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Medium-sized businesses are just now moving in a major way from
to Carrier Ethernet services despite their availability for over a decade. On the demand side, the need for high-speed, high-quality, and reliable connectivity with a relief from T1 line cost is just emerging in this market segment, while on the supply side, service providers are finally overcoming tough technical obstacles to service delivery.
Whether standalone entities or branch offices of large enterprises, medium-sized business establishments have been the neglected stepsisters of the telecom services market. Residential broadband has benefited from massive investment and promotional programs by incumbent MSOs and telcos that see broadband as a means of restructuring their businesses to be data-centric. Small businesses – up to 20 employees – have somewhat comparable access to business-grade broadband. Large enterprise sites also have long been a high priority for incumbent telcos which preempted competition by building fiber optic access facilities into major office buildings, hospitals, and government facilities. In contrast, medium-sized business sites typically have one or two T1 lines (1.5 Mbps to 3.0 Mbps) that are shared among 30 to 100 employees. Furthermore, T1 line costs run to hundreds of dollars per month.
Medium businesses' bandwidth requirements, however, can no longer be satisfied by a few T1 lines. High-speed and high-quality data services are now a business essential. Advertising and marketing have moved from print and broadcast media to the web. Sales and distribution services also are web-based and moving toward cloud solutions such as Salesforce and Amazon (
), Facebook, and Wikipedia that originated as consumer services are now widely used in the workplace. Collaboration tools such as Skype, Webex and GoToMeeting have helped to virtualize the workplace.
Required data rates for medium businesses also have climbed beyond T1 line capacity with the increase in the importance of data communications. Video is a primary driver of the increased bandwidth requirement. It is essential to the virtualized workplace business model and permeates other network applications as well. Web-based advertising, training and service delivery all make heavy use of bandwidth-intensive video streaming. Many industry segments also require movement of large data files. Medical diagnostics, for example, are particularly bandwidth intensive due to the high information density of X-rays and MRIs.
Finally, medium businesses’ demand-side drivers are not simply driven by better service availability and speed. Business services require guaranteed performance, reliability and privacy. These requirements trump raw speed and go a long way in explaining why businesses are stuck with slow and archaic T1 line services while much lower-cost and higher-speed broadband services are available.
Carrier Ethernet-based services ideally meet the access needs of medium businesses. They offer flexible Layer 2 service options based on legacy TDM, Frame Relay and ATM. Service types include IP-VPN for multipoint-to-multipoint connectivity, E-Line for point-to-point connectivity, and E-LAN that extends the campus LAN concept to the wide area network. Ethernet operations administration and maintenance (OAM) provides the foundation for service providers to operate and maintain service on the same massive scale as is done for legacy services. Most importantly, service providers now have Service Level Agreements (SLAs) in place that guarantee performance, reliability and support just as they do for their legacy business offerings.
From a media (Layer 1) perspective, fiber optic cable is ideal for delivery of Carrier Ethernet services. It offers essentially unlimited bandwidth and the transmission symmetry needed for most business services. It is expensive to deploy, unfortunately, especially where customer densities are low or where customers" willingness to pay is too low to recover the initial investment cost. Most fiber is found in the financial districts of large cities. Fiber also can be found at large enterprise sites. In these cases, service providers undertake Individual Custom Bids (ICBs) which are turnkey construction projects to provide service. As such, they are not public service offerings in the usual sense. The same economic reasoning that makes fiber deployment economically attractive very neatly excludes the presence of most medium businesses. The real estate in such sites is too expensive to attract medium businesses.
Actelis Networks and Overture Networks are pioneers and leaders in Ethernet over bonded copper technology. Ethernet over bonded copper technology provides a solution that has the economics that better matches those of medium businesses’ locations. The copper (twisted-pair) is ubiquitous and readily available. Deployment does not depend on dense customer concentrations, because the necessary hardware is deployed within the central office on a case-by-case basis and at the customer premise. Costs are low, since the copper plant is already deployed and inexpensive to maintain while the electronics used at the endpoints are mature and mass-produced. These essential Ethernet OAM standards also are now established and easily adapted to existing service provider operating practices.
Medium businesses will be moving from T1 lines to Carrier Ethernet services over the next several years and are likely to sustain above-average revenue growth of 15 percent per year. Multi System operators (MSOs) and Competitive Local Exchange Carriers (CLECs) are likely to be the main beneficiaries of this growth due to their concentration on meeting the needs of medium businesses.
Written by: Michael Kennedy
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