 18 months, Level 3 has launched new dynamic Carrier Ethernet services based on 2.0 standards in Europe and Asia-Pacific, in a move towards delivering a single, ubiquitous Ethernet platform to enable consistency across its global network – giving the technology fresh growth prospects in these regions. A later aim is to bring the company’s Latin American footprint up to speed too.
Side by side with consistency in its own network, McReynolds says that as more global carriers adopt new standards, it becomes easier to coordinate and automate Carrier Ethernet from a wholesale perspective because services then work like people expect. He believes the push towards standards for orchestration is shifting things in the right direction for the future, but there is still a way to go to get everything working together between carriers. “There’ll be growing pains, but you have to go through those to get to the end place,” he says.
Greater agility
Henry Bohannon, director of data and broadband products at BT Wholesale, also says the future of Carrier Ethernet is in more agile networking, making use of technologies such as SDN and NFV to allow more dynamic services – allowing customers to provide more integrated solutions to end-users. The company has also just started trialling Ethernet access over 4G mobile, which Bohannon says is a “new innovation” that is set to give customers more choice of access.
“As we evolve, I would see greater integration between Ethernet and the data centre world, to allow dynamic capabilities, but also to optimise the network in terms of getting the best latency and performance – particularly as we move towards 5G networks,” says Bohannon.
One of the things to bear in mind for BT Wholesale, he says, is the need with the next phase of services to accommodate and coordinate between both its larger customers and smaller resellers, which will want to consume services in different ways.
Meanwhile, for PCCW Global, Carrier Ethernet remains a “fundamental building block” of the company’s portfolio, says Shahar Steiff, AVP of new technology. Its value among today’s technologies, he says, is that Carrier Ethernet offers a unique mix of manageability and agility.
Says Steiff.“With the move towards managed services and bundled services, Carrier Ethernet will gradually evolve from a connectivity service being delivered independently into a building block in a more complex structure,” he adds.
Greg Harris, a senior manager at Verizon Partner Solutions stresses the need for innovation for carriers to realise the promise of future dynamic carrier Ethernet services.
Harris explains: “In the coming years, those providers that can leverage Carrier Ethernet as the foundation with a solid SDN and NFV implementation will reap the rewards of new service revenues at reduced cost points.”
Time to make a move
Going forward, many carriers believe that the new proposed standards could lead to new opportunities for themselves and customers. “There are tremendous customer experience benefits and operational efficiencies for carriers with these new Third Network capabilities and services,” says Parimi Satya, general VP for spectrum data at Spectrum Enterprise.
And the MEF’s Hubbard describes the future of the market as “incredibly promising”, but stresses that providers will also need to be nimble in both their strategies and investments to take advantage of the opportunities.
He says the players to watch in the next chapters of the Carrier Ethernet story will be those involved in developing and implementing a wide range of inter-provider LSO APIs. “These providers essentially will form the core of a global ecosystem of service providers who are able to orchestrate on-demand services across each other’s networks.”
